Arreon Carbon

China is poised to overtake the United States (US) as the world’s biggest emitter of greenhouse gases. Some say it already has. With one billion more people than the US, the country still has enormous emission growth potential. It is already feeling the strain of its current emissions. Sixteen of the world’s twenty most polluted cities are in China. A recent State Environmental Protection Administration/World Bank paper reported that the health effects of ambient air pollution is costing China hundred of billions of yuan each year. It is vital that the world’s most dynamic economy cleans up.

The nation is facing a dual challenge: how can it curb emissions and continue to pull its people out of poverty? China’s per capita GDP is still one sixth of the US and it still has 200 million people living on less than one US dollar a day. The country needs to stop its emissions, but it cannot sacrifice economic growth and visa versa. These challenges are compounded by the fact that the country has 22% of the world’s population but much less resources than the average country. According to Beijing University statistics, its oil resources are only 10% that of the average country, natural gas is 5%, arable land 33%, water 25%. For most Chinese companies, if a green energy project comes out in the red, it’s just not feasible.

Incentivising Infrastructure Building

The Clean Development Mechanism (CDM) is providing China with the bottom line incentives it needs to implement emissions abatement projects. Under the mechanism, stakeholders from developed country signatories to the Kyoto Protocol invest in and transfer technology to greenhouse gas abatement projects in developing countries. This process has been hugely successful in China. In the first two years, the UN has approved over one hundred CDM projects in China that will reduce over 400 million tonnes of carbon dioxide equivalent by 2012.

One common Chinese CDM project cuts emissions by targeting emissions produced by coal, the nation’s primary source of energy. Coal demand is now over two billion tonnes per year and growing. Coal, abundant and inexpensive, is a logical fuel source for the developing nation. Although coal is dirtier than other energy sources, China just can’t afford to completely turn away from a readily abundant fossil fuel. To curb its emissions, China aims to use its coal in a cleaner, more efficient way.

To make its coal cleaner, the country also has to cut emissions that occur at the source: coal mines. During mining, methane, a greenhouse gas twenty-three times more potent than carbon dioxide, is released from the coal or surrounding rock strata. The build up of this gas within the mine decreases stability, while its release damages the atmosphere. Mines can instead drain, capture and utilise the methane. The process not only reduces greenhouse gas emissions but also increases local employment opportunities and mine safety, an important consideration in a country with thousands of mine deaths per year. Despite the many benefits, limited financial returns make these projects difficult to implement. The owners of these projects, no matter how committed they are to the issue of climate change, are just not able to get them off the ground without financial support. CDM provides the incentive that gets this infrastructure built.

Arreon Carbon and CDM

Under the CDM, Arreon Carbon is developing and investing in a number of coal mine methane projects across China. One such project, located outside Dengfeng in Henan Province, will capture methane from a mine then use it to fuel six 500 KW generators. This electricity will replace electricity that is currently being brought in from China’s Central Power Grid. The project is expected to keep about 75,000 tonnes of carbon dioxide equivalent from being emitted into the atmosphere each year. Another project, also in Henan Province, will capture around 18 million m3 of methane each year and use it to generate 52 GWh of electricity. Each year, this project will prevent approximately 250,000 tonnes of carbon dioxide equivalent from being emitted. As of July 2007, according to Point Carbon, 40 coalmine projects, projected to reduce 120 million tonnes of carbon dioxide equivalent by 2012, were being developed in China. Regardless of what happens after Kyoto’s first phase ends, the green infrastructure built by these projects will remain in place over the long term.

China’s current rate of emissions growth is unsustainable. By purchasing emissions reductions exclusively in China, Arreon Carbon targets change where is critically needed. CDM is a tool that is getting Chinese companies on board with climate change in a very real way: incentivising the country’s biggest polluters to build infrastructure, develop technology and gain experience now, laying a solid foundation for a greener and more sustainable future.

W: www.arreon.com