China has become the largest provider among developing nations of carbon credits under the Kyoto Protocol after approving more than 350 foreign-invested carbon reduction projects.
As a developing country, China is not obligated to meet targets set by the Kyoto Protocol, but under the Clean Development Mechanism (CDM) it can provide so-called carbon credits to developed countries if they invest in projects that help reduce carbon emissions in China.
China's National Committee on Climate Change told Xinhua that since 2005 it has approved 352 CDM projects that could cut carbon emissions by 780 million tons a year.
The projects are waiting to be registered under United Nations Framework Convention on Climate Change (UNFCCC).
So far 42 CDM projects in China have been registered with UNFCCC, and they are expected to cut emissions accounting for more than 40 percent of the carbon credits earned under the CDM.
A carbon credit is given for the reduction of every ton of carbon prevented from being emitted into the atmosphere.
"China is now the largest carbon credit provider under the Clean Development Mechanism in the world," said He Ping, an energy and CDM program manager with the United Nations Development Program in China.
The Clean Development Mechanism allows developed countries to fulfill their own emission reduction obligations at much lower cost by investing in clean energy projects in developing countries such as China.
The projects include upgrading equipment in factories or converting coal burning factories to alternative energy sources.
Under the Kyoto Protocol that came into effect in 2005, 38 industrialized countries are required to reduce their greenhouse gas emissions by an average of 5.2 percent below the 1990 levels, between 2008 to 2012.
By using the CDM these countries can meet their emission reduction targets at a much lower cost by investing in clean energy projects in developing countries such as China.
Insiders estimate the cost of a carbon credit is about 27 Euros in the European Union, while in China the same credit would require foreign investors spend seven to nine Euros.
The CDM is the only mechanism within Kyoto Protocol that allows the trade of carbon credits between developed countries and developing countries.
"The mechanism is a win-win solution for both developing countries and developed countries," said He.
China's CDM projects include wind power, hydropower, landfill gas power generation and garbage power generation. Earlier this month, Hebei Province signed a contract for a wind power project through the CDM with Japan. The deal will provide Japan with 60,000 carbon credits a year between 2008 and 2012.
China's largest CDM project was jointly launched by Zhejiang Juhua Limited and Japan's JMD company. It provides Japan with 2.4 million credits.
Chinese Premier Wen Jiabao said at the press conference on March 16 that the Chinese government will keep its pledge and honor its international responsibilities by reducing greenhouse gas emission.
"We endorse the Kyoto Protocol and we have formulated plans in light of the United Nations Framework Convention on Climate Change," said Wen.
China has set a target to reduce energy consumption per unit of GDP by 20 percent during the 2006-2010 period, Wen said.
China is the second largest greenhouse gas emitter. Some international energy agencies forecast that it will overtake the United States to become the largest emitter after 2009.
(Xinhua News Agency March 17, 2007)