SOME OFFICIALS with a UN program have suspected for some time now that something funny might be blowing in the wind in China’s alternative energy sector.
The Executive Board of Clean Development Mechanism, a UN body, has since this summer cancelled carbon credits for some 50 wind farm projects in China, Mandarin-language Caijing online reported.
This is due to allegations of possible manipulation of an “additionality” clause in the mechanism that allows funding from developed nations to so-called “developing nations” like China for alternative energy projects that would not ordinarily break ground if not for CDM aid.
With China’s economy one of the fastest growing in the world, and its leapfrogging of France, the UK and Germany in the past half decade, it seems that those controlling the purse strings of CDM money are starting to look a lot closer at recipient need.
The PRC publication said as the upcoming climate conference in Copenhagen, the Executive Board has put in place a temporary halt in approvals for CDM-worthy wind farms in China due to suspicions of China’s industrial policy manipulations in winning the development aid targeting renewable energy sources.
“At least 50 wind farm projects have had their approval put on hold,” Caijing cited an industry insider as saying, with officials at other wind power firms in the country saying they were not surprised by the CDM decision.
The publication said that Executive Board head Lex de Jonge had confirmed that "a handful of (Chinese) projects" had been suspended, but declined to provide reasons.
The Board said that it was concerned subsidies from Beijing were being replaced by the CDM credits, and that most if not all of the wind farms on the drawing board would have been constructed in China, with or without the UN assistance.
However, another Chinese expert was cited as saying that if the Board made the most recent move in an attempt to set parameters for energy prices in developing nations, then leaders in these affected countries would no longer place as much importance on the benefits of CDM credits and the UN’s global emissions reduction campaign would suffer as a result.
Winds of change?
The jury remains out on whether China is manipulating the somewhat arcane and hard-to-prove (or disprove) “additionality” clause in order to amass as much “free money” from industrialized nations for its wind farms that it would ordinarily dip into its own domestic coffers and ballooning forex reserves to fund.
Over the past half-decade, China has been the biggest CDM recipient, a carbon trading scheme intended to siphon funds from the “rich” countries to “developing” states like China in order to reduce greenhouse gas emissions.
Wind farms only qualify for credits if the candidates can prove they would not have been constructed anyway, a condition known as "additionality."
The CDM monitors suspect that Beijing may be cancelling or reducing planned subsidies for wind farms in order to give the appearance of financial need, thus winning more approvals for CDM credits.
So far at least, wind farms have been in the crosshairs of CDM approvals, though the UN funds are earmarked for a variety of renewable energy projects.
Whatever the outcome of the accusations, next week’s UN climate conference in the Danish capital is likely to devote quite a bit of attention to the story, and may result in ramped up calls for the CDM project approval regime’s overhaul.
Several Chinese wind and solar firms are listed in Singapore and Hong Kong.
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