European utility GDF Suez is to offset some of its carbon emissions through the development of two hydropower projects in China under the Kyoto Protocol’s Clean Development Mechanism (CDM).

The company has secured two carbon trading deals relating to the projects, which are expected to be operational by the end of 2009. The contracts cover a total estimated volume of about 1.6 million Certified Emissions Reduction (CER) units during the 2009-2012 contractual period.

The CERs will be generated through one 48 MW hydropower project in northwest China and one 99 MW hydro project in the southeast of the country. The projects are owned by subsidiaries of the China Guodian Group Corporation, one of China’s five largest generating companies.

Each CER credit is equivalent to one tonne of carbon dioxide (CO2) and can be counted towards meeting Kyoto targets.

The CDM allows countries with emission reduction commitments under the Kyoto Protocol to finance renewable energy projects in developing countries. While described by the UN as a trailblazing scheme that promotes sustainable development, CDM has been criticised by green groups because in some cases they are providing project developers with financial windfalls and not encouraging emission reduction.

International Rivers, a group opposed to the development of large hydropower projects, believes that many hydropower projects – particularly in China – that apply for CERs under the CDM would have been built anyway. It describes them as “non-additional” projects and each CER issued to them means one extra tonne of CO2 is released into the atmosphere.

WWF has described the CDM as a useful too that needs to be “fine-tuned” to achieve its aims.