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Literature On The Significance Of Wind Power Environmental Sciences

Essay add: 13-11-2017, 18:27   /   Views: 2

In order to achieve the aim and objectives of this thesis research, a thorough literature review has been undertaken. For outlining the significance of wind power as renewable energy to mitigating climate change, emphasis has been put on: studying previous incentives of wind energy; introduction to Clean Development Mechanism (CDM) regulatory framework; assessing CDM's influences on wind power; key issues involved in promoting wind power under CDM.

2.1 Climate change and wind power (Arial Bold Italic 12 point)

Climate change has become a core topic among scientific and political scholars since the last decades. The concentrations of so called Green House Gases (GHGs) in the atmosphere have been rapidly increasing after the industrial revolution - 1900s. The main cause for the excessive GHGs is the anthropogenic burning of fossil fuels. Because of retaining heat around the earth, carbon dioxide (CO2) has been believed to result in growth of average temperature, leading to climate change.

As for substituting burning of tradition fossil fuels, renewable energy has become the most potential for mitigating GHGs emissions and energy security concerns. Generally, renewable energy is defined as being able to replenish from natural resources such as hydraulic power, wind, sunlight, tides, geothermal heat etc. Among these natural resources, nowadays wind power takes up the second largest renewable energy market around the world (only after hydropower). Currently, wind power is deemed as a mature technology, which is viable and competitive with conventional energy technologies, particularly at windy sites. By the end of 2009, total world wind generation capacity exceeded 150,000 Megawatts. According to Blueprints for Wind Power Development - Wind Force 10 and Wind Force 12, which is published by Greenpeace and European Wind Energy Association (EWEA) in 1999 and 2002, 10% and 12% of the world's electricity would be generated by wind power respectively. The development of wind power around the world is not evenly dispersive, because approximately 80% of the total wind power generation exhibit dominance in only five countries: Germany, Spain, USA, Denmark and India. Usually, development of wind farms is under a couple of constrains, such as: 1) national and regional development strategies and policies; 2) land suitability, wind speed, access and transportation infrastructure; 3) present and future situation of power system, stand-alone system or grid-connected; 4) wind turbine technologies, sizes; 5) financing viability, the electricity market; 6) environmental impacts, visual impact, noise and the risk of bird-collisions.

2.2 Previous incentives of wind energy

It could be tracked back to the early 1970s that many development assistance had been attempted to stimulate small-scale renewable-energy technologies like wind turbines in developing countries. Much of the stimuli of wind energy were concentrated on technical transfer possibility or on independent projects that were barely self-sustaining and could not be applied widely. As focus had been made on initiative installations, in developing countries those wind power pilot projects did not take institutional and commercial viability into account. Thus, many such projects were failure because of rather poor technical performance, bad suitability to indigenous situation. Moreover, due to lack of involvement of relevant stakeholders, lack of sustainable credit and expertise and lack of incentive structures and lack of mechanisms for turbines maintenance, lots of initiative wind power projects could not sustain their prime operating performance. The major concern was that public sectors in developing countries rarely showed high interest in promoting a commercial dissemination process as results of their heavy dependence on these donor-aid stimuli for developing wind power.

Until the end of 1980s, several large-scale grid-connected wind power initiatives by developing countries started to commence, for instance, India. Also a number of success projects began with donor assistance from industrialised countries in the 1980s, and they became growing private sector-led markets gradually afterwards. Nevertheless, many of the projects during this period were still not successful, often because many scholars had argued that factors of sustainability and replications possibilities were still missing. Some reasons were: even though original installations of wind turbine could meet those relevant technical guidelines and local legislative requirements, sale contracts of electricity generated by wind power were instable and not long term due to the fierce price competitions with conventional fossil fuels. Therefore, the local operating companies could not afford loan arrangements for equipment maintenance, which resulted in low repayment rates and lack of credits for projects' replication.

