China mustered up the lion share in the supply of certified Carbon Emission Reductions (CER) with 73% of market absorption last year. They emerged as the front-runner for the third consecutive year, improving from their 54% market share of 2006. Carbon credits are issued under Clean Development Mechanism (CDM) of Kyoto Protocol which promulgates to the developed nations to meet part of their emission cutting target by funding the carbon emission reducing projects of the developing countries.
China was able to achieve this by fast track implementation of projects that reduces industrial gases, particularly Hydroflurocarbon (HFC), a byproduct precipitated while making refrigerants. Majority of the factories in the world that produce HFCs are located in China. Besides, the minimal cost involved in the installation of equipment, which destroy the carbon emitting gases has helped China immensely to generate large volumes of carbon credits.
China has already embarked on various eco-friendly energy projects to maintain the momentum, especially since HFC factories are fast depleting for any further equipment installation. China is largely benefited because of their continued focus on diversifying their production and manufacturing as per the CDM program. Until the new norms take effect, after the expiry of Kyoto agreement in 2012, China will remain the largest gainer in terms of carbon credits.
Both Brazil and India have witnessed a decline in their carbon credit earnings during the same period. Both were able to take just 6% each of the total transaction of 2007, and the transaction status of the carbon credit would be unchanged in the near future, since the number of projects outside China was also negligible. Analysts argue the flaws in the current agreement have put the African nations collectively to garner just 5% of the credits. Though there are many projects coming up in Brazil and India, China will continue to be the first choice of the buyers of the credits, they added.