China, the world's largest greenhouse gas emitter, is making new environmental protection commitments, now highlighted by the first voluntary carbon credit purchase in Beijing. Tuesday's buy falls under the Panda Standard, which is the country's carbon credit evaluation and calculation mechanism.

The world's fastest growing economy is looking to move into one of the globe's hottest new financial markets: carbon trading.

Franshion Properties, one of China's leading real estate companies, has voluntarily bought 17,000 tons of carbon credit from the Beijing Environmental Exchange.

It's one of the largest deals yet under the Panda Standard, the nation's very own carbon trading regime, which came out of the 2009 Copenhagen Climate Change Conference.

"The Panda Standard serves as a key reference for China's fledgling carbon market, including the price of tradable carbon, the validation process, and the supervision system," said Mei Dewen, General Manager of Beijing Environmental Exchange. "It aims to channel money from polluting industries to fund agricultural and ecological projects in the countryside, helping alleviate poverty. It's a system tailored to China's realities."

The exact price Franshion Properties paid for the right to emit 17,000 tons of carbon dioxide hasn't been disclosed. But sources familiar with the deal say the cost was around one million yuan, or about 100,000 euros. It has also been confirmed that the voluntary buy is slightly cheaper than the globally validated Clean Development Mechanism.

"There should be compulsory carbon trading measures, so companies will have to calculate the cost of buying carbon credits and, gradually, scarcity will be created," Mei said. "With scarcity, we will not be too far from having a transparent and fair pricing mechanism for carbon. This is how China's carbon trading market can mature."

The money from Tuesday's deal will go toward financing an initiative to improve eco-systems in southwest China's Yunnan Province. The project includes growing thousands of hectares of bamboo to absorb carbon dioxide from the atmosphere.

(CNTV.cn March 30, 2011)