China turns away more than half of carbon credit applicants to curb glut

BEIJING (Reuters) - China's top regulator has ruled that more than half of the 54 mitigation projects that recently sought to register for carbon credits are ineligible, it said on Friday, amid worries that a glut of permits is undermining its pilot carbon markets.

Projects that help cut climate-warming greenhouse gases can apply to the National Development and Reform Commission (NDRC) to be ruled eligible to receive a type of carbon credit known as a CCER, which can then be sold on some domestic exchanges to help companies cover their emissions reductions targets.

But the NDRC said on its website (www.ccchina.gov.cn) that it approved only 21 out of a recent batch of 54 projects, and project developers suggested the rejections were the result of a recent tightening of qualification rules.

To qualify now, a project must prove that it could not have gone ahead without the income generated through the sale of carbon credits. The sources said the NDRC is looking more closely at the financial status of the projects in a bid to curb potential oversupply in the market.

"We have only been told that the authority's checks would be stricter, but it isn't clear where the bar will be," said one project developer, who declined to be name because of the sensitivity of the matter.

China has issued 14 million credits so far to help companies covered by its seven pilot carbon markets meet a June compliance deadline, but demand and prices have remained low.

The authority is trying to prevent too many credits from flooding into the markets, where trade in locally-issued carbon permits is already thin.  

(Reporting by Kathy Chen and David Stanway; Editing by Tom Hogue)