OREANDA-NEWS. September 04, 2012. Shandong Jinyuan Biomass Gasification Power Generation Project, to which Agricultural Bank of China Limited (ABC) provided consulting services, has been successfully registered in the Clean Development Mechanism (CDM) Executive Board of the United Nations, reported the press-centre of ABC.  

It is the 2105th project of China registered in the United Nations and the first successful CDM project with a large state-owned commercial bank as consulting agency marks that ABC has abilities of independently conducting "carbon finance" and providing green credit services.
The Clean Development Mechanism (CDM) is a mechanism defined in the Kyoto Protocol about the greenhouse gas emission trading (or carbon emission trading) between developed countries and developing ones. Approved by and registered in the United Nations, carbon emission reduction of developing countries could be sold to developed countries to offset their emission reduction tasks. As the emerging of the international greenhouse gas trading market, more and more international financial institutions develop various financial products and services for carbon reduction trading.

As the biggest developing country in the world, China is also the biggest greenhouse gas emitter with great reduction potential. At present, 49.1% of the greenhouse gas emission reduction projects registered in the United Nations are from China, most of which are renewable energy projects such as small hydroelectric power projects and farming and forestry residues power projects developed by county-level SMEs. The application of CDM projects involves both international and domestic approvals, which is more complex. It therefore takes more time and is difficult to get registered. Ordinary businesses could seldom succeed without the help from professional agencies.

Furthermore, buyers of CDM projects are mostly foreign organizations, while the Chinese SMEs generally are lack of expertise and bargaining power and information asymmetry in international carbon emission trading. ABC has been highly concerned about the financial services market in domestic energy saving and emission reduction field and actively developing green credit financial products. To tackle the difficulties in carbon emission trading for SMEs, ABC firstly launched the CDM consulting service in 2008, providing SMEs in counties with comprehensive professional CDM consulting services, including finding international buyers, writing project design documents (PDD), and getting transaction approvals from the both trading countries. It also helps SMEs to pass the inspection by an international third party (DOE) and successfully register in the United Nations.

Shandong Jinyuan Biomass Power Co., Ltd., the owner of Shandong Jinyuan Biomass Gasification Power Generation Project, is a SME located in Yangxin County, Binzhou City, Shandong Province. The project utilizes industrial residues such as xylitol residue (mostly corncobs) from local xylitol production plants and crop straws for power generation. The project plant is equipped with a combined capacity of 15,000 KW and costs RMB130 million. The annual xylitol residue consumption of the project is over 60,000 tons, while its annual emission is about 41,400 tons. With the help from ABC’s professional team, Shandong Jinyuan Biomass Power Co., Ltd. concluded a carbon emission reduction contract at a high price of the day (no less than EUR9 per ton) with Bunge Group, one of the three international grain and oil giants and a Fortune 500. With the project registered successfully, Shandong Jinyuan Biomass Power Co., Ltd. will realize an annual income of EUR370,000 (or RMB3 million) in the following seven years, increasing annual net profit by over 10%.

Next, in accordance with the Guidelines on Green Credit issued by the China Banking Regulatory Commission, ABC will continue providing quality CDM consulting services to SMEs and further strengthen the R&D and innovation of green credit products. It will give priority to contract energy management and strive to develop relevant innovative products and services, so as to maintain its superiority in green credit products.