The Chinese government, in cooperation with the World Bank, Germany and Switzerland, hosted the international conference "Clean Development Mechanism in China: Taking a Proactive and Sustainable Approach" in Beijing on July 1-2, 2004.

The meeting followed on the announcement last Thursday by the National Development and Reform Commission, the Ministry of Science & Technology and the Ministry of Foreign Affairs that a regulation governing the management of the Clean Development Mechanism in China would go into effect on June 30, 2004.

Through the conference, the Chinese authorities obtained practical insights and additional impulses for rapid, effective and sustainable implementation of renewable energy and energy saving measures under the Clean Development Mechanism (CDM).

CDM represents a number of opportunities from the perspective of Chinese stakeholders:

• Government: The CDM can deliver financial and technology impulses for implementation of a scientific approach to development, which is necessary for sustained economic growth in China;
• Local business: The CDM represents a positive incentive (additional foreign resources) to promote voluntary corporate social responsibility among Chinese enterprises, and can also generate competitive advantages due to more efficient resource use;
• Civil society: If designed properly, the CDM can deliver local benefits, such as reduced health impacts of fossil energy use, a more reliable and secure energy supply, economic development, and public participation in shaping project design to meet local needs.

The CDM Conference attracted a wide range of national and international experts, with almost 250 participants. “This workshop is of great significance to China, it is the largest, most geographic diverse and multi-sectoral event on CDM ever taken place in China,” said Gao Feng, deputy director general and China chief negotiator in the Kyoto Protocol, Department of Treaty and Law, Ministry of Foreign Affairs. Sessions addressed the main results of a new expert report released at the conference "CDM in China, entitled -- Taking a Proactive and Sustainable Approach", the current development of carbon markets and CDM, China's new policies and institutional arrangements for CDM application (CDM regulation), and proactive strategies to remove CDM implementation barriers. Interactive panel sessions and discussion groups allowed participants to bring in their own experience on these issues, and the Conference provided a platform for discussions between foreign and local business managers on CDM project cooperation.

Gao Guangsheng, director general of the National Co-ordination Committee for Climate stressed that “CDM can be a model to practice sustainable development for developing countries. It can also have a strong technology demonstration effect.”  Maria Teresa Serra, Director at the World Bank Environment and Social Development Department of the East Asia & Pacific Region pointed out that “although the study question the conventional wisdom that a rather large pool of cheap carbon dioxide reduction options are available in China, at least in the power sector, the potential share of China in the CDM market appears very large. CDM application in China are an essential tool for equitable climate change mitigation and now China has made a major decision to enter into the CDM having put the rules of game well into effect”.

What Is the Clean Development Mechanism?

The Clean Development Mechanism (CDM) is an innovative international instrument established under the UN Kyoto Protocol that makes it attractive for wealthy and developing nations to cooperate to implement climate protection projects that generate Certified Emission Reductions (CERs). The former can claim credit for greenhouse gas emission reductions achieved through CDM projects in developing countries for which they provide additional financing, thus lowering their overall cost of compliance with their binding emission reduction commitments under the Protocol. At the same time, the countries that host such projects, such as China, can promote sustainable development domestically by attracting additional funding and advanced technology that can contribute to local economic development, resource efficiency and pollution reduction.

CDM in China: the Xiaogushan Hydropower Project

The largest contributor to greenhouse gas emissions in China is the power generation sector using fossil fuels. In order to reduce this emission, the CDM promote the application of alternative or renewable energy resources like hydropower and windmills projects. As the first project funded by the World Bank Prototype Carbon Fund (PCF), the Xiaogushan 98 MW Hydropower Project, which is located in Zhangye in Gansu Province, will contribute to easing local power supply shortages, protecting the environment, and removing poverty in local regions.

(China.org.cn July 2, 2004)