INTERVIEW-China expects $1.5 billion for climate fund by 2012

By Emma Graham-Harrison

BEIJING, Dec 6 (Reuters) - China expects to raise $1.5 billion by 2012 from a levy on sales of carbon credits, which it will channel into a government fund to raise awareness of climate change and cut emissions, the head of the fund said.

Chen Huan, acting director of the Clean Development Mechanism fund, said Beijing wanted to increase public knowledge of climate change and government capacity to cope with it, in a country that has already suffered slightly higher than average warming.

It would also invest some of the cash in projects that directly tackle climate change, potentially ranging from small-scale renewable energy to efficiency improvements at major industrial plants, Chen added.

"We hope that this fund could be a very creative financing mechanism to serve as a new driving force for the country to address climate change," he told Reuters in an interview at the fund's newly established Beijing headquarters.

"We are trying to help the government translate policies into concrete action," he added, as China won praise from campaigners for its constructive attitude at climate talks in Indonesia.

The Clean Development Mechanism, part of the Kyoto Protocol to tackle global warming, allows rich nation polluters to fund emissions cuts in poorer countries and put them towards domestic carbon reduction targets.

China has been the top producer of the Certified Emissions Reductions (CERs) under the system, and Beijing set up the CDM fund to spend a government cut of the earnings from the credits, which are now worth nearly 20 euros ($29) each in European markets.

Beijing charges a sliding levy on projects, related to how profitable they are, and how much they do to promote government goals of a shift to a cleaner energy infrastructure.