PetroChina, Longyuan strike first Chinese carbon offset deal

State-owned PetroChina bought 10,000 Chinese carbon offsets from wind power producer Longyuan on Friday for 16 yuan ($2.62) each, six times higher than international prices, in the first publicly known trade in the country's fledgling carbon market.

 

The deal was carried out on the China Beijing Environment Exchange and was the first transaction of Chinese Certified Emissions Reductions (CCERs), the exchange said.

 

The CCERs are generated from emission reductions attributed to Longyuan's wind power project in Gansu province, western China.

 

The trade comes a day after Beijing became the third of seven planned pilot carbon markets to launch in the country as China aims to limit its output of heat-trapping greenhouse gases.

 

All seven of the pilot schemes are expected to allow regulated companies to use a limited amount of CCERs to help meet their obligations, with the limits varying from 5 to 15 percent of each firm's annual emissions.

 

In Beijing's emissions trading scheme, emitters are allowed to use CCERs to meet up to 5 percent of their compliance obligations, and half of that must be from projects based in the city.

 

Friday's trade offers a glimmer of hope for China's emission reduction project developers, which have been hard hit by a collapse in international credit prices.

 

Chinese projects have been awarded over 60 percent of the 1.4 billion offsets issued so far under the United Nations' Clean Development Mechanism (CDM).

 

But CDM credit prices have dropped to just 40 cents from around $17.70 in 2010 as industrialized countries have delayed setting new emission cut targets, rendering most schemes unprofitable.

 

China allows CDM projects to re-register with the government so they can supply credits to the domestic market.

 

The Longyuan project is among a first batch seeking domestic approval.

 

PetroChina is China's biggest oil producer and listed on exchanges in Hong Kong, New York and Shanghai. The deal was carried out through its subsidiary PetroChina International North East.

 

Longyuan is a subsidiary of state-owned power generator China Guodian Corp.