LONDON - Very efficient coal-fired power plants will be able to sell carbon offsets under the Kyoto Protocol, in an expansion of project eligibility under the carbon trading scheme, U.N. official Jose Miguez said.  "It was approved," he told Reuters on Friday.

China is set to overtake the United States this year as the world's biggest emitter of carbon dioxide, blamed for global warming, largely because of its rapidly rising coal consumption.  Under Kyoto rich countries can meet domestic greenhouse gas emissions goals by buying carbon offsets from emissions-cutting projects in developing nations, in a scheme meant to cut the cost of fighting climate change.

Until now the U.N.'s clean development mechanism (CDM) had mostly financed projects to install renewable energy like wind, or to destroy powerful greenhouse gases from the chemicals industry and landfills, especially in China, India and Brazil.

Under the amended rules, power plants in countries where coal accounts for more than half of all electricity generation will be able to apply, Miguez said. One industry expert estimated that some 40 power plants worldwide may be able to earn CDM credits, or CERs.

Another analyst called the decision 'significant', adding the potential scale of emissions reductions could be quite high and plants could attract significant amounts of carbon finance as a result. "This should shift (the current CER supply) up by around 50 million...or an extra two or three percent," Ryan McDonagh of carbon specialists ICECAP told Reuters.

On its website, the UNFCCC reports the current expected supply of CERs up to 2012 from the more than 2,100 projects in the pipeline is around 2.2 billion, or around 1 million credits per project. Secondary CERs currently trade at around 16.50 euros per tonne of carbon dioxide reduced.

(By Gerard Wynn and Michael Szabo, Reuters, 14/09/2007)