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* Chinese developers say USC requires CDM to be viable
* Technology already mature, costs falling, says World Bank
By David Stanway
BEIJING, Aug 25 (Reuters) - Developers of clean-coal power plants in China fear for the viability of their projects after a U.N. carbon-credit scheme denied funding for a similar plant in India at the end of July.
They said "ultra-supercritical" (USC) power stations would struggle without funds earned through the U.N.-backed Clean Development Mechanism (CDM) that lets rich countries invest in clean energy projects in developing countries.
In return, investors earn tradeable carbon offsets known as certified emission reductions or CERs CEREZ0.
Nine Chinese projects up for U.N. accreditation are on a much smaller scale but the proceeds from carbon trading will still be essential, one developer said.
"The Indian plant was too big, at 4,000 megawatts -- no wonder it couldn't get approved," said Hua Huang, a manager at the Anhui Wenergy Tongling Ultra-Supercritical Coal-Fired Power Project, which has a capacity of 1,000 megawatts.
At its latest meeting at the end of July, the U.N. executive board that grants CDM accreditation rejected the massive 4,000-megawatt supercritical power plant being built by India's Tata Power (TTPW.BO) in western Gujarat state. [ID:nSGE67B0FZ]
Though the project violates the principle of "additionality", which aims to ensure that carbon funding is directed to projects most in need of it, other supercritical plants would be judged on a case-by-case basis, a U.N. spokeswoman said.
"I think it will be very difficult for such projects to survive without the CDM," said an official at a USC plant now being built in China's eastern province of Jiangsu by a joint venture involving state-owned utility Guodian.
"There are a few companies in China that have made it without carbon funding, but they have had government subsidy."
Supercritical power plants were allowed to apply for CDM support in 2007. By vastly increasing boiler pressures, they use coal more efficiently, and they produce around 15 percent less CO2 than ordinary thermal power generators, documentation from one Chinese project submitted to the executive board shows.
They also use far less water and reduce acid rain-producing industrial emissions such as sulphur dioxide and nitrogen oxide.
Chinese developers said USC costs around 10 percent more than sub-critical plants and carbon funding is essential to make it viable, but a World Bank report says costs have been cut to the levels of ordinary coal power stations and around three-quarters of all new plants in China already employ USC boilers.
With the Tata plant expected to become a large source of greenhouse gas emissions despite its use of supercritical technology, environmental groups contend the CDM should not be used to fund coal projects of any kind.
China, already the source of more than half the CERs traded on the global emissions market, has been accused of creating a flood of substandard credits from industrial gas abatement or already profitable wind and hydropower plants.
The executive panel has faced heavy pressure to tighten approvals and it rejected a string of Chinese wind and hydro projects at its July meeting. [ID:nTOE67503I] (Additional reporting by Beijing newsroom, Editing by Clarence Fernandez)