China’s offset market got a boost on Tuesday as nearly 40% of a new batch of approved projects are set to generate CCERs eligible for use in the nation’s seven pilot emissions trading schemes.

The NDRC, which is in charge of issuing domestic carbon offsets, approved a total of 43 new projects, a list published on its website showed.

According to project design documents, 16 of them are so-called Category 1 projects – the only category eligible in most of the pilot markets – with a total capacity to generate some 1.2 million CCERs per year.

China’s emerging offset market has so far been dominated by pre-CDM projects, which has led to a situation where almost all CCERs issued so far are banned from the majority of the pilots.

The new approvals, mostly solar and wind projects, means supply eventually will start trickling onto the market place, although market participants say the first issuances are not likely to take place for another three or four months.

Some observers doubt there will be sufficient demand in the pilot markets to soak up any incoming supply given the surplus of allowances in most of the schemes, but some funds and trading houses have expressed interest in buying CCERs ahead of the national ETS, which will be launched in 2016 or 2017.

The NDRC, which will set eligibility rules for the national market, has yet to clarify whether pre-CDM offsets will be available for compliance use, but is thought to be wary of flooding the scheme with cheap offsets of doubtful environmental integrity.

By Stian Reklev – stian@carbon-pulse.com

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