World Bank logs largest ever greenhouse gas deal

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The World Bank put together on Tuesday the largest greenhouse gas deal ever, where European and Asian companies and others will pay two Chinese chemical companies USD 1.02 billion to reduce output of gases believed to cause global warming, reports Reuters.

In the deal, European and Asian companies bound by the UN's Kyoto Protocol to tackle climate change, will pay the Chinese chemical companies to reduce and destroy emissions of HFC23, a heat-trapping gas 11,700 times stronger than carbon dioxide.

The deal will reduce emissions by about 19 million tons of carbon dioxide equivalent annually, according to the World Bank.About 75% of the money to purchase the reductions came from private capital, it said.

Additional participants included entities in World Bank managed funds including the Danish Carbon Fund, the Italian Carbon Fund, Deutsche Bank, Mitsui&Co and two entities of Natsource LLC, which calls itself the world's largest greenhouse gas asset manager.

As a developing country, China, the world's No. 2 producer of greenhouse gases, is not required to reduce emissions of heat trapping gases in the first phase of the international global warming pact the Kyoto Protocol, which runs from 2008 to 2012.

Tuesday's deal was done under Kyoto's Clean Development Mechanism (CDM), which allows allows rich countries to meet some of their greenhouse gas reduction obligations under the Kyoto Protocol by investing in reductions in developing countries.

"The resources came together from lots of different directions. There was pooling and deployment of capital in a large scale which was good to see that the CDM could do that," Jack Cogen, president of New York-based Natsource, said in a telephone interview.

The Chinese government will recoup 65% of the money from the deal though taxes on the two chemical companies and use it cut greenhouse gases and expand the use of renewable energy.In addition, the technology to burn and destroy HFC23, a waste gas formed in making refrigerants, can be put in place quickly.

"The beauty of industrial gas projects is that both of these projects will start generating greenhouse gas emission reductions later this year, one in October and one in December," said Anita Gordon, a World Bank spokeswoman.The world's No 1. emitter of greenhouse gases, the United States, did not ratify Kyoto.