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On Sunday China's iron and steel giant Chuanwei Group said that International Grid System Group (IGSG) of the Netherlands had agreed to purchase greenhouse gas emission reduction credits from their gas power project.

The project, with an investment of 200 million yuan (US$25.6 million), has given the two companies an opportunity to cooperate under the Clean Development Mechanism (CDM), according to the technical reform office of Chuanwei Group, based in southwest China's Sichuan Province.

Chuanwei Group launched the gas power generation project in 2003 with an annual capacity of 200 million kilowatt-hours.

The agreement between Chuanwei and IGSG will help reduce carbon dioxide emissions by 147,000 tons per year. At US$7.5 per ton the value of the deal will reach 12 million yuan (US$1.5 million) annually, according to the agreement.

The CDM programs encourage China to improve energy efficiency and protect the environment by using clean energy for electricity generation.

Established under the Kyoto Protocol the CDM is a market-based mechanism that allows developed nations to fulfill their greenhouse gas emission reduction obligations by investing in clean energy projects in developing countries like China.

With rapid economic growth and a large population, China is currently the world's second largest energy consumer and producer and the third biggest oil importer. Coal use has caused much of the atmospheric pollution in the country. 

(Xinhua News Agency January 15, 2007)