China must drop cheap options in new CO2 deal -EU

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BEIJING, June 12 (Reuters) - China must stop chasing “low-hanging fruit” and instead use world carbon trading initiatives to achieve more effective CO2 cuts, a European Union delegation representative told Reuters on Friday.

With the first phase of the Kyoto Protocol set to expire in 2012, the international community is now locked in talks on a new climate change accord, and the E.U. is pushing China to reject easy and low-cost options like the elimination of industrial gases, Magnus Gislev, first secretary with the European Commission delegation in Beijing, said.

“Our policy is that post-2012, for the low-cost measures — and those that even have a negative cost — China should take responsibility for implementing them without any support from the clean development mechanism (CDM) or any other market mechanism,” Gislev said.

“That would allow us to concentrate on technologies and segments in the market that are more costly, which would mean we could have a bigger impact on Chinese emissions.”

Since ratifying the Kyoto Protocol in 2002, China has been the most active participant in the CDM, which allows developed countries to meet mandatory CO2 reduction targets by buying offsets granted to clean energy projects in the developing world.

But critics say China’s carbon trading profits have been used to support “business as usual” pursuits such as cutting industrial gases or building hydropower projects — most of which would have happened anyway.
“Certainly a number of industrial gas projects can be carried out at extremely low cost if you include carbon credits, meaning that the current mechanism is not really cost-effective,” Gislev said.

CHINA DOMINANT

More than 60 percent of the “certified emission reductions” generated by the CDM have originated in China, stirring criticism that the country has been given a “free ride” and that foreign countries are footing the bill for China’s clean-up.
China rejects the claims.

“Sixty percent (of all carbon credits) are from China, but how does China develop so many? The situation is complicated but the most important factor is that China — from a government and policy standpoint — has greatly supported the CDM,” said Gao Guangsheng, director general of the National Development and Reform Commission’s climate change office.
But that is only part of the story, Gislev said.

“The CDM is constructed in such a way that it is more appropriate to the kind of society and economy that China has, with its rapid industrialisation and a lot of new projects constructed in the energy sector,” he said.
“It is not necessarily the optimum mechanism for the least developed economies, which are in a completely different situation.”

The problem is one of unequal distribution, Gislev said.
“It is not that we think China has got too many projects. We think that others don’t have enough.”
The deadline for a replacement CDM is the end of this year, when negotiators arrive in the Danish capital of Copenhagen.

Despite the differences, Gislev said the negotiating positions of the E.U. and China remained quite close on the kind of project to be supported by any new carbon trading regime.
“I think we are not really that far from each other,” he said.
(Reporting by Beijing newsroom; Editing by Clarence Fernandez)