China has dominated as a selling country, so far attracting approved investments to cut emissions through 2012 by some 300 million tonnes -- UN data shows -- worth over 3 billion euros (US$3.90 billion).

It has become a honeypot for investors because some of its carbon credits are achieved at especially low-cost, for example destroying especially potent greenhouse gases which qualify for huge multiples of carbon credits for every tonne of emissions saved.

China has taxed these western investments at up to 65 percent as a way of diverting some cash away from industrial plants into smaller projects, and the long touted carbon-fund could have tens of millions of dollars already.

"It has been approved by the state council and we are coordinating with other authorities to formalise it," said Ju Kuilin, Deputy Director General at the Ministry of Finance's International Cooperation Department.

"By the end of this month or early March we will put it into operation.

"Our guideline for management is based on independence in climate change projects," he added.

He declined to say how much of a pot had built up since the tariffs were brought in last year, and said Beijing was also hoping for contributions from other governnments and international organisations.

Science and Technology Vice-Minister Liu Yanhua said the cash will be handed out in both loans and grants, but regulations might be adjusted after assessing their practical impact.