China on Monday published a list of 55 new projects that have been approved to generate offsets for the domestic carbon market, increasing the total by 31%, with the majority being new initiatives that are eligible in most of the pilot markets and are likely to generate CCERs for the national ETS.
The approvals, made by the NDRC, were the first since late June. China has now registered a total of 233 projects to feed offsets into its seven pilot carbon trading schemes.
But while pre-CDM projects have dominated previous approvals, the fresh batch included 36 new projects, also known as Category 1, that are expected to generate close to 2.1 million CCERs annually.
Most of the pilots also allow Category 1 CCERs, meaning the vast majority of CCERs that have been issued so far are ineligible.
Given the over-allocation in most of the pilots, the lack of offset supply has not had a major impact on allowance prices so far, but according to market participant an increasing number of emitters are seeking to buy CCERs ahead of the 2017 start of the national ETS.
The NDRC has not yet clarified offset eligibility rules for the national scheme, but Category 1 projects are widely expected to qualify. Some observers say pre-CDM projects might be ruled out amid fears of flooding the market with cheap credits, some of which have questionable environmental quality.
Another 16 pre-CDM projects with a combined capacity to generate up to 2.4 million offsets in total were approved on Monday, but the buyers for those are limited, and they normally fetch less than Category 1 offsets.
Documents for three of the 55 projects failed to make it clear which category they belonged to.
By Stian Reklev – firstname.lastname@example.org