* Green groups slam CO2 credits for 4,000 MW power station
* Plant is fifth to be approved for CO2 credits by U.N.
* World body dismisses concerns, but U.N. panel voices fears
By David Fogarty
SINGAPORE, July 12 Environmentalists criticised
the United Nations on Tuesday after it ruled that a large Indian
coal-fired power project is eligible to earn carbon credits
worth $165 million at current prices.
Several green organisations said the U.N. rules, or
methodology, applied to the 4,000 MW supercritical plant owned
by Reliance Power were flawed and that the project was
viable without the sweeteners of tradeable carbon credits called
certified emissions reductions (CERs) .
The power station, in Krishnapatnam in Andhra Pradesh, is
the second Reliance Power project to be formally registered by
the United Nations under its Clean Development Mechanism.
In total, five high-efficiency coal power plants have been
registered under the CDM -- four in India and one in China --
meaning they are all eligible to earn CERs that they can sell.
The CDM is meant to reward developers of clean-energy
projects in poorer nations by giving them CERs as a way to make
the projects viable.
"To say that this project required CDM revenues to go
forward is patently absurd," said Anja Kollmuss of CDM Watch, a
green group that monitors the CDM market.
"Not only is the project required by the Indian government
to use supercritical technology, but they already secured all
the necessary financing, bought the land, began construction,
and ordered all of the critical components before they knew if
they could receive CDM funds," she said in a
The executive panel that governs the CDM has been under
pressure to suspend the methodology under which firms can apply
for U.N. offsets on the basis of cutting greenhouse gas
emissions through more efficient power generation technology.
Supercritical and ultra-supercritical power plants use more
efficient boilers that cut coal consumption per megawatt/hour.
The Indian government has rolled out a programme that supports
the building of 4,000 MW supercritical plants to try to meet
booming power demand. Reliance, Tata Power and NTPC
Last week, the methodology panel, which advises the CDM
executive board, seemed to back the concerns by stating that the
methodology, ACM0013, "may lead to significant overestimation of
emission reductions," Point Carbon News, a Thomson Reuters
subsidiary, reported on Monday.
The panel said the methodology should be put on hold with
"This project never should have been registered. It is
plainly not additional," said Steven Herz, senior attorney with
the Sierra Club's International Climate Program, said in the
joint statement with CDM Watch.
He was referring to a central CDM rule that developers must
prove that a project or technology type would not be viable
without CER revenue.
Reliance Power declined to comment. But a person familiar
with the matter said that "the entire process as laid down by
the U.N. was followed."
The United Nations secretariat that oversees the CDM
dismissed the concerns.
"The project was registered and there is no story there. The
project would have gone through the regular vetting process,"
David Abbass, public information officer for the CDM office told
The five registered power projects involve two from Reliance
Power totalling 8,000 MW, two projects totalling 2,640 MW from
Adani Power and a 2,000 MW ultra-supercritical plant
by Shenergy in China.
According to U.N. data, the five projects are eligible to
receive a total of 68.2 million CERs over a 10-year crediting
period. That is worth 661 million euros ($919 million) based on
current prices of CERs traded on the European Climate Exchange
of 9.70 euros.
Reliance's Krishnapatnam plant will receive 12.3 million
CERs and the firm's other 4,000 MW plant, Sasan Power in Madhya
Pradesh, will receive 22.5 million.
Total carbon dioxide emissions from the five projects,
based on data from project design documents, over the 10-year
crediting period is 673 million tonnes. That compares with the
total annual greenhouse gas emissions of Australia at less than
600 million tonnes.
The European Union's emissions trading scheme is the main
buyer of CERs and the EU has already banned the use of CERs in
its scheme from some types of projects from 2013.
"As of now no other credits are banned, however, there is a
risk that EU may ban the use of other kinds of credits on
sustainability aspects," said Ashutosh Pandey, CEO, carbon
advisory business, for project developer Emergent Ventures
(Additional reporting by Prashant Mehra in Mumbai, Nina
Chestney in London, Ratnajyoti Dutta in New Delhi and Stian
Reklev of Point Carbon News in Beijing)
(Editing by Ed Lane)