A new political life has come since 1990s, as UN Conference on Environment and Development (called the Rio Earth Summit) accompanied by establishment of UN Framework on Climate Change have introduced new forms of multilateral assistance for wind energy. Those multilateral collaborations aim to promote sustainable technology diffusion and market growths in developing countries through eliminating key barriers involved with skills, financing, institutional structures and business models. Wind power projects transferred from emerging stages into self-learned and self-evolved approaches. This is because those bilateral donors have focused more on market-oriented approaches with regard to local demand and consumers' needs, assist enterprise development for sustained services, and establish market mechanism independent of continuous donor, instead of the simple equipment provision. An industrial chain for installation, distribution, and maintenance of wind power has begun to thrive. Local governments in developing countries have also implemented some wind technology promotion policies. For instance, national research grants for Research and Development teams of local wind turbines manufacturing; subsidies for purchase of local produced wind power equipments; tax exemptions for renewable energy; low interest loans for wind power installations; subsidized electricity tariff for wind power etc.

Furthermore, Feed-in-Tariff has become the most successful experience for renewable energy around the world. Three key provisions have been outlined in Feed-in-Tariff: "1) guaranteed access to electricity-grid; 2) long-term concession contracts for electricity generation; 3) purchase prices to electric grid utilities are methodologically based on the cost of renewable energy generation". (Mendonça, M. (2007). Feed-in Tariffs: Accelerating the Deployment of Renewable Energy. London: EarthScan.) Donor projects seem to be more valuable; because they help developing countries familiarize wind technologies and demonstrate market viability. One obvious drawback is donor-subsidized wind turbines created perceptions among electricity utilities that wind energy was not commercial and required further donor aid. At the early development stage, higher wind power purchase prices could be attributed to lack of commercial competition.

2.3 Introduction to CDM regulatory framework

As a mitigation to climate change, the Clean Development Mechanism (CDM) was stipulated by Article12 of Kyoto Protocol (1992) aiming at: 1) helping industrialized countries (Annex I countries) meet their greenhouse gases (GHGs) reduction targets; 2) assisting developing countries in promoting environmentally friendly investment from industrialized countries.

2.3.1 CDM regulatory framework (Times Bold 12 point)

There are five roles involved in CDM regulatory framework: The Conference of Parties served as the Meeting of the Parties (COP/MOP) to UNFCCC; Designated National Authority (DNA); the CDM Executive Board (EB) and its panels and working groups; Designated Operational Entity (DOE); Project Participants (PPs). Table 1 demonstrates the specific roles of the five stakeholders mentioned above.

Table 1 (Source: Liang 2007)

COP/MOP

The COP/MOP shall provide guidance to the Executive Board by taking decisions on:

(a) The recommendations made by the Executive Board on its rules of procedure;

(b) The recommendations made by the Executive Board, in accordance with provisions of

decision 17/CP.7, the present annex and relevant decisions of the COP/MOP;

(c) The designation of operational entities accredited by the Executive Board.

The COP/MOP shall further:

(a) Review annual reports of the Executive Board;

(b) Review the regional and sub-regional distribution of designated operational entities and take appropriate decisions to promote accreditation of such entities from developing country

Parties;

(c) Review the regional and sub-regional distribution of CDM project activities with a view to identifying systematic or systemic barriers to their equitable distribution and take appropriate decisions, based, inter alia, on a report by the Executive Board;

(d) Assist in arranging funding of CDM project activities, as necessary.

DNA

The DNA is the national focal point in charge of CDM matters under a Kyoto Protocal party's central government and in order to participate in the CDM parties must set up a DNA. The role and function of DNA is to grant written approval (Letter of Approcal, LoA) of voluntary participation for the project participant involved in the project activities

EB

The CDM EB is the international regulatory body, under the COP/MOP, that supervises the daily operation of the CDM, the CDM EB shall:

(a) Make recommendations to the COP/MOP on further modalities and procedures for the CDM, as appropriate;

(b)Review provisions with regard to simplified modalities, procedures and the definitions of small-scale project activities and make recommendations to the COP/MO;

(c) Be responsible for the accreditation of operational entities and make recommendations to the COP/MOP for the designation of operational;

entities, responsibilities include decisions on re-accreditation, suspension and withdrawal of accreditation;

(d) Report to the COP/MOP on the regional and sub-regional distribution of CDM project activities with a view to identifying systematic or systemic barriers to their equitable distribution;

(e) Make any technical reports commissioned available to the public and provide a period of at least eight weeks for public comments on draft methodologies and guidance before documents are finalized and any recommendations are submitted to the COP/MOP for their consideration;

(f) Address issues relating to observance of modalities and procedures for the CDM by project participants and/or operational entities, and report on them to the COP/MOP.

