Many domestic and foreign enterprises are looking to cash in on the Clean Development Mechanism (CDM), an important commitment-fulfilling mechanism of the Kyoto Protocol.
"The complicated nature of trade related to CDM is hard for outsiders to understand, but it means a win-win situation for developed and developing countries," said Lu Xuedu, vice director of the Office of Global Environment Affairs of the Ministry of Science and Technology (MOST) and member of the United Nations CDM Executive Board (EB).
Along with its significant contributions to the global environment, CDM offers huge business potential, he said.
According to the Kyoto Protocol, CDM allows developing and developed countries to jointly launch greenhouse gas (GHG) emission reduction projects.
If developed countries could not realize their targets under the framework of the Kyoto Protocol in their own countries, they can realize the targets by helping developing countries reduce GHG emissions. These include providing technology expertise and funding to them.
The volume achieved in developing countries can also be taken into account in developed countries' commitment to their pledge to the Kyoto Protocol.
Developing countries can sell their emission volume to developed countries.
Currently, many foreign companies are looking to work as traders or agents in this area, or to transfer technology expertise to China.
Last week, organized by the German Industry and Commerce Chamber, some 70 German investors, certified emission reduction (CER) volume traders and equipment providers flocked to Beijing to undertake in-depth discussions with some 200 representatives of local governments and enterprises in China.
Jutta Ludiwig, executive general-director of the German chamber, said: "We are beefing up our efforts to help German enterprises find Chinese co-operators in CDM projects."
Presently, China plays an important role in the field of CDM.
Since the first CER project was certified by the EB in October 2005, approved projects by the board have numbered 349 in the world. The total estimated GHG emission reduction volume is expected to surge to 90 million tons annually around the world.
Among them, only 20 projects are from China, but the carbon dioxide emission reduction volume involved in the projects accounts for 40.78 per cent of the total, snatching the largest share.
To date, China's CDM projects certified by the National Development and Reform Commission (NDRC) have reached 123.
According to the Kyoto Protocol, from 2008 to 2012, the required GHG emission reduction volume for developed countries is 5 to 5.5 billion tons.
"But it is estimated, industrialized countries will only realize 50 per cent of the target and another 50 per cent needs to be achieved through flexible co-operation with developing countries 'purchasing the volume through co-operating with developing countries'," said Wang Can, a professor of the Environment Science and Engineering Department of Tsinghua University.
The World Bank predicts, before 2010, the trading value of CERs could at least touch US$10 billion, which will drive total investment worth US$50 billion globally.
Lu said: "China has strong potential in GHG emission reduction, as it has many projects awaiting investors to explore in the fields of renewable energy, new energy and the recycling of methane and coal gas."
It is estimated, before 2010, some US$3-5 billion trade related to CDM around the world will come from China, according to a World Bank report.
If China seizes the opportunities, the total investment involved in CDM is expected to hit US$15-20 billion from 2008 to 2012, the report said.
Seizing the pie
"For some enterprises, 'CDM' is like a pie dropping from the sky as a traditional Chinese saying goes," said Lei Wen, vice general manager of the Clean Energy Investment Service Ltd of the Farsighted Group.
The company is now engaged in promoting CDM to some local areas in China and providing technology prowess. The Farsighted Group, a competitive private firm, was among the first companies to operate CDM projects in China.
It is now investing some 850 million yuan (US$106 million) in a large wind power project in Rudong, in East China's Jiangsu Province. The project, certified by EB, has an installed capacity of 100 megawatts.
When Lei is actively promoting CDM to various enterprises, some believe Lei is cheating them.
"Some enterprises don't believe me when I tell them that they will gain technology and funding through developing renewable energy to reduce GHG emission and then reap rewards by selling the 'achievement' the total figure of 'volume' to developed countries," Lei said, but he is confident that people will recognize it in the near future.
Currently, official Lu admitted that one of the priorities in his work agenda is to promote CDM knowledge, letting more enterprises and governments understand it is a win-win situation.
In addition, making information flow more transparent, in order to help match-make more buyers and sellers, is also being given more importance by government authorities.
Lu also pointed out, the government is strengthening monitoring and will not lower approval standards for such projects.
Obviously however, many companies have already seized the "pie." In West China's Gansu Province, 18 projects are in progress and the total GHG emission reduction is expected to rise to 1.7 million tons annually, according to Liu Jin, director of the Gansu Technology Service Centre.
Buyers of the projects are large agents from the Netherlands and British companies, Liu said, who is now hoping that EB will certify six large projects the province has applied for.
Successful case
To date, the largest CDM project in China involves Jiangsu Myland Group, and is a 50-year long chemical enterprise in Jiangsu Province, which has to emit a total of 8 million tons of GHG every year.
By the end of this year, the company will reap several millions of US dollars by selling the "figure" of the treated carbon dioxide to the World Bank, at a price of six euros (US$7.62) per ton.
The project was launched between Myland and the Changshou Sanai Fuzhonghao New Chemical Materials Company. It is estimated that the total carbon dioxide emission reduction will be at least 19 million tons every year.
The World Bank then sells the "figure" to some 10 European Union countries.
According to the agreement, 65 per cent of the benefits from the HFC and PFC reduction and 30 per cent of benifit from the nitrous oxide reduction will go to the Chinese Government, which pledges to use it to support the nation's sustainable development, with the other going to enterprises.