China will launch a Clean Development Mechanism Fund (CDMF) in March to
help finance climate change projects, according to sources with the
Ministry of Finance.
Ju Kuilin, a senior official with the Ministry of Finance, said the
fund has been approved by the State Council, or China’s cabinet.
A group formed by seven authorities including the National Development
and Reform Commission and ministries of finance, and science and
technology will be responsible for managing the fund.
The fund will collect some carbon credit transaction income, donations
from international financial organizations and individuals as well as
other sources approved by the State Council.
According to Ju, the fund has got a 6.4-million-US-dollar loan from the
World Bank, and Europe will pour in loans worth a further 500 million
euros.
The Chinese government had approved nearly 300 CDM projects by the end
of January this year, including wind power, hydropower and landfill gas
power generation. With all these projects kicking off, the fund will
absorb around two billion US dollars.
Under the Kyoto Protocol that came into effect in 2005, 38
industrialized countries must reduce their greenhouse gas emissions by an average
of 5.2 percent below the 1990 levels, during the period 2008 to 2012.
The CDM is a market-based mechanism that allows these countries to
fulfill their emission reduction obligations at much lower cost, by
investing in clean energy projects in developing countries such as China.
China and the United Nations plan to set up a carbon trading exchange
in Beijing, making the city an important center for multi-billion-dollar
trade in global carbon credits.
China now accounts for one third of the global carbon credits market,
behind India. The UN predicts that China will become the largest carbon
credits provider by 2012, covering 41 percent of the global market.