The Meth Panel (MP) is under the supervision of EB and is responsible for making recommendations to the EB as to baseline and monitoring methodologies, both proposed and approved, as well as revisions to project design documents (PDDs).)

Small Scale CDM Working Group (SSC WG): The SSC WG is in charge of making recommendations to the CDM EB as to baseline and monitoring methodologies for SSC activities.

DOE

DOEs are the organizations accredited by the CDM EB and formally designated by the COP/MOP, which is either a legal entity with key functions in validating and subsequently requesting for registration of a proposed CDM project activity as well as verifying the emission reductions of a registered project activity and certifying such ERs and requesting the CDM EB to issue them accordingly.

PPs

The Project Participants submit their PDDs to be validated and registered at UNFCCC, so as to acquire Certified Emission Reductions (CERs), which are tradable in the market.

2.3.2 CDM Project Cycle

The detailed modalities and procedures of the bilateral climate change policy structures and regulations of CDM were instituted in December 2001, which was formulated as the Marrakesh Accords. In order to obtain CERs from wind power projects as results of reductions of GHGs, PPs should get wind power projects approved by the EB. The general CDM project cycle contains:

" 1) development a wind power project idea;

2) decide whether the project is small-scale or full scale, an wind power project can be eligible as a small-scale project if the installed capacity is less than 15 MW [] ;

3) decide whether it is a unilateral project or choose a project participant in an Annex I country [] ;

4) contact the DNA in the country to ask for local eligibility criteria and procedures;

5) start to develop the PDD;

6) choose an approved baseline and monitoring methodology or suggest a new one;

7) invite local stakeholders to make comments on the project;

8) an agreement must be written on how the CERs generated will be split among the PPs;

9) choose a DOE to validate the PDD;

10) the DOE will ask the involved DNA's for approval letters;

11) hopeful no request for project review at request for registration at the EB;

12) project implementation and monitoring;

13) select a DOE to verify and certify the emission reductions;

14) issuance of the CERs;

15) PPs trade the CERs on market." (Figure 1 below demonstrates the specific project cycle of CDM.) (Source :)

Figure 1 source: Guide book

As shown in Table 2, about half of the total CDM projects are waiting for validation at EB according to CDM pipeline (1st December) [] . Among those project procedures mentioned in proceeding paragraphs, CDM projects' validation and registration at EB (see step 4 in Figure 1) usually are the most crucial steps. In order to get wind CDM projects' validation and registration at EB, PPs must prove that the suggested GHGs reductions are real and measurable, and would not have occurred in absence of the proposed CDM project activity. This procedure for validation is called "Additionality". In addition, after establishing a "baseline scenario" (this is defined as description with regard to the current level of GHGs is prior to introducing the suggested wind power CDM projects), wind power projects must be able to reduce accounted direct emission reductions within a given boundary during a certain crediting period (either seven years with option of renewing twice=21 years; or 10 years without the renewal option). (See Figure 2)

Figure 2

Table 2 source: CDM pipeline

Status of CDM projectsNumberAt validation2590

Request for registration

97

Request for review

74

Correction requested

91

Under review

15

Total in the process of registration277

Withdrawn

43

Rejected by EB

126

Rejected by DOEs

653

Registered, no issuance of CERs

1310

Registered. CER issued

605

Total registered1915

Total number of projects (incl. rejected & withdrawn)

5604

Additionality assessment is a crucial aspect of CDM, which is the justification of a proposed wind power CDM project according to the baseline scenario without presence of project activity. Methodology tool ACM0002 was implemented at 16th EB meeting [] . There are five (six) major steps to assess project's additionality in the tool ACM0002 (see Figure 3: the flow chart of the additionality assessment).

