The Chinese and Italian governments have begun working together to reduce greenhouse gas emissions with the creation of the Italian Carbon Fund, which will help develop emission reduction projects in China and combat climate change.

A presentation was held in Beijing at the weekend for the launch of the fund, from which Chinese private- or public-sector entities can apply for financial support. Projects will focus mainly on energy services and technologies.

Last autumn, the World Bank entered into an agreement with Italy to create a fund to purchase greenhouse gas emission reductions for projects in developing countries and countries with economies that are in transition. The projects must generate emission reductions eligible under the Kyoto Protocol’s Clean Development Mechanism (CDM) and Joint Implementation (JI).

The fund is a public-private partnership administered by the World Bank. It has an initial endowment of US$15 million provided by the Ministry for the Environment and Territory of Italy.

Corrado Clini, a senior official with the Italian ministry, said Sino-Italian links in developing CDM projects are beneficial to both parties, and that China has huge potential for reducing greenhouse gas emissions.

Italy has participated in several international carbon funds in the past and is now seeking project partners. But CDM projects have not been launched in China on a large scale so far, because Chinese enterprises do not have a clear understanding about carbon funds and how they operate.

The CDM is designed to help generate both cost-effective greenhouse gas controls and sustainable development benefits for developing and developed countries. It was established in Kyoto, Japan, in December 1997, when more than 150 nations signed the Kyoto Protocol.

The Italian Carbon Fund is helping to change the emission reduction market by bringing carbon finance to China: linking buyers of carbon credits with climate-friendly projects that are in sore need of capital.

“The bank is actively engaged in expanding these opportunities in discussions with other potential carbon buyers, both public and private,” said World Bank Senior Environmental Specialist Andrea Pinna.

(China Daily May 24, 2004)