Big China hydro plant can sell carbon credits-Xinhua

BEIJING, April 3 - A hydropower plant on the upper reaches of China's Yellow River was this week approved by the United Nations to sell carbon credits, making it the biggest hydro project to do so, Xinhua reported on Friday.

The Bingling hydropower plant in northwest China's Gansu province will be allowed to sell the offsets after successfully registering with the UN's official climate change body, Xinhua news agency said on Friday.

The project applied for clean development mechanism (CDM) accreditation in August last year and was given the go-ahead by the UN executive board to sell 760,000 tons worth of "certified emission reductions" per year on March 31, Xinhua said.

The project, which is scheduled to go into full operation at the end of September this year, will have a total generation capacity of 240,000 kilowatts.

Gansu Electric Power Investment, the project owner, is contracted to sell the carbon credits to its partner, Italy's Enel.

The CDM was set up under the Kyoto Protocol to allow developed countries to meet their emission reduction targets by investing in clean projects in the developing world.

A CDM project needs to demonstrate that it will lead to a quantifiable reduction in greenhouse gases. Under the "additionality" principle, it also has to demonstrate that it would not have been economically viable without the additional capital generated by carbon trading.

However, critics have argued that the CDM process has been manipulated, particularly by the owners of large-scale hydropower plants, which remain environmentally controversial.

A study by Stanford University last year said that the CDM had also been used to help fund projects that would have been built anyway, thereby violating the "additionality" rule.

The Bingling hydropower plant began construction in November 2004 and started the CDM application process the following year.

Requiring a total investment of 180 million yuan ($26.4 million), the project's first turbine started selling electricity to the local power grid in February this year.