• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

Quake May Hurt China’s Carbon Offset Supply

Posted on: Friday, 16 May 2008, 13:02 CDT

Lehman analysts estimate that the recent earthquake in China could cut the country’s supply of carbon offsets under the Kyoto Protocol by up to 5 percent over the next 12 months.

Rich countries earn carbon offsets by investing in remission cuts in developing countries.

China is expected to supply about half of the annual 540 million tons of offsets called CERs (certified emissions reductions) developing countries are projected to sell through 2012. They are worth more than $38.75 billion on a secondary market.

Lehman said some 15 million tons of China's annual output were within a 150-kilometer radius of Monday's quake centered in the southwest Sichuan province.

"We counted seven impacted companies among the world's top 20 project developers," said Laurent Segalen, Lehman head of emissions trading. He listed EcoSecurities, Deutsche Bank, Endesa and Mitsubishi Corp among developers with nearby projects.

Included are projects to cut greenhouse gas emissions from chemical plants as well as replacing fossil fuels using wind and hydropower.

Over 10 offset projects in Sichuan may have been affected and corresponded to 8 million tons of emission cuts through 2012, according to Tricorona, a Stockholm-based project developer.

"There is still no information on the status of the individual projects or the extent of the indirect damages that might come to affect the delivery of emission reductions from these projects," the company said.

Two local Chinese nitrous oxide (N20) plants and several hydro plants where it had emissions-cutting projects had stopped for safety checks but were not damaged, according to British carbon project developer EcoSecurities.

An EcoSecurities spokeswoman said it seems that the hydro projects are undamaged but are going through safety checks.  "The N20 projects are fine but one of them will be delayed for several weeks for safety checks."

Segalen said the quake could interrupt monitoring of emissions cuts, a required step before projects can claim their offsets, adding to the uncertainty of the scale of impact.

He said Dongfang Turbine, a major manufacturer of wind turbines including supplying planned Kyoto projects, had a major plant in the area.

"Some sources said the blade workshop is completely destroyed," he said.

Source: redOrbit staff and wire reports

More News in this Category