Last week issuance dramatically outline Chinese weight in the CDM. With 11 of the 21 issuing projects, Chinese projects received 4.6 millions credits (out of 5.05 million). These figures are in line with a more general trend, namely the Chinese rush to registration and issuance before the end of 2012. The Chinese domination in CDM is acknowledged for a long time, with 58% of the total volume of credit issued since the inception of CDM going to Chinese projects (mostly to industrial gases HFC23 and N2O projects). As we can see on the graph next to the text, this trend accelerated in the last months and is not expected to stop before the end of 2012.
This acceleration of Chinese project issuance is explained by the recent shifting in the EU ETS, prohibiting credits from HFC23 and adipic N2O projects in phase III. Furthermore, the European Commission underlined the fact that during this new phase of the European trading scheme, only credits from project coming from Least Developed Countries and countries that signed a bilateral agreement with the European Union will be accepted. This may jeopardize the future of CDM projects in China, as the signature of such an agreement is unlikely between the EU and China. And yet, China may bypass this dead end. China is currently engaged in individual diplomatic negotiation with EU members, a legal way to sign bilateral deals and thus to secure CDM investment from European Member States.