Figure 3 Project assessment using the addtionality tools ACM0002 source:

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2.4 CDM's influences on wind power

CDM has been attracting foreign capital for wind projects and assisting developing countries towards a more prosperous but low carbon-intensive economy. Hundreds of sustainable wind power projects has been encouraged and validated involving both private and public sectors' participations. Wind CDM projects are also hoped to introduce local environmental side benefits and poverty alleviation through income and potential employments. Diffusion of wind power is relied on a tool of technology transfer among bilateral collaborations under CDM scheme as well (Annex I Parties and non-annex I parties referred to Kyoto Protocol in 1997). Figure xxx shows the soaring trend of wind energy development from 1983 to 2004, particularly after 2000. At the early stage of CDM, wind power installation capacity in developing countries was only 5837 MW, however, only the capacity applied under CDM scheme increased to seven times higher in 2009 in virtue of a mature CDM markets (see Table xxx). It is worth mentioning that not all the wind power projects in developing countries were established through CDM, so the rise of wind power installations should be higher than seven times.

Figure xxx Annual and cumulative global wind energy development from 1983 to 2004

Table xx Wind installation capacity in 2005 compared with wind power capacity under CDM for developing countries (Source: wind and CDM and pipeline Dec 2009)

2005

5837 MW

2009

33784 MW

2.5 Key issues involved in promoting wind power under CDM

It should be noted wind power CDM scheme is an extraordinary market-based approach for promoting renewable energy. The scope the thesis study will be based on "validation and registration" stages and "Financial barriers" addtionality assessment. Thus, there are two key issues to be discussed: Internal Return Rate and E+/E- policy.

2.5.1 The Internal Return Rate

The likelihood of development of the proposed wind power CDM project would be determined by comparing the proposed project's Internal Return Rate (IRR) [] with the benchmark of interest rate available to any local investors. For wind power projects, financial gain derived from the sale of generated electricity to utilities (electricity tariff) and revenues of CERs in the carbon market demonstrate the main financial viability of the proposed CDM projects, although up-front transaction costs are very high, for instance: market exploration costs, registration fees at EB, monitoring costs etc). By comparing the financial returns of proposed wind projects, logical investment will come into force with higher projected IRR. Project participants mush demonstrate their proposed wind CDM projects are not economically viable under the Business As Usual (BAU) scenario, so that the CDM finance seems to be indispensable in comparison with alternative investments (see Fig xxx). There are two credible indicators of additionality according to Marrakesh Accords: 1) the baseline scenario proposed must represent actual and tangible BAU in certain relevant energy market; 2) IRR must be crucial in determining investments' behaviour and patterns in the relevant energy market. Table 3 shows the impact of CERs on IRRs in wind power projects in a couple of countries, compared with selected other renewable technologies.

Fig xxx The idea of using Financial Analysis to demonstrate additionality based on ACM 0002 (also see chapter 2.3.2)

Table 3 Impacts of CERs on IRRs

2.5.2 The E+/E- policy for wind power CDM

E+/E- discussions are another main factor determining the CDM projects' validations. Table 4 below is the definition according EB. The EB require relevant DOEs to provide information as to whether the tariffs could be considered to be an E- policy and if not to assess in a quantitative manner whether the observed changes in the applicable tariff had resulted in a change in the incentives for investors. If the EB considered that the DOE and project participant had failed to either clarify that the tariff could be considered an E- policy or provide a quantitative assessment. The Board could therefore not assess the suitability of the applied tariff and therefore could not register the proposed CDM project activity. Thus, if project participants could demonstrate that certain renewable power tariffs fall into E- policy categories, and it has implemented since the adoption by the COP of the CDM M&P (decision 17/CP.7, 11 November 2001), so this E- policy may not be taken into account in developing an emission baseline scenario. For example, for the "China Qinghai 42 MW Jiangyuan hydropower project" (Reference number: 2769), EB would give feedbacks as "While the concern of the Board on the trend of tariff for similar projects exporting electricity to the same grid has not been fully substantiated, the Board considers the project activity additional as with the application of the highest reported tariff in the province since 11 November 2001, the project IRR does not cross the benchmark" [] .

