Price tag for China-WB greenhouse gas deal: $19m
www.chinaview.cn 2004-12-03 20:57:37
by Jiang Guocheng
BEIJING, Dec. 3 (Xinhuanet) -- A Chinese coal production company said Friday it will receive 19 million US dollars under a greenhouse gas emission reductions purchase agreement (ERPA) it signed with the World Bank, promising to reduce carbon dioxide equivalent emission by 4.5 million tons in two decades.
According to the agreement signed Wednesday, Jincheng Anthracite Coal Group Co., Ltd. will capture coal mine methane andutilize it for power generation at the Sihe coal mine in Jincheng City in north China's Shanxi Province.
The certified greenhouse gas emission reductions generated by the project will be purchased by the Prototype Carbon Fund (PCF), a public/private partnership made up of six governments and 17 private companies, which authorizes the World Bank, as Trustee, to purchase greenhouse gas emission reductions from projects on behalf of the participants of the fund.
The PCF will purchase 4.5 million tons of carbon dioxide equivalent emission reductions during the project's 20-year lifetime.
China depends on coal to meet more than 60 percent of its demand for energy. To avoid gas explosion. As coal mine methane (CMM) is 23 times more powerful than carbon dioxide in affecting global warming, coal mines are listed among the world's largest greenhouse gas emitters.
China's National Climate Change Coordination Committee has placed coal methane projects in its top four prioritized categories in developing projects under the Clean Development Mechanism of the Kyoto Protocol.
The Kyoto Protocol, which, with Russia's ratification, will come into effect in February 2005 to limit climate altering greenhouse gas emissions.
The Clean Development Mechanism (CDM), a flexible mechanism of the Protocol, allows Organization for Economic Cooperation and Development (OECD) countries to fulfill some of their greenhouse gas emission-reduction commitments through financing related projects in the developing world.
The Jincheng Project is expected to bring tangible benefits for local population. Shanxi Province, located in north China, is the center of the country's coal mining industry. Economic and employment conditions in Shanxi are heavily coal-dependent. The Sihe mine alone employs 27,000 people.
The bank said this project will improve conditions at the mine for the current employees and create 60 new jobs for re-trained miners and additional specialist staff at the power project.
The project will also help improve production safety for miners by explore a better way to eliminate explosive methane from the mine.
Sun Cuihua, director in the Climate Change Office under China'sState Development and Reform Commission, said the agreement servedas a model case for further promotion of similar CDM activities in China.
Methane, which is released from coal seams during the mining process, causes explosions if it is allowed to build up in the mines. Chinese safety regulations require that mine operators remove the gas to a certain safety level.
Mine operators currently take the lowest-cost method for venting the CMM gas: they release it into the atmosphere.
Under the deal, the Jincheng Coal Group will capture the coal mine methane by upgrading the Sihe mine with new, internationally proven technologies to improve mine safety and efficiency during gas drainage. The project will recover CMM from the mine and process it into energy at a nearby power plant.
The energy will be delivered to the local power grid, improvingthe capacity of the Jincheng Power Network and mitigating its electricity shortage.
Jean-Claude Steffens, PCF Participants' Committee Chair and Director Environment and Innovation, Suez-Tractebel of Brussels, described the deal as a first success that "illustrates and rewards the determination of all PCF participants in the carbon fund to include CDM projects in China within their portfolio."
David Dollar, the World Bank's country director for China, hailed the deal as a historical event as the size of the ERPA amount is the largest within the World Bank's carbon finance business so far conducted.
The Kyoto Protocol provides an unprecedented opportunity for the Organization for OECD countries to reduce greenhouse gas emissions and at the same time help developing countries and economies in transition invest in climate friendly technologies and infrastructure.
The Protocol's Clean Development Mechanism and Joint Implementation provide an element of flexibility for the industrialized countries to meet their obligations under the Protocol to reduce greenhouse gas emissions by an average 5.2 percent below their 1990 levels by 2010.
In so doing, the Protocol provides an unprecedented incentive for those seeking lower cost emission reductions, to leverage the flow of private capital and privately held clean technology from North to South.
Carbon finance is the general term applied to financing seeking to purchase greenhouse gas emission reductions to offset emissionsin the OECD. Enditem
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