The World Bank and two Chinese companies have recently orchestrated
the world's biggest emissions-reduction deal to date: $1.02 billion for 19 million tons of HFC-23 (trifluoromethane
), a greenhouse gas that happens to have a global warming potential 11,700 times stronger than carbon dioxide. The deal was made under the Kyoto Protocol's emissions trading Clean Development Mechanism
(CDM), which allows developed countries to reach their emissions targets by investing in reductions in developing countries, where reductions are cheaper, and arguably needed more. The purchase was made by the World Bank's Umbrella Carbon Facility
on behalf of a group of public and private sector entities including the Danish and Italian Carbon Funds, Deutsche Bank, and Mitsui & Co. Two Chinese companies that are regional leaders in emissions of HFC-23, Jiangsu Meilan Chemical Co. Ltd
. and Changshu 3F Zhonghao New Chemicals Material Co. Ltd
, will reduce their emissions of the chemical, which is produced as a byproduct during the manufacture of HCFC-22, a chlorofluorocarbon gas used as a refrigerant and as a building block for other chemicals. As Worldwatch reports, the revenues will be divided between the companies and the Chinese government, which will invest it in a new Clean Development Fund (CDF).
The CDF is expected to finance projects in priority sectors such as energy efficiency, renewable energy, and coalbed methane recovery and use. "In the short run, there is no denying that it is win-win cooperation with industrialized countries in CDM development for China," says Zhang Jianyu, China program manager with the U.S.-based environmental organization Environmental Defense.
Although China, under Kyoto, is not required to reduce its greenhouse gases until 2012, its excessive emissions (second only to the U.S., first in SO2) mean that there's never been a better time to get moving on reductions--and to do it through mechanisms like these. As Point Carbon has reported global emissions trading surged last year to 800 million metric tons, up from 94 million tons in 2004. By the end of the decade, it is estimated that the market will be worth as much as 34 billion euros (US $40.2 billion) annually. And as the UN tells us, and Worldwatch notes, China is already taking off as the world's biggest site of emissions reductions projects. Aside from a lot of recent talk about the ever-important project of energy efficiency and concerns about the green economy, the country is currently discussing setting up a domestic cap-and-trade mechanism to reduce SO2. But market-based emissions reductions seem to be a solution to China's staggering emissions that makes sense (and cents) for everyone.
See a video on CDM here (.wmv) and take a look at a Q&A; on the deal and the state of the carbon market today at the World Bank's site.: : Worldwatch