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July 22nd, 2008:

Despite Flaws, Expand Green Scheme Now

Updated on Jul 22, 2008 – SCMP

Trading in carbon credits between rich countries and the developing world has come in for a lot of flak recently, with China, as the world’s largest source of the credits, attracting much of the criticism.

The existing system certainly has flaws, and concerns that some of the credits being traded do not represent genuine reductions in greenhouse gas emissions are clearly justified. But the idea that polluters in the rich world can meet their emission targets by funding reduction projects in developing countries remains a good one. Despite its faults, the scheme should be strengthened and expanded.

Because it makes little difference to global warming where exactly on earth greenhouse gasses are pumped into the atmosphere, the 1997 Kyoto Protocol included an arrangement called the clean development mechanism, or CDM. Under this, rich country polluters can invest in projects to cut emissions in the developing world, crediting the reductions towards their own greenhouse gas targets.

In the last couple of years, the CDM market has really taken off. More than 150 projects have won approval in China, with another 850 or so in the pipeline, mostly developing wind or hydro-power, improving energy efficiency, or cutting emissions of industrial gasses like hydrofluorocarbons.

Earlier this month, for example, investment bank Lehman Brothers agreed to pay mainland power producer China Guodian a reported €52 million (HK$644 million) for 4.2 million tonnes of certified carbon dioxide reductions.

But even as the CDM market has approached critical mass, it has come in for some withering criticism. Doubters’ top concern is that many of the certified projects would have gone ahead anyway, even without the additional incentive of CDM funding, so the reductions being traded do not represent genuine cuts in emissions.

“The whole mechanism is in question,” says Simon Powell, head of power research at broker CLSA.

According to a new study commissioned by the conservation group WWF, however, CDM funding can play a critical role in boosting internal rates of return above the 8 per cent threshold at which renewable energy projects become attractive (see chart below). Without CDM investment, many Chinese wind and hydro power projects, as well as conversions from dirty coal to cleaner gas, wouldn’t have happened.

Where the CDM scheme has been less successful is in persuading wasteful industrial companies, especially in the steel and cement sectors, to increase their energy efficiency by using waste heat to generate electricity, even though rates of return can be much more attractive. With bank credit rationed, says Fulvio Bartolucci of Azure International, the Beijing consultancy which compiled the report, energy efficiency initiatives are getting crowded out by even more lucrative investments.

Even so, the CDM scheme has been instrumental in raising Chinese companies’ interest in cutting emissions, improving transparency and setting standards. For it to be really effective, says Liam Salter of WWF, it should now be expanded from individual projects to cover whole regulatory programmes and industry sectors.

The problem with that idea is that the current CDM scheme is due to expire in 2012 and uncertainty over what will replace it is already discouraging new investments. If the mechanism is to be effective in the longer term, policy-makers need to get working now to extend and tighten the scheme. Then we might begin to see some meaningful emission reductions coming out of it.

Awful Pollution

Updated on Jul 22, 2008 – SCMP

Shame on the Hong Kong and Beijing governments.

The pollution on the mainland and in Hong Kong is disgusting. Every time I visit it is worse.

Greed for the spoils of industry’s money outweighs the health of citizens. I ponder their lifespan and the huge health costs. Who will pay for that? What has happened to responsibility and duty?

I have been to the Commonwealth and Olympic Games; it is an awesome experience. But I will not be going to Beijing.

Joy Mosse, New Zealand

Beijing Continues To Choke Despite Traffic Curbs

More stringent steps planned as Beijing continues to choke despite traffic curbs

Shi Jiangtao in Beijing – Updated on Jul 22, 2008

Beijing might further curb driving to clear the skies following the bold traffic restrictions that went into effect on Sunday but left the skies still hazy.

More cars will be taken off the city’s roads if the measures, which included a ban on construction works and closing down certain factories, do not clear the air in time for the Games just 17 days away, according to an official with the Beijing Municipal Environmental Protection Bureau.

“We are still finalising the emergency plan tackling higher-than-standard pollution levels and extremely unfavourable weather conditions, which includes banning more cars in the city,” said Li Xin , deputy chief engineer of the bureau.

She did not give additional details of the plan but said it would go further than the current restriction that assigns driving days based on whether a car’s number plate ends with an odd or even number.

According to environmental expert Zhu Tong , who has been involved in drafting Beijing’s pollution controls for the Games, the plan calls for up to 90 per cent of the city’s 3.3 million cars to be taken off the road.

Authorities would continue to use number plates to determine which cars can drive that day, but tie the scheme into the day of the month. “For example, if pollution levels are too high on August 3, it means only drivers with licence plates that end in the number 3 would be exempted from the new plan,”

The plan would be unveiled soon and only be imposed “under extremely poor weather conditions”, according to Ms Li.

The air in recent weeks has been noticeably cleaner, although yesterday’s sky wasn’t as clear as on Sunday, which Ms Li put down to higher humidity and vehicle exhaust.

Pollution readings backed this up. Particulate matter, a key pollutant in the city, was 65 micrograms per cubic metre yesterday, comparing to 55 on Sunday.

Forecasts put the reading of the pollutant for today at 70 to 90 micrograms per cubic metre, which would be one of the heaviest polluted days in the past week.

But Ms Li was confident Beijing would meet its pollution-reduction pledges during the Olympics next month.

“We have seen more blue skies these days, which should be attributed to frequent thunderstorms partly and apparently the traffic restrictions imposed earlier,” she said. “We are fairly close to meeting our commitment for the Olympic air quality and I am confident we will be able to deliver a green Olympics.”

Latest statistics from Ms Li’s office showed Beijing had seen 19 blue sky days this month till yesterday, compared to 17 days during the same period last year. Blue sky days are a mainland measurement that indicates air quality has met the national standards for urban residential areas.

Du Shaozhong , a deputy chief of the city’s environmental bureau, said it would take about 20 days to see the impact of the traffic curbs.

But Professor Zhu said the public would only need a week to tell whether the stringent car bans and other bold measures have worked.

According to him, Hebei and Tianjin would impose driving curbs similar to the capital’s odd-even restrictions if Beijing is unable to clear its air itself.