The Clean Development Mechanism in China- A Win-win Synergy?

Outstanding economic growth in China has its price to pay. By prioritizing economic growth as number-one issue, complementing cheap energy consumption has undeniably been side-by-side. Although the energy base on fossil-fuel energy consumption, together with inefficient technology has pushed forward China to lifting millions of the population out of poverty, it has also mounted emissions in China, causing disastrous incident nation-wide and help China ranking the largest emitter today. On the other side of the coin, these negative stands can open doors of opportunity to China, as it has potential in offering low-cost abatement options and rooms for alleviating climate change effects. Therefore, it is widely expected as the world’s largest host country for clean development mechanism (CDM) projects. Nonetheless making this potential a reality presents a number of challenges. Blockades towards cost effectiveness provision have been a general lack of awareness and experience by the government and business communities, market demand uncertainty, high procedural transaction costs, low transparency, information constraints, and foreign equity investment restriction. Impediments towards sustainable development provision are narrow project target, low sustainable development sentiment, and small scale of CDM market. This paper aims to address if the CDM projects will be efficiently contribute to the dual goal equally. This is performed by examining the major setting of regulations and procedure of CDM in China namely, the capacity building projects with bilateral and multilateral donors, the establishment of streamlined CDM procedures, the increase in transparency of CDM procedures and sound governance, the certified emission reductions (CERs) taxes scheme and the national eligibility. These initiatives taken by the Chinese government is likely to facilitate China to fully exploit the win-win opportunities. As evidence, the preliminary prediction of the cost effectiveness benefits and sustainable development benefits shows promising figures. However, the controversial standpoint is apparent in CERs taxes scheme and national eligibility regulations. It is where China trade-off its cost effectiveness benefits to investors with own sustainable development benefits. Instead of achieving win-win synergy, China undertakes a pro-sustainable development strategy. The decision is deemed reasonable with China’s promising market future, legal facilitation and specific demand for quality in the market. I believe that there is room for improvement in China’s CDM exploitation that is noteworthy but should also be approached with caution. These are clearly defined sustainable development objectives, which are: wider and deeper project focus onto those projects beyond renewable projects, incorporating the locals and project developers to engage in CDM planning process and balancing the dual goal attainment, not to incline too much on developmental benefits as of today