Table 4 Definition of E+/E- Policy [] 

EB 16 Report, Annex 3:

Clarifications on the treatment of national and/or sectoral policies and regulations (paragraph 45 (e) of the CDM Modalities and Procedures) in determining a baseline scenario

1. The Executive Board agreed to differentiate ways to address the following four (4) types of national and/or sectoral policies1 in determining a baseline scenario:

(a) Type E+: Existing national and/or sectoral policies or regulations that create policy driven market distortions which give comparative advantages to more emissions-intensive technologies or fuels over less emissions-intensive technologies or fuels.

(b) Type E-: National and/or sectoral policies or regulations that give positive com­para­tive advantages to less emissions-intensive technologies over more emissions-intensive technologies (e.g. public subsidies to promote the diffusion of renewable energy or to finance energy efficiency programs).

2. Only "Type E+" national and/or sectoral policies or regulations that have been implemented before adoption of the Kyoto Protocol by the COP (decision 1/CP.3, 11 December 1997) shall be taken into account when developing a baseline scenario. If "Type E+" national and/or sectoral policies were implemented since the adoption of the Kyoto Protocol, the baseline scenario should refer to a hypothetical situation without the national and/or sectoral policies or regulations being in place.

3. "Type E-" national and/or sectoral policies or regulations that have been implemented since the adoption by the COP of the CDM M&P (decision 17/CP.7, 11 November 2001) may not be taken into account in developing a baseline scenario (i.e. the baseline scenario should refer to a hypothetical situation without the national and/or sectoral policies or regulations being in place).

Chapter 3- Chinese Wind cdm: Barriers and Lessons Learned From Controversy

In the second half of 2009, there was a serious controversy of Chinese wind CDM projects arising from proving additionality for registration. At the centre of the controversy was the concern that China might be intentionally cutting subsidies through beneficial CDM scheme, which was ascribed to benchmark prices of wind power tariff issued by the China National Development and Reform Commission (NDRC) on 24th July 2009. The tariffs range between 0.51 and 0.61 yuan [] (RMB) per kilowatt-hour in four regions after abandoning a public bidding system, showing obvious price discrepancy compared to previous Chinese wind CDM projects submitted to EB. At meeting EB47, EB48 and EB49, more than 50 Chinese wind CDM projects were put under review, because EB worried that Chinese government artificially manipulated the wind tariff attempting to strengthen additionality claims of those wind CDM projects.

As response to the EB's suspension of wind CDM in China, the NDRC published "China Wind Power and Electricity Price Development Research Report" on its website by the Chinese - Danish Wind Energy Development Project Office and Professional Committee of China Renewable Energy jointly. NDRC claimed that the Chinese government's policy of wind tariff was based on its own objective of development, the capacity of power grid. According to the report, when determining the price, NDRC never considered CDM factors and China's pricing process was completely nothing to do with CDM. The "Report" [] pointed out that the price of domestic wind power had shown an overall upward trend, but also admitted that in a few areas there was a downward price of wind power under special circumstances: lower costs of wind power in Heilongjiang Province were due to the faster growth of wind power equipments; Tariff had slid in recent years, because local constructions of transmission lines could enable enterprises to reduce the related costs, reflecting a lower electricity price trend in some regions was normal. The "Report" presented a bar chart indicating the government's subsidies on wind power had never decreased, but a steady ascending trend instead (see Fig xxxx cut from the "Report")

Fig xxx source: http://cdm.ccchina.gov.cn/WebSite/CDM/UpFile/File2364.doc. page 9

When the EB officially rejected ten Chinese wind CDM projects in EB 51 Report on 4th December 2009, the controversy reached a boiling point, with a combined investments of six billion yuan have been influenced by EB's decision. Afterwards, there was an intense political debate over this controversy at COP15 in Copenhagen. Due the suspension of potential CERs revenues, Chinese wind became the riskiest CDM investments. The controversy induced serious influences on the carbon market, which provoked consecutive criticism from projects participants and advocates of CDM scheme.

