Our company has signed a Clean Development Mechanism (“CDM”) cooperation agreement with Carbon Asset Management Sweden AB (“CAM”), pursuant to which our company will sell all certified emission reductions (“CERs”) of five of its wind power plants to CAM.
The five wind power plants are the ZhaLuTeQi ARiKunDuLeng Wind Farm in Inner Mongolia, [ZhangWu MaZongShan Wind Farm in Liaoning], [ZhenLai HeiYuPao Wind Farm in Jilin], [SiZiWangQi Wind Farm in Inner Mongolia] and [WuChuan YiHeMei Wind Farm also in Inner Mongolia]. Each wind farm has an installed generation capacity of approximately 49.5MV and CER production of 100,000 tons a year. The income from sales of CERs is about 15-20% of the total revenue of the plants.
The CDM projects of the wind power plants developed by the Group are CDM Executive Board of United Nations approved based on the “Clean Development Mechanism” of the 《United Nations Framework Convention on Climate Change Kyoto Protocol》(“Kyoto Protocol”). All CER trading is calculated in metric tons of CO2. According to the agreement, both parties will trade all the CERs generated by the five plants between 2008 and 2012. Should the Kyoto Protocol continue to be effective in 2013 and the signatory government bodies continue to fulfill their responsibilities and obligations before 2013, both parties would also continue to honor the contract according to agreed terms after renegotiation of and consensus is reached regarding the new purchase price.
The five wind power plants together produce a total of 500,000 tons of CREs each year. The CDM project not only can help to protect the environment, but can also bring strong additional revenue to the Group.