A World Bank fund signed deals to buy pollution credits from two Chinese chemical companies for $930 million under a plan that lets richer countries meet commitments to cut greenhouse gas emissions by paying for reductions in poorer economies.
The agreements, signed on Monday, were the biggest yet for the fund, set up as part of the Kyoto Protocol on climate change, the bank said.
Richer countries can meet their treaty commitments by buying credits from the fund.
The two Chinese companies, Jiangsu Meilan Chemical Co Ltd and Changshu 3F Zhonghao New Chemicals Material Co Ltd, agreed to cut their greenhouse gas emissions by 19 million tons a year for an unspecified period, the bank said.
Teresa Serra, the World Bank’s East Asia director for the environment and social development, said in a written statement: “With this project China will move to the forefront of countries making contributions to mitigate the effects of climate change.”
The Kyoto Protocol commits industrialised countries that sign it to reducing emissions of gases that contribute to global warming.
India and China exempted
Poorer countries such as China and India are exempt from such commitments, but the treaty created the credits to encourage them to cut their own emissions and to provide a way to finance the reduction.
The Chinese companies earned the credits by installing technology to reduce emissions of HFC-23, or trifluoromethane, a chemical blamed for global warming, the bank said.
HFC-23, created during the production of refrigerants, is one of six gases targeted by the Kyoto Protocol.
The World Bank said it also signed an agreement with China‘s Finance Ministry to spend revenues from sales of pollution credits on projects to encourage sustainable economic development.
Neeraj Prasad, the bank’s carbon fund co-ordinator for East Asia and the Pacific, said the contracts with the Chinese companies last until at least 2012 but would not give their end date.