Chinese reap biggest Kyoto rewards

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FT Syndication Service

LONDON: China has been by far the biggest winner from the Kyoto protocol, receiving tens of billions of dollars in investment to finance low-carbon technology.

Last year, 73 per cent of carbon credit projects certified by the United Nations under the protocol were based in China.

Brazil and India received the next largest shares at 6.0 per cent each, while only 5.0 per cent of projects were based in Africa.

Under the Kyoto treaty, the "clean development mechanism" enables rich countries to meet part of their target to cut carbon emissions by funding the development of projects to reduce emissions in developing nations. These include wind turbines, capturing methane from sewage works and technology used in factory chimneys to destroy harmful industrial gases.

China has benefited most through projects that reduce industrial gases, particularly HFC, a byproduct of making refrigerants. Most of the world's factories that produce HFC are in China.

Geoff Sinclair, head of emissions at Standard Bank, which does much of its business in emerging economies, said it was "a shame Africa has not benefited by much". He said this was partly because the system was unbalanced by large investments in destroying HFC. Installing equipment to destroy the gas is relatively inexpensive but generates large volumes of carbon credits because the gas is more than 11,000 times more harmful to the climate than carbon dioxide.

The number of new projects targeting HFC ennssions is falling as developers run out of factories in which to install the cleaning equipment.

Most emission-reducing projects now focus on energy efficiency and switching away from dirtier fuels. But these efforts also benefit countries with a large industrial base so the prospect of large increases in carbon finance flows to Africa remains poor.