3.1 Background of Chinese wind tariff and wind power CDM

On account of influences of CDM scheme since 2005, wind power in China has experienced a striking growth [] (see Fig xxx). As to encourage investments, NDRC implemented a policy of feed-in tariff for renewable energy power in January 2006 [] . Purchasing electricity from renewable energy for long-term is guaranteed, and risks of investors have been largely reduced.

NDRC issued Renewable Energy Development Plan setting a target of 15% of total primary energy generated from renewable energy by 2020 and wind power total capacity should reach 150-200 GW by 2030. The wind tariff has been implemented under preferential policy consideration and supported by national-wind electricity surcharge on consumers.

Fig xxx Data source: Annual report of China Renewable Energy Industries and UNEP CDM pipeline updated 1 February 2010

The development history of Chinese wind power tariff could be categorized into four stages: International aid stage; Commercialization stage; Scaling stage; Benchmark Feed-in tariff stage (so called Regional flag price) (see Fig xxx). The evolution history of Chinese wind tariff experiences a same process as incentives of wind energy in other countries around the world (see literature review in Chapter 2.2). During the first stage, wind power projects were initiated and fully funded by international aids and the tariff was paid at the same levels with coal-fired power, less than 0.3 yuan/KWh. After intervened by the government for renewable energy policy, wind power tariff ranged from the relatively low price of 0.3 yuan/KWh up to 1.2 yuan/KWh in the second stage. During that period, wind tariff was proposed by local government and approved by the central government.

In the third stage, tariff was decided by a concession bidding system. However, only wind projects that were larger than 50MW or in special wind-rich regions applied into this system. Smaller projects were still subject to tariffs assigned by local regulatory framework, in which wind tariff submitted bids to the NDRC including proposed wind electricity prices and share percentages of domestically produced wind turbines. NDRC then made the final decisions of approved projects.

In accordance with the principles of the previous bidding, usually the lowest bidder should be awarded. In that mode, in order to seize the wind resource and enter the wind power market, several large-scale companies would win wind projects bidding at extreme low electricity prices. Because these companies or their parent energy corporations heavily rely on tradition thermal power projects, their wind power concession projects could temporarily survive through the profits offset from their tradition power. Low biding system easily led to price wars, resulting in fierce competition. Those investors reported that electricity prices artificially low, leading to wide-spread loss of wind instalment capacity, not making any profit margin, waste of resources in some high-quality wind energy areas. Under this background, NDRC issued the existing Regional Benchmark Wind Tariff (Regional Flag price system) policies in July 2009, trying to push an effective restraint mechanism on wind power tariff. The benchmark wind tariff in four regions was mandated under the principle "Cost + reasonable return with consideration of available wind resources" [] . However, the detailed calculation equations are not public available.

Fig xxxx The evolution history of Chinese wind tariff

As Fig xxx shows, domestic policies mentioned above should be deemed as successful measures in terms of stimulating deployment of wind power. By the early of 2010, total wind installed capacity has almost reached government's 2020 target. International carbon finance has well exerted its function through CDM scheme to boost Chinese wind power development. Since the first Chinese wind CDM project submitted in 2005, at least 30% of China's total wind instalment capacity was originated from CDM finance. Fig xxx illustrates that wind CDM in China has been one of successful experience, which accounts for 22% of total CDM projects in China. In addition, CERs generated by wind power has been informally considered as some of the best in the carbon market in terms of environmental concerns. Given an overlap of international carbon finance and several favourable domestic renewable energy policies, it would not be a surprise that wind CDM projects are subject to the scrutiny of EB. Since the suspension of Chinese wind CDM approvals as results of the wind tariff controversy in 2009, investments in Chinese wind power absolutely became less attractive due to the loss of CERs revenues.

