The biggest agreement so far to cut greenhouse gas emissions in a developing country was finalised this week (29 August).
Under the deal, Asian and European companies will pay two Chinese chemical companies more than US$1 billion to reduce their emissions of one of the most potent gases involved in global warming.
The World Bank's Umbrella Carbon Facility brokered the deal, which will reduce emissions of the gas — called HFC-23 — by an amount equivalent to 100 million tonnes of carbon dioxide.
HFC-23 is used as a refrigerant. Molecule for molecule, it traps 11,700 times more heat in the atmosphere than carbon dioxide.
The money raised through the new deal will be put into a fund to promote renewable energy and energy efficiency in China.
The deal was set up under the terms of the Kyoto Protocol's Clean Development Mechanism (CDM).
Industrialised countries that have ratified the Protocol are obliged to cut their emissions of greenhouse gases to below 1990 levels by 2012. The CDM allows these nations to meet their reduction targets by funding initiatives that cut emissions in developing countries.
John Hay, head of communications at the UN Framework Convention on Climate Change's Secretariat, says the deal is an example of the boom in CDM projects agreed over the past year.
Emissions reductions to be delivered under the CDM have grown from 800 million tonnes in February to 1.2 billion tonnes by the end of August, a total equivalent to the combined emissions of Canada and France in 2003, he says.
Teresa Serra, the World Bank's East Asia sector director for environment and social development, said the deal "provides a unique opportunity to redirect carbon finance towards capacity building and sustainable development activities in China".
China accounts for nearly 15 per cent of the world's greenhouse gas emissions, making it second only to the United States in this respect.
As a developing country, China is not required to cut its emissions under the Kyoto Protocol. Nor is the United States, which chose not to ratify the protocol.