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CDM projects in China's energy supply and demand sectors - opportunities and barriers


  • Michaelowa, Axel
  • Jusen, Asuka
  • Krause, Karsten
  • Grimm, Bernhard
  • Koch, Tobias


China has had an enormous growth of energy and electricity consumption during the last decades. This has been fuelled primarily by using domestic coal resources. Until 1997, annual construction of power stations averaged around 15 GW which was not sufficient to alleviate the demand surplus. Forecasts envisaged continuation of this growth. The majority of power stations is small scale and reather inefficient. Local air pollution is becoming very strong and is increasingly seen as a politi-cal issue. Foreign investment in the power sector has been hampered by bureaucracy and unclear competencies. On the demand side, energy efficiency has improved markedly in the last two dec-ades, albeit from a very low basis. Due to the economic transformation, many proven incentives for efficiency improvement cannot be used any more. The Clean Development Mechanism (CDM) opens a host of possibilities to link foreign investment in the energy supply and demand sectors with projects that enhance efficiency and reduce greenhouse gas emissions. All big industrial countries have been very keen on climate policy coop-eration with China. While the official Chinese negotiation position towards the CDM and climate policy in general has been extremely cautious, many government bodies show great interest. The Asian financial crisis, which led to an electricity oversupply in 1998, gives the possibility to retire the most inefficient power plants.

Suggested Citation

  • Michaelowa, Axel & Jusen, Asuka & Krause, Karsten & Grimm, Bernhard & Koch, Tobias, 2000. "CDM projects in China's energy supply and demand sectors - opportunities and barriers," HWWA Discussion Papers 90, Hamburg Institute of International Economics (HWWA).
  • Handle: RePEc:zbw:hwwadp:26216

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    Cited by:

    1. Yang, Ming & Nguyen, Fran├žois & De T'Serclaes, Philippine & Buchner, Barbara, 2010. "Wind farm investment risks under uncertain CDM benefit in China," Energy Policy, Elsevier, vol. 38(3), pages 1436-1447, March.
    2. Resnier, Martin & Wang, Can & Du, Pengfei & Chen, Jining, 2007. "The promotion of sustainable development in China through the optimization of a tax/subsidy plan among HFC and power generation CDM projects," Energy Policy, Elsevier, vol. 35(9), pages 4529-4544, September.
    3. Gan, Lin & Yu, Juan, 2008. "Bioenergy transition in rural China: Policy options and co-benefits," Energy Policy, Elsevier, vol. 36(2), pages 531-540, February.

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