China launched its Clean Development Mechanism (CDM) fund, with a potential funding of $3 billion, on Friday to finance the country's efforts to tackle climate change.
The CDM fund, managed by the Ministry of Finance, will pool money by taking part of the proceeds from the country's carbon trade with developed countries, said Xie Zhenhua, vice-minister of the National Development and Reform Commission (NDRC).
Established under the 1997 Kyoto Protocol, CDM allows developed countries to fulfill their obligations in greenhouse gas emission reduction by buying carbon credits from developing countries or investing in their clean energy projects in a market-based manner.
By the end of October, Xie said the NDRC had approved 885 CDM projects. If those projects are implemented, it will trade a greenhouse gas emission reduction of 1,500 million tons of carbon dioxide, with a turnover of about $15 billion, more than $3 billion of which will be injected into the new CDM fund, Xie said.
To ensure the sound operation of the new fund, China will first focus on establishing good corporate governance and an effective risk control system, Finance Minister Xie Xuren said at the ceremony to launch the fund.
The Chinese government will implement a series of measures to cut greenhouse gas emissions and help tackle global warming, Xie said.
The country will promote technological upgrading to improve energy efficiency and develop more low-carbon and renewable energy products to balance its energy structure, he said.
China called on developed countries to make more efforts to combat global warming.
Global warming, in essence, has mainly been caused by developed countries as their industrialization has historically led to huge emissions, said Zhang Yesui, vice-minister of foreign affairs.
Zhang said the CDM arrangement is a win-win move to cut greenhouse gas emissions. "It can reduce developed countries' costs in meeting their emission reduction requirements, while developing countries can benefit from capital and technologies."
Zhang urged developed countries to take the lead to tackle global warming.
"The solution is in our hands," said Asian Development Bank President Haruhiko Kuroda.
The CDM fund is an innovative example of proceeds from carbon trade being used to promote a low-carbon economy, he said.
(China Daily November 10, 2007)