The reporter learned from the 2007 China Coal Industry Summit, held in Beijing from December 5th to 7th, that the Clean Development Mechanism (CDM) market has experienced significant growth in recent years, with China emerging as a highly attractive destination for international carbon finance players. A well-known carbon finance firm, Climate Change Capital Group, highlighted the increasing interest in the Chinese CDM sector. However, the process of project approval remains slow due to the high volume of applications and limited capacity of the reviewing authorities, creating a bottleneck that hinders progress.
Speaking about the potential of China’s CDM market, the head of the British Climate Change Capital Group expressed optimism, noting that Europe and Japan are currently the main buyers in the CDM market. Meanwhile, China is rapidly becoming the largest seller, surpassing other developing nations like India and Brazil. The country now holds a 60% share in the global CDM market, prompting major international firms such as Climate Change Capital Group and Rui Carbon Group to focus their efforts on China.
With growing awareness of CDM projects among businesses, the Chinese CDM market has entered a dynamic phase. As of the end of October, over 885 CDM projects had been certified in China. This rapid expansion has led to the international recognition of CDM as the “China Development Mechanism.†Due to the much higher global warming potential of industrial gases like nitrous oxide and fluorinated gases, many chemical companies have benefited from CDM initiatives. For instance, several chemical firms have recently submitted applications, including one in the chlor-alkali industry that is seeking CDM certification for its dry-process acetylene calcium carbide slag cement project.
To apply for a CDM project, companies must first submit a detailed project design document. After approval by the National Development and Reform Commission, the proposal is forwarded to the United Nations Framework Convention on Climate Change (UNFCCC) for final review. However, the complex procedures and limited capacity of UN agencies have significantly extended the registration timeline. Some projects now take over a year to be approved, which poses challenges for timely implementation.
In 2007, the first carbon fund backed by Climate Change Capital Group completed its full investment, with a major portion allocated to an N2O emission reduction project in the industrial gas sector. The second carbon fund, valued at 800 million euros, has already seen 350 million euros invested in various CDM initiatives, including renewable energy, biomass, coke oven gas, and natural gas projects.
Additionally, during the United Nations Climate Change Conference in Bali, Indonesia, on December 3, 2007, Australia officially joined the Kyoto Protocol. However, the protocol does not specify obligations for developing countries after 2012, leaving uncertainty about future commitments. This ambiguity introduces risks into CDM cooperation, particularly for long-term projects. Despite these challenges, the CDM continues to play a vital role in China's sustainable development strategy.
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