It’s not news to chemical manufacturers that the Kyoto Protocols now must meet new emission quotas for greenhouse gases. The treaty, ratified by 164 countries, requires 35 participating industrial nations to reduce emissions of carbon dioxide and five other so-called greenhouse gases by 5.2 percent below 1990 levels between 2008 and 2012.

Nor is it news that companies able to reduce emissions below their assigned quota accumulate credits they can sell, while companies that cannot make reductions in time to meet their targets can purchase credits from other companies to make up the difference What is less known is a third opportunity available for earning credits. Under the “Clean Development

Mechanism” portion of the protocol, a company or group of companies in an industrial nation can identify a source of greenhouse gas emissions in a developing country, finance an emission reduction project in that country and either sell the resulting credits or use them to offset its own emissions.

Last August, the World Bank and 11 utilities, banks, trading firms and others assembled the largest such deal in history: a US$1 billion agreement to help our client and another China-based chemical company reduce greenhouse emissions by the equivalent of 19 million tons of carbon dioxide per year.

The deal constitutes a windfall for the Chinese government, which stands to receive 65 percent of the money through taxes on the two companies. Seventy-five percent of the money for the trade came from European and Asian corporations interested in buying emissions credits.

Time is running out for emission reduction projects to be productive by the treaty’s first regulatory period in 2008. Companies and groups are now less likely to seek projects that will take longer to complete, such as power plants, and are instead considering projects that can be finished by 2008.

The landmark Chinese deal fit the bill. The companies manufacture a refrigerant using a process that releases HFC-23, an inert gas rated 11,700 times more powerful in global warming than carbon dioxide. The potency of the gas involved, and the simplicity of the incinerator technology needed to decompose it, mean that HFC-23 elimination projects are not only quickly completed but readily earn valuable credits.