VZCZCXRO1970
RR RUEHGH RUEHVC
DE RUEHCN #0239/01 3010539
ZNR UUUUU ZZH
R 280539Z OCT 09
FM AMCONSUL CHENGDU
TO RUEHC/SECSTATE WASHDC 3482
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHMFISS/DEPT OF ENERGY WASHINGTON DC
RUEHC/USAID WASHDC
RUEAEPA/EPA WASHINGTON DC
RUEHCN/AMCONSUL CHENGDU 4176

UNCLAS SECTION 01 OF 02 CHENGDU 000239 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR EAP/CM 
 
E.O. 12958: N/A 
TAGS: ECON ENRG EINV CH
SUBJECT: SW CHINA OFFICIALS SEEK GREATER CONTROL OF CLIMATE CHANGE 
FUNDING 
 
CHENGDU 00000239  001.2 OF 002 
 
 
¶1. (U) This cable contains sensitive but unclassified 
information - not for distribution on the Internet. 
 
 
 
¶2. (SBU) Summary.  Even as Chinese officials in Beijing discuss 
national-level climate change initiatives in the run-up to the 
Copenhagen conference, Sichuan officials have been stymied in 
efforts to increase provincial authority over the allocation of 
mitigation funding at the local level.  Sichuan established a 
group of government officials responsible for coordinating 
climate change efforts at the provincial level, particularly 
focused on promoting energy conservation through industrial 
restructuring.  These officials are frustrated, however, that 
they have not been able to decide on the allocation of 
international funding that Sichuan has received through the 
Kyoto Protocol's Clean Development Mechanism (CDM) - which may 
not be a bad thing given the potential for local corruption and 
interference with national goals for climate change mitigation. 
Most of the CDM funding in Sichuan has been used to build or 
renovate hydropower capacity.  End Summary. 
 
 
 
Provincial Climate Change Organization 
 
------------------------------------- 
 
 
 
¶3. (SBU) Sichuan Province in 2007 established a climate change 
and environmental leading group (LG), headed by Governor and 
Deputy Party Secretary Jiang Jufeng, that has responsibility for 
coordinating the climate change work of 32 government bureaus, 
according to an official at the Sichuan Province Development and 
Reform Commission (DRC).  The LG formulates and implements 
emissions reduction policy that is designed to reduce energy 
consumption and emissions in accordance with national-level 
goals established during the 11th Five-Year Program (FYP).  An 
important goal established during the 11th FYP calls for a 
20-percent reduction in energy consumption per unit of gross 
domestic product.  The LG has focused part of its work on 
industrial restructuring as a way to reduce energy consumption, 
particularly in the iron, steel, non-ferrous metals, and 
chemical industries. 
 
 
 
Beijing Controls the Purse Strings, Sichuan Seeks Change 
 
--------------------------------------------- ---------- 
 
 
 
¶4. (SBU) The CDM allows greenhouse gas emitters in developed 
countries to invest in emissions reduction projects in countries 
like China, rather than reduce their own emissions.  The goal of 
CDM is to produce a net reduction of greenhouse gasses like 
carbon dioxide.  China's current process for directing CDM 
dollars requires that the National Development and Reform 
Commission (NDRC) in Beijing vet and approve all projects, 
according to the same DRC official.  Local businesses can 
effectively bypass the provincial government and acquire CDM 
funds through the NDRC approval process.  The official went on 
to say that this process deprives the Sichuan DRC of its ability 
to provide provincial oversight of the projects. 
 
 
 
¶5. (SBU) The DRC official implied that a better funding 
mechanism would be one under which the Sichuan government had a 
greater role in the selection of businesses that could apply for 
funds; local government would also ideally control the 
allocation of CDM funds.  The official said that greater control 
of funding would bolster the ability of provincial governments 
to pursue climate change-related mitigation efforts.  (Comment: 
The DRC official did not offer any specific examples of project 
waste or excess that had occurred due to insufficient provincial 
oversight.  At the same time, the extent that local officials 
can control the allocation of funding will likely affect their 
enthusiasm for the process, including local opportunities for 
corruption.  End Comment.) 
 
 
 
 
CHENGDU 00000239  002.2 OF 002 
 
 
Funds Channeled To Hydropower Projects 
 
-------------------------------------- 
 
 
 
¶6.  (SBU) Sichuan Province as of mid-2009 had roughly 10 percent 
of the roughly 2,100 nationally approved CDM projects, according 
to the DRC official.  The overwhelming majority projects involve 
hydropower, based on Congenoff's review of 180 Sichuan-based 
projects published by the NDRC.  All of 158 "renewable energy" 
CDM projects in Sichuan focus on the construction, retrofitting, 
or expansion of dams in the province.  The total power output 
from these projects will total more than 2,900 megawatts (MW), 
roughly equivalent to three, third-generation nuclear power 
plants.  At least 30 percent of these dam projects have led, or 
will lead, to the construction of small hydropower facilities 
with a total installed power generating capacity of 30 MW or 
less.  While Congenoff could not determine the power capacity 
for about half of the hydropower projects, at least 17 percent 
of the dams will produce more than 30 MW; some will produce more 
than 160 MW. 
BROWN