The constant broadening of the scope of the clean development mechanism (CDM) is bringing more opportunities to the coal industry in China, but the exploitation of coalmine methane remains the best option, said a European carbon trader.

"We are looking at all kinds of methodologies, and new ones are being approved (by the CDM executive board of the United Nations) all the time, but the greater potential is still with coalmine methane," said Bjorn Odenbro of the Swedish carbon trader, Tricorona.

Carbon traders need to demonstrate to the executive board the "methodology" through which the carbon reductions that arise from a project are calculated.

Although coalmine methane projects are well-established in the sector, traders are calling on the UN to widen the scope of the CDM in order to include clean coal technologies like carbon capture and storage.

Traders expect the issue to be one of the key elements of the talks between international governments on the treaty that will replace the Kyoto Protocol once it expires in 2012.

Odenbro said that the market potential in China remains immense, and while only a small fraction of the company's project portfolio in China has so far been approved by the executive board, sponsor countries in Europe have already been lined up.

The CDM allows developed countries to meet their carbon reduction commitments by financing and buying carbon credits from projects in the developing world. Each project needs to have a sponsoring country.

However, although there is a steady stream of brokers approaching the company with potential new projects throughout the provinces, including hydropower plants in southwest Yunnan and northwest Ningxia, competition in the market has increased significantly, said Odenbro.

    Source:AFX

    2007-12-19