Mainland companies and power generators are set to tap into a market worth at least US$400 million a year by reducing their greenhouse gas emissions, something the government is already encouraging through preferential policies.
Under the Kyoto protocol, which came into effect at the start of the year, European power producers with an obligation to produce less greenhouse gases can buy 'carbon credits' from companies that reduce emissions in other countries or regions.
Beijing has set a goal to capture at least half of that market.
'Greenhouse gases don't recognise national borders and once you've reduced emissions to a certain level, it gets increasingly expensive to continue. Under Kyoto's Clean Development Mechanism, companies can make their money go further by reducing emissions in developing countries,' said James Cameron, co-founder of Climate Change Capital, a merchant bank that invests solely in renewable energy production, clean energy technology and emissions trading.
An estimated 80 million tonnes a year of carbon dioxide reduction will have to be bought by European power firms through the mechanism, and if China can implement enough projects that cut emissions, it could supply half that amount.
Beijing has set a minimum price of US$7 a tonne but carbon credits are trading above Euro22.50 ($204) in Europe. At today's price, China's reduction target would be worth more than Euro900 million a year.
