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China Projects Skirt Price Floor, Avoid Carbon Supply Cuts

Chinese carbon-cutting projects are skirting around the nation’s unofficial floor price for carbon credits, according to the former head of an emissions trading lobby group. That would indicate the country is less likely to show supply restraint, said a Stanford University researcher.

Some Chinese projects get paid at a floor price of about 8 euros ($10.06) a metric ton and then send fees back to the buyer for consultancy services in a second transaction, according to Henry Derwent, former president of the International Emissions Trading Association, the Geneva-based lobby group. EU factories, power stations and airlines can use the offsets to cut the cost of complying with the bloc’s greenhouse-gas laws by 48 percent.