A Chinese company last Friday signed a greenhouse gas emission reductions purchase agreement with the World Bank acting on behalf of the Italian Carbon Fund for the first energy efficiency project in China under the Clean Development Mechanism (CDM) of the Kyoto Protocol. The project is expected to reduce 61,860 tons of carbon dioxide (CO2e) per year.

The China Nanjing Steel Converter Gas Recovery Project, located in Nanjing, China, will introduce a set of converter gas recovery and power generation systems which uses a 4th generation converter gas recovery system (OG system).

The system will recover the converter gas (LDG) produced by the two converters of the Nanjing Iron & Steel Co., Ltd. (NISCO) in the steel production process and utilize the gas for electricity generation. Through the first component (recovery/utilization of gas from the 1st converter) and the second component (recovery/utilization of gas from the 2nd converter), the electricity generated by the project will be used to partially meet the company's power need in its daily production, replacing some grid electricity and reducing carbon dioxide.

For enterprises like NISCO, CDM activities bring economic revenue or transfer of advanced technologies. More important, it is an incentive to achieve sustainable development and reduce greenhouse gas emissions, said Mr. Liu Yuejian, Department Manager and Senior Engineer of the Nanjing Iron & Steel Co., Ltd. (NISCO). Reducing primary energy consumption, greenhouse gas emissions, pollution of the environment, and achieving sustainable development, is not only the target of our government, but also the motivation for us to be involved in this CDM project.

This is the first energy efficiency CDM approved by the Government of China. The majority of China's CDM projects up to now have been HFC-23, landfill, coal mine methane and renewable energy. The Government of China considers energy efficiency projects as one of the top priorities for the country, and is committed to reduce energy consumption per GDP by 20 percent in the next five years.

NISCO is the first Chinese steel mill to implement a CDM project, said Warren Evans, Director of Environment at the World Bank. This is also the first steel sector project for the carbon finance activities of the World Bank.

China is the world's largest steel producing country producing more than 200 million tons per year, but the efficiency of the operations is very low. The NISCO project for the Italian Carbon Fund will be a prototype for energy efficiency CDM projects in the Chinese steel sector.

The Italian Carbon Fund (ICF) through the World Bank will purchase 572,205 tons of CO2e over 10 years (2006-2015). The ICF is initially purchasing emission reductions from the first component of NISCO's CDM activity. This amount will likely double with a purchase from the second component as well, after all due diligence is done.

(China.org.cn July 4, 2006)