The China Beijing Environment Exchange (CBEX) released the country's first financing platform for energy performance contracting Sunday, providing a new monetary channel for emissions reductions.

Energy performance contracting allows entities such as highly-polluting companies to enter into agreements with energy service agencies to improve energy efficiency with little to no upfront costs.

The number of energy service companies in China has grown from only three in 1998 to 502 as of now. Energy service firms first entered the Chinese market in the late 1990s from overseas.

The industry generated a total output value of 58.77 billion yuan ($8.61 billion) in 2009, an increase of 40.83 percent year-on-year.

However, financing obstacles, together with deficient program information disclosure channels, have been prominent impediments to the industry.

The newly-launched platform connects energy service agencies, social funds and companies with emissions reduction demands.

"The platform is a helpful attempt. It provides solid capital flow for energy services agencies to look for more projects," Kang Yanbing, director of China's National CDM Project Management Center under the National Development and Reform Commission (NDRC), told the Global Times.

The platform works like this: An energy service agency trades profit rights to projects on the platform with an investor. If multiple investors are interested, a deal can be made through bidding.

Through the period of the energy performance contract, the energy service agency transfers all its proceeds from the contract to a designated account. CBEX will transfer the money to the investor when the deal is finalized.

Xing Yuhui, general manager of the department of trust with Beijing International Trust, said many other issues like certification of energy ser-vice agencies' qualifications and measurements of the amount of energy saved will also be tough nuts to crack.

Insiders are expecting a huge leap in the industry as pressure on enterprises to cut emissions grows as the country steps up environmental protection efforts.

The China Energy Conservation Association Energy Service Industry Committee said overall output value of the energy services industry would reach 80 billion yuan ($11.72 billion) this year.

The State Council vowed in April to facilitate the industry through financial aid, tax preferences and financing support.

The NDRC and the Ministry of Finance advanced a carbon tax system framework last month, saying the right time for levying a carbon tax on enterprises will be 2012.

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