Climate change

Wind power shares soar

PUBLISHED : Tuesday, 13 December, 2011, 12:00am
UPDATED : Tuesday, 13 December, 2011, 12:00am

Mainland wind power producer shares rose after a global deal was reached for industrialised nations to continue their subsidy scheme for carbon-reduction projects in developing nations beyond next year.

China Longyuan Power Group surged 4.6 per cent and Huaneng Renewables gained 3.4 per cent. China Datang Corp Renewable Power fell 2.8 per cent after rising as much as 3 per cent. The state-backed firms source substantial portions of their profit from the scheme. Privately-owned China WindPower Group rose 1.6 per cent.

Negotiators from 194 nations agreed on a way forward for the world to cope with climate change at talks in Durban, South Africa, on Sunday.

Governments of 35 industrialised nations agreed to extend their carbon emission reduction commitments beyond the end of next year, when the Kyoto Protocol expires.

Under the protocol's Clean Development Mechanism (CDM), corporate polluters in developed nations are allowed to offset their emissions that exceed their given quotas, by buying credits from emitters in developing nations that are often more cost-efficient in reducing emissions. Since developing nations are not bound by mandatory emission cuts under the protocol, the credit purchases amount to a form of subsidy. These 35 nations, which do not include the US, are expected to submit their reduction targets by May 1 next year.

From an equities perspective, the most material outcome is that Kyoto will be extended until 2017 or 2020, meaning the CDM programme will continue to deliver carbon offset credits to renewable energy projects in developing countries, said CLSA research chief Charles Yonts.

But he said it was not possible to estimate the financial impact on wind power producers, since the details of the 35 nations' commitment after next year had not been fixed.