Efficient Implementation of the Clean Development Mechanism in China

FNI Report 1/2004. Lysaker, FNI, 2004, 24 p.

China at present ranks as the world's second largest emitter of carbon dioxide (CO2) after the USA. Given its huge emissions of greenhouse gases and large potential for low-cost emission reductions, China is generally expected to become a major recipient of CDM funding. The current report has several purposes. First, the authors discuss how CDM is likely to be implemented in China, not least in terms of effectiveness measures. We go on to examine Chinese policies on and priorities for CDM as set forth in international negotiations and reflected in their CDM project system design. We survey recently deployed, internationally funded CDM projects and China's capacity for identifying, approving and carrying out CDM projects and describe China's first CDM project, the Inner Mongolia Huitengxile Wind Farm Development Project, a project that was approved by the Dutch CERUPT in 2003. The report reviews project experiences and developments thus far and finally, inasmuch as the report is a joint ERI/CREIA-FNI production, we look at developments in Norway's climate policy and CDM potential. To summarize the conclusion, the authors note that China's domestic CDM apparatus still awaits approval by the State Council, which may indicate waning Chinese interest for (or a wait-and-see attitude towards) CDM. At the same time, however, we expect that the several ongoing international projects with Chinese actors will gradually enhance CDM under-standing in China. While CDM capacity is strong centrally in China, there is little knowledge or awareness of it in industrial quarters. The international projects will therefore crucially help bring knowledge to local stakeholders. The Inner Mongolia Huitengxile Wind Farm Development Project is one such example. China as gained valuable experience through its participation in the Dutch CDM program, and CDM information has been disseminated to stakeholders in China, especially industrial actors. The report sets out several recommendations concerning future Chinese and Norwegian government action.