| The global carbon market is rapidly developing as the first commitment period of the Kyoto Protocol draws closer and Parties to the Protocol with greenhouse gas (GHG) emission reduction targets seek alternative ways to reduce their emissions. The Protocol includes the Clean Development Mechanism (CDM), a tool that encourages project-based investments to be made in developing nations that will lead to an additional reduction in emissions. Due to China's economic size and rate of growth, technological characteristics, and its reliance on coal, it contains a large proportion of the global CDM potential. As China's economy modernizes, more technologies and processes are requiring electricity and demand for this energy source is accelerating rapidly. Relatively inefficient technology to generate electricity in China thereby results in the electrical sector having substantial GHG emission reduction opportunities as related to the CDM. In order to ensure the credibility of the CDM in leading to a reduction in GHG emissions, it is important that the baseline method used in the CDM approval process is scientifically sound and accessible for both others to use and for evaluation purposes. Three different methods for assessing CDM baselines and environmental additionality are investigated in the context of China's electrical sector: a method based on a historical perspective of the electrical sector (factor decomposition), a method structured upon a current perspective (operating and build margins), and a simulation of the future (dispatch analysis). Assessing future emission levels for China's electrical sector is a very challenging task given the complexity of the system, its dynamics, and that it is heavily influenced by internal and external forces, but of the different baseline methods investigated, dispatch modelling is best suited for the Chinese context as it is able to consider the important regional and temporal dimensions of its economy and its future development. For China, the most promising options for promoting sustainable development, one of the goals of the Kyoto Protocol, appear to be tied to increasing electrical end-use and generation efficiency, particularly clean coal technology for electricity generation since coal will likely continue to be a dominant primary fuel. |
