Baumann Group: Should China Apply For CDM Credits?

The Clean Development Mechanism shows fundamental flaws as developing country China applies for CDM credits.

The UN Clean Development Mechanism (CDM) is a mechanism of the Kyoto Protocol. Its concept is that a project that reduces emissions in a developing country can receive carbon credits and subsequently offer their use to countries that are limited in the amount of CO2 they emit. Each one credit can offset one tonne of CO2 ; so a country could use these as a way of stretching their limits as opposed to reducing their limits.

‘We were aware that when the Kyoto Protocol was signed in 1997 that it wouldn’t be enforceable for some time. However the member countries agreed to a ‘prompt start’ policy, which was included in the CDM, allowing developing countries to initiate projects from the start of the new millennium and receive the credit for them at a later date - after the rules had been set and the regulatory bodies were in place” explained a senior analyst at Baumann Group.

“This was necessary at the time because the commitments for reductions were set far ahead so that developing countries had time to cut their emissions yet every year they delayed implementation their ‘de-carbonization’ projects would result in higher emitting technologies later on.

“However, we operate within the concept that the CDM was developed for. Our main concern is that this is being abused and the CDM is flawed. How is it fair or logical or morally right that almost every new renewable energy production facility being built by China for the next four years is applying for CDM credits! The Chinese have introduced policies to encourage these industries. It is simply not fair” concludes the Senior Analyst at Baumann Group.

China is classed as a developing country and developing countries are not obliged to reduce their emissions. Although Chinese policy encourages alternative energy resources development it is still voluntary so it can’t be dismissed that they qualified to receive carbon credits was fundamental in the decision to go ahead.

Mike Rutherford a finance strategist at Baumann Group opined: “I believe that the value of carbon credits is way undervalued as a tradeable commodity; vastly underestimated as an investment vehicle. That is why we do what we do at Baumann Group”.

The Baumann Group are a Venture Capital Firm and we are based in Toronto, Canada. We assist companies that are looking for much-needed Growth Capital so that they may flourish and grow and meet their objectives that, without such capital, they would be unable to do so.

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This release was published on openPR.