after the slump of carbon market begun in the second half year of 2011, it is said that recently shanghai will officially launch pilot carbon emission trading from 2013 to 2015; the european union will review carbon trade system in august this year. it predicts that eu will start the third stage of carbon emission trading system within half a year.
under this favorable prediction, china longyuan power will become the biggest winner of china carbon trading. xie changjun, the president predicts that the registered cdm projects of this company are expected to break through 60, and to realize income of 900 million yuan. the sharp contrast is that the cdm development in many domestic power groups is in huge deficits and even in lawsuits. why china longyuan power can outshine others?
perceive the problem when firstly getting to cdm
china longyuan power firstly got to cdm around 2005. this trading system which full name is clean development mechanism is confirmed in tokyo protocol that the developed countries can implement the obligations of emission reduction by reducing domestic greenhouse gas emission load, or purchasing greenhouse gas emission reduction limit from other countries. on nov. 18, 2004, the first cdm project in the world was successfully registered.
of course, facing the huge business opportunities of cdm, many consulting companies are established in china to help enterprise with emission reduction projects to sell limit as agent, and offer attractive conditions ”i sell for you, and all the costs are mine. i only take 30% or 40% the money it sold, and all others belong to you. you cost nothing.”
under the preferential conditions, all power groups entrust the agency to conduct the projects, so dose china longyuan power. it subcontracted two projects of xinjiang branch. however, the things happened next made china longyuan power back down. at that time, the carbon price in northern europe market had a major fluctuation, and morgan stanley quitted the trade. it showed that buyer may breach the contract, i.e. the set price may be changed. the rights and profits of seller were very hard to be guaranteed.
“at that time we felt we can not control the risks to entrust the projects to the agency.” deputy president huang qun said to the journalist of china energy news, “we need to do it ourselves. since the consulting companies can do it, why can’t we? ”
manage carbon assets independently
it is this strategic decision that makes china longyuan power guarantee cdm income under the changeable situations of carbon trade market in later few years.
in 2008, china longyuan power officially established longyuan (beijing) carbon assets management technology co., ltd specially engaging in clean energy mechanism development services for china longyuan power, including compiling scientific research report according to cdm requirements, approving projects, connecting into the power grid, finishing registration in the united nations, signing carbon purchase agreement with foreign parties, selling emission reduction volume and guiding project company to monitor net electric quantity according requirements of cdm. at present, the average age of staff in this team is below 30, and above 80% possesses master’s or higher degree.
with the help of its own carbon trade company, china longyuan power controls the risks such as breach. as known by the journalist, currently the main form of cdm breach is sell the project at a price lower than that agreed in the contract. the agency claims they have no money. if the sellers such as power company choose litigation, they have no chance to win, because all materials are under the control of the agency. that is the major reason of the cdm deficit in power companies.
china longyuan power can realize nearly 2 billion yuan cdm income, not only because it has its own cdm development company. huang qun believes that the cautious choice of customers is an important guarantee to avoid breach, which creates the current situation that china longyuan power has no problems of breach or possible to breach till now.
carefully choose buyers
the standards of cdm buyers choosing are nearly harsh. only the companies satisfying all conditions of favorable qualification, good reputation and powerful strength can be chosen, especially terminal buyers of government and energy companies, such as austrian government, norway ministry of finance, french power company, holland power company and large petroleum companies who are the long-term partner of china longyuan power.
meanwhile, those well-known buyers chose china longyuan power because it has done well. longyuan carbon assets sufficiently uses its scale advantage, implements packing operation and unified sale, carries out the contract template of our party, reduces the time of negotiation and sales. it not only establishes long term relationship with buyers but also get superior price. every project is the result of group decision.
establish competitive inner management
in order to achieve efficient operation, china longyuan power formulated special cdm service management process. aiming at the features of services, it develops cdm development management platform system and unified development template, and confirms key nodes. which both lowers mistake rate, and accelerates development progress. in the meantime, it discomposes projects, implements to specific personnel, and forms inner competitive mechanism. the performance of each personnel will be contrasted in real time in system platform.
extensive cooperation
with the increase of market participation subjects and changes of cdm rules, the new problems are emerging, and many of which are common problems of chinese projects. china longyuan power pays attention to establish extensive cooperation mechanism with government, doe (the third party of verification), and same industries for long term to jointly analyze and solve the common problems met by chinese projects. for instance, the electricity price problem troubled for two years gains breakthrough by concerted efforts of government organization and industrial alliance, and some projects in chinese enterprises uniformly adopt “reference price”, and finally succeeded to register in eb.
by now, the projects of china longyuan power registered in un reach up to 137, installed capacity is accumulated to 7,322.55 mw, annual emission reduction volume is about 18 million tons, and accumulated equity income is 1.95 billion yuan, which tops the industry.
as huang said “the success of cdm development is the pride of china longyuan power.”
(reported by lu yu)