Beijing will establish an exchange for trading carbon dioxide credits under a new program launched yesterday by the United Nations and the Chinese government to help counter global climate change.

The platform, if successful, could be the first of its kind in a developing country.

On completion, it would join those in the United States and Europe as one of the key centers for the multi-billion-dollar global trading market for carbon dioxide credits.

The proposed exchange is part of a program to pilot carbon trading in 12 western provinces, build capacity and provide policy input for the expansion of the carbon market and reduction of greenhouse gas emissions in China.

The three-year program, estimated to cost US$1.7 million, will be partly financed by Arcelor Mittal, the world's top steel maker, the United Nations said in a statement.

"Assisting China in its efforts to cope with the impact of global climate change to create more sustainable, less greenhouse-gas-intensive development paths is an important focus," said Khalid Malik, the UN's China coordinator. "A range of market-based instruments has now emerged to support this effort, with carbon trading emerging as a major opportunity."

Carbon dioxide credits, or the right to emit the gas that scientists believe is the key contributor to global warming, are issued by the UN through its Clean Development Mechanism under the Kyoto Protocol. The credit can be traded on special exchanges, through brokers or among companies.

Firms in industrial nations that have signed the Kyoto accord to limit greenhouse gases can buy credits in registered projects such as wind farms in developing countries. The credits can then be used to offset Kyoto obligations.

(China Daily February 7, 2007)