China may provide data on the power tariffs it pays for renewable energy, helping developers know whether projects are eligible for greenhouse-gas credits, the chairman of the United Nations emissions regulator said.
Renewable-energy projects can win credits if they demonstrate they need assistance to be viable, according to rules of the UN’s Clean Development Mechanism. Requests for credits under the program, where richer nations invest in emission-cutting projects in the developing world, will probably rise 54 percent this year to 1,700 applications, according to a UN presentation.
The executive board overseeing the program uses a list of highest tariffs in a given region or province when determining whether projects should be approved for credits, Martin Hession, the newly appointed chairman of the board, said in a phone interview from Bonn.
“We have published the highest tariff rates in so far as we have them,” Hession said. “The Chinese authorities are working on confirming” any differences. He didn’t say when the new data may be available.
The dialog between government subsidies and emission credits is a “really difficult area,” Hession said. “I think everybody knows that is not a perfect rule.”
The high-tariff list doesn’t work because it includes prices from years ago designed to encourage renewable projects, said Susanne Haefeli-Hestvik, technical director at Tricorona, a Stockholm-based emission-reduction developer owned by Barclays Plc of London.
Erroneous lists
The lists don’t distinguish between richer and poorer regions in the same province, she said yesterday in a phone interview. Hydro projects in poorer regions may be missing out on support from emission credits because there are higher tariffs in more developed parts of the same province, she said. “The high tariff rule should go away this year.”
Tricorona would welcome better data from China because the current list contains errors, Haefeli-Hestvik said. It also welcomed Hession’s comment that the board will consider projects on a case-by-case basis. China has produced more emission credits than any other nation.
Certified Emission Reduction credits for December were unchanged today at 11.35 euros ($15.38) a metric ton on the ICE Futures Europe exchange in London. The credits, which stem from the Clean Development Mechanism, or CDM, can be used by power stations and factories in the European Union carbon program, the world’s biggest greenhouse-gas market by traded volume.
‘A conservative rule’
EU permits traded at a 3.44-euro-a-ton premium to CERs as of yesterday’s close, compared with an average 2.87 euros last year, ICE data show.
Using the highest tariff lists is “a conservative rule,” Hession said. “And it’s not perhaps a very flexible rule. But that’s what we could do. It’s pretty clear.”
The board is seeking proposals from projects wanting assessment using different criteria, Hession said. The regulator is unlikely to change its rule this year, he said. The board this week appointed Maosheng Duan of China as vice chairman.
“We’re open to establishing tariff rates on another basis, on a case-by-case basis,” Hession said. “I think the market frustration is that we haven’t given any guidance on what alternative approaches there might be.”
The current rules may reduce the incentive for developing nations to adopt a cleaner path than developed countries, Haefeli-Hestvik said. Poor nations may be dissuaded from introducing new renewable-energy subsidies today if they will crimp revenue from the CDM in years to come, she said.
Hession will seek to cut the time it takes to win approval for new systems that attract credits, known as methodologies, he said. Some methodologies have been waiting for more than a year for approval, he said. The board would seek to cut the time it takes for approval to less than a year, he said, declining to be more specific.
