The reporter gathered insights 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 particularly appealing destination for international investors. Notably, well-known carbon finance firms have started to focus their attention on the Chinese market, recognizing its vast potential.
However, the process of registering CDM projects has become slow due to the high volume of applications and the limited capacity of approval authorities. As a result, the registration procedure has turned into a major bottleneck, delaying project development and creating challenges for stakeholders.
Speaking about the future of the CDM market in China, a representative from the British Climate Change Capital Group expressed optimism, highlighting 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 carbon finance companies to invest more in the region.
As awareness of CDM opportunities grows, the Chinese CDM market has entered a period of active development. By the end of October 2007, over 885 CDM projects had been certified in China. This rapid expansion has led to the international nickname “China Development Mechanism†being applied to the CDM. With industrial gases such as perfluorocarbons and nitrous oxide having a much greater greenhouse effect than CO₂, many chemical companies have benefited from CDM initiatives. In particular, several chemical firms have begun applying for CDM projects, including a dry-process acetylene calcium carbide slag cement project in the chlor-alkali industry.
To apply for a CDM project, companies must first submit a detailed project plan. After approval by the National Development and Reform Commission, the proposal is sent to the United Nations for final review. Due to the complexity of the process and the limited resources of UN agencies, the approval timeline has significantly increased. Some projects now take over a year to be registered, causing delays and uncertainty for participants.
Notably, the first carbon fund backed by the Climate Change Capital Group completed its full investment last year, with one of the largest investments going to an Nâ‚‚O emission reduction project. A second carbon fund, valued at 800 million euros, was also launched, with 350 million euros already allocated to various CDM projects, including renewable energy, biomass, coke oven gas, and natural gas initiatives.
Additionally, during the United Nations Climate Change Conference in Bali, Indonesia, on December 3, 2007, Australia officially joined the Kyoto Protocol. However, since the Kyoto Protocol does not clearly define the obligations of developing countries after 2012, there remains uncertainty about whether these nations will be required to meet emission reduction targets. This ambiguity introduces risks into CDM cooperation efforts, making it essential for participants to carefully assess long-term implications.
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