Business cooperation under the CDM is providing vital support to China's transition to a low carbon economy, by financing real emission reductions in sectors such as energy generation (through hydropower, windpower, high efficiency coal plants and fossil fuel switch), coal mining and chemical industry.

This source of finance adds to policy support, institutional capacity building and research cooperation under the EU-China Climate Change Partnership established in 2005 and to financing by EU development banks, including the China Climate Change Framework Loan of 500 million euros that the European Investment Bank has made available to the Ministry of Finance of China.

The European Union has played an important role in creating the conditions for the CDM market to thrive here in China.

The EU has done this first by strictly implementing the commitments that its member states have taken under the Kyoto Protocol, and by ensuring that the companies in the European emissions trading system are given strict emission caps.

Secondly, it has been done by helping China set up the necessary infrastructures for CDM - for example, we are currently teaching Chinese verifiers how to check that CDM proposals meet the requirements laid down under the Kyoto Protocol.

This joint action on CDM goes hand in hand with many cooperation projects between the EU and China in the field of Energy, environment and climate change, the latest being the creation in Beijing of a "EU-China clean energy technology center" in order to foster exchanges of technologies between our respective research centers, industries and business.

The European Union has started to channel investment spending into cleaner, low-emission technologies. We look forward to intensifying our dialogue with the Chinese government with a view to reaching a new international agreement for which, I hope, future generations will thank us.

The author is EU Ambassador to China

(China Daily April 23, 2008)