China has signed its first agreement to sell greenhouse emission reductions to developed countries under a quota-trading mechanism of the Kyoto Protocol.

The World Bank and the Jincheng Anthracite Coal Group Co Ltd, in North China's Shanxi Province signed the agreement on Wednesday, said the bank's representative office in Beijing yesterday.

The bank signed it on the behalf of the Prototype Carbon Fund (PCF), a group made up of six governments and 17 private companies.

No details were released on how much money was involved in the deal.

In a first for the World Bank, it will act as trustee for the fund.

Under the agreement, the Jincheng company will capture coal mine methane and utilize it for power generation, instead of releasing the gas into the air. Money for adapting the facilities will be provided by PCF.

Methane affects global warming 23 times more than carbon dioxide.

The reduced amount of emissions in the Jincheng coal mine will be counted towards emission reductions from PCF members.

The arrangement is typical under the Clean Development Mechanism (CDM) of the Kyoto Protocol. It allows countries of the Organization of Economic Co-operation and Development (OECD) to fulfill some of their greenhouse gas emission-reduction commitments through supporting projects in the developing world.

For developing countries, they can try to use the Clean Development Mechanism to establish or improve projects for which they otherwise have funding.

Methane, which is released from coal seams during the mining process, causes explosions if it is allowed to build up.

Some Chinese mine operators currently use the cheapest methods to vent gas -- they release it into the atmosphere.

Under the new project, the Jincheng Coal Group will capture methane released by upgrading the mine with several new technologies to improve safety and efficiency. It will recover methane and process it into energy at a nearby power plant.

The project will create 60 new jobs for re-trained miners and additional staff at the power plant.

The project will serve as a model case for further promotion of CDM activities in China, said Sun Cuihua with the climate change office under the National Development and Reform Commission.

Jean-Claude Steffens, who chairs the PCF group, agreed. "I am certain that many other projects, within the PCF and outside, will follow this breakthrough," he said.

The Kyoto Protocol is the 1997 international agreement to limit climate altering greenhouse gas emissions.

To become effective, it needed the support of countries accounting for 55 per cent of emissions worldwide. Russia ratified last month, helping it cross line and ensuring it takes effect in February 2005.