Fig xxx China's CDM projects by types updated until UNEP CDM pipeline on 1st February 2010 (source: http://cdmpipeline.org/)

3.2 Institutional barriers

As mentioned in Chapter 2.3.1, local DNA in host countries and EB are the key decision makers for validating and approving CDM projects. NDRC who is the local DNA in China definitely plays a significant role in this controversy of wind power CDM projects. As stimulated in legal framework of UNFCCC, EB is a crucial regulatory body in executing and deploying CDM procedures among COP/MOP. NDRC and EB both have their own roles, rights, risks and responsibilities involved in CDM implementations. When serious dispute happened between the two institutions under CDM-specific frameworks, various barriers to CDM market expansion might occur in developing countries.

3.2.1 DNA

In the additionality assessment tool, financial barriers discussions are vital for demonstrating the benefits of CDM revenues. Therefore, wind power tariffs can greatly determine the financial balance for investors. In fact, China's NDRC is the only institutions who can set up wind power tariff under current Chinese legal framework. Given the unique political situation in China, NDRC has their rights to make sovereign decisions based on government's development plan, instead of a market-based manner, which means wind tariff is a proprietary of socialism. When come to CDM project cycles, the role of NDRC becomes vague between Chinese regulators or a real arbiter of additionality in terms of wind tariff. To a large extent, NDRC introduces a great number of barriers in defining a factual and tangible Business As Usual (BAU) baseline. Hence, it would be absurd to determine additionality if the wind tariff is set by NDRC via regulatory decree, rather than by market pricing. While, the national concession scheme (bidding system, which was abandoned in Chinese wind tariff stage three) would seem to be more market-based price discovery mechanism because of involvement of project participants. Of course, the problems behind the bidding system for promoting renewable energy are not neglectable, for instance, fierce and distorted price competitions, waste of installed capacity etc. Unfortunately, NDRC's possibility to make full BAU wind tariff is constrained by three reasons as following:

First of all, a couple of major state-owned enterprises (SOEs) want to enter and manipulate wind power prices, because they are required to meet certain investments quotas in renewable energy, which is allocated by central government and called Renewable Portfolio Standard capacity requirements. SOEs have stubborn financial support from the government, and they are mainly motivated by government development polices instead of financial returns. If considering their influences in the BAU, there would be not sense to determine additionality.

Secondly, preferential wind power projects are requested to use high portions of domestically manufactured wind turbines, which is a government policy to protect the domestic wind industries. For example, Beijing government required that 70% of parts in wind turbines used there should be domestically made. This rule has significantly resulted in barriers for foreign turbine producers to establish business in China, not mentioning setting electricity prices for wind projects afterwards.

Thirdly, due to the so named China's sovereign right, NDRC dare to set wind tariff according to its own judgements. Public available information is simply "cost + reasonable return". No body can specify how the reasonable return levels are determined. Nevertheless, it is understandable that NDRC has to determine the "reasonable return" through the wind tariff, which is subject to appropriate IRR for project participants.

Therefore, NDRC's role has fateful authority in influencing CDM's additionality of IRR through setting wind tariffs. Chinese regulator controls of NDRC are fundamentally incompatible with BAU determination of additionality. EB has already been aware of the fact that wind power prices can be easily manipulated by Chinese government since EB49 meeting [] .

3.2.3 EB

Parties to the Kyoto Protocol have requested that the Board take on a more executive

role. In response, the Board has focused on enhancing the consistency and

efficiency of its operations and those of its support structure, increasing the

transparency of decision-making processes, and increasing stakeholders' understanding

of required standards, which should lead to improved quality of submissions.

Secretariat taking more of an administrative function and with a fully elaborated appeals process. Participants have complained that the EB and the Secretariat often duplicate work done by CDM auditors, known as Designated Operational Entities (DOEs).

3.3 Structural failure of CDM's additionality assessment

3.4 Principal arguments on accurate baseline

Chapter 4- Opportunities for improvement

Chapter 5- Conclusion

Article name: Literature On The Significance Of Wind Power Environmental Sciences essay, research paper, dissertation