Emission allowances for greenhouse gases can be bought and sold

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　　After the Kyoto Protocol came into force in 2005, the most notable development was the rise of the CDM (Clean Development Mechanism). The core of CDM is to allow developed **and developing** countries to cooperate in implementing greenhouse gas reduction projects in developing **countries**. Under the provisions of the Kyoto Protocol, the carbon dioxide reduction targets for developed countries such as those in Europe and the United States from 2008 to 2012 were as follows: compared to 1990, the EU was required to reduce emissions by 8%, the United States by 7%, Japan by 6%, Canada by 6%, and the countries in Eastern Europe by 5%–8%. In developing countries such as China and India, there are no such restrictions. In other words, emissions are restricted in Europe and the United States, but not in China and India. The human and technical costs required to reduce one ton of carbon dioxide emissions are very high in Europe and the United States, but these costs are low in countries such as China and India. Unless there is a major technological revolution, it will be difficult to control the continued release of carbon dioxide into the atmosphere. The Kyoto Protocol took this situation into account; as regards measures to reduce emissions, in addition to encouraging countries to use new technologies, it also allows them to employ economic tools to control emissions, such as the environmental taxes imposed by the European Union and pollution fees imposed by China. The EU also assigns carbon dioxide emission quotas to its member states, but it is difficult to distribute these quotas in a completely balanced manner; those who do not have enough quotas **must pay to acquire them**. Therefore, the Kyoto Protocol introduced the Clean Development Mechanism (CDM): if countries in Europe and the United States invest in environmental protection projects in countries such as China and India, resulting in a reduction in carbon dioxide emissions from those projects compared to before the investment, this reduction is considered a \"return on investment\" that can be used to offset the additional carbon dioxide emissions produced by those companies in Europe and the United States. In simple terms, if a company abroad runs out of its emission allowances, it can purchase them from companies in China that have surplus allowances. A successful example is the HFC-23 decomposition project carried out by Changshu Sanyafu Zhonghao New Chemical Materials Co., Ltd., a subsidiary of Sanyafu (600636). This project was registered as a CDM project with the United Nations CDM Executive Board on August 8 last year, and it is expected to generate over 90 million yuan in additional net profit for the company each year. According to the data, developed countries were required to reduce 5 billion tons of carbon dioxide equivalent in emissions by 2012 as part of their obligations under the Kyoto Protocol; half of this reduction was to be achieved domestically, while the remaining 2.5 billion tons was to be accomplished through CDM, joint implementation, and emission trading. Of this amount, CDM and joint implementation were responsible for approximately 1 to 1.5 billion tons. 　By the end of October 2007, the **Development and Reform Commission had issued approval letters for 885 CDM projects. If all of these projects are successfully registered, the total amount of emission reductions that can be transferred under the contracts amounts to approximately 1.5 billion tons of carbon dioxide equivalent, with total transfer revenues of around $15 billion. Of this amount, **more than $3 billion will be allocated to the Clean Development Mechanism fund.