In the deal, European and Asian companies bound by the UN's Kyoto Protocol to tackle climate change, will pay the Chinese chemical companies to reduce and destroy emissions of HFC23, a heat-trapping gas 11,700 times stronger than carbon dioxide.
The deal will reduce emissions by about 19 million tons of carbon dioxide equivalent annually, according to the World Bank.
About 75 percent of the money to purchase the reductions came from private capital, it said.
Additional participants included entities in World Bank managed funds including the Danish Carbon Fund, the Italian Carbon Fund, Deutsche Bank, Mitsui & Co and two entities of Natsource LLC, which calls itself the world's largest greenhouse gas asset manager.
As a developing country, China, the world's No. 2 producer of greenhouse gases, is not required to reduce emissions of heat trapping gases in the first phase of the international global warming pact the Kyoto Protocol, which runs from 2008 to 2012.
Tuesday's deal was done under Kyoto's Clean Development Mechanism (CDM), which allows allows rich countries to meet some of their greenhouse gas reduction obligations under the Kyoto Protocol by investing in reductions in developing countries.
"The resources came together from lots of different directions. There was pooling and deployment of capital in a large scale which was good to see that the CDM could do that," Jack Cogen, president of New York-based Natsource, said in a telephone interview.
The Chinese government will recoup 65 percent of the money from the deal though taxes on the two chemical companies and use it cut greenhouse gases and expand the use of renewable energy.
Read more: World Bank
Categories: climatechange, globalwarming, greenhousegases