a harassed and exhausted negotiator. The syndicate was fragile and he wasn’t in control. On the other side, Mina’s descriptions suggested that Wang was a wily and experienced operator with a number of different options to choose from. The project could be worth a lot of money and other buyers were already circling. On the surface, it looked as though Winchester had a lot more to lose than Wang. I knew that a good Chinese negotiator would sense that and know how to extract maximum value. Finally, Cordelia was lurking unpredictably in the shadows. I knew almost nothing about the carbon industry and had none of the specialist vocabulary even in English, so I felt unsure of myself. When I arrived at the airport with an hour to spare, I found the business lounge and pulled up a computer. I was searching for websites with the technical terms in Chinese when Mina came bounding up behind me. Later she admitted to me that her heart had sunk when she found me there. Winchester had already concluded that I was a halfwit and now she’d seen from my Web search that I didn’t even know the Chinese for ‘carbon credit’. With more than €150 million of carbon hanging by a thread and one last chance to recover it, she knew that her job was on the line.
As the plane flew over Russia and on into the night, I could see from the bundle of papers that Mina had dumped on my lap that IHCF had agreed to buy carbon credits from the chemical factory in Quzhou for a period of five years. At the back of the files, behind bundles of contracts and spreadsheets, I found some background information on the carbon industry. It explained how there was a growing demand for emission allowances because the European Union and Japan had agreed to impose strict limits, or ‘caps’, on big greenhouse gas emitters, including power stations, steelworks, chemical factories and cement plants. If any of the plants failed to meet the cap, they had to go into the carbon market and buy emission allowances, which were expensive. The system was known as cap-and-trade and had some similarities to the system that had been used in the United States to cut back on gases that cause acid rain. The idea was to force businesses to pay for emissions they made in order to create an incentive to reduce them. The emission allowances came mainly from the EU and Japanese governments, but the United Nations was also involved and could issue equivalent allowances, called ‘international offsets’ or ‘carbon credits’, from projects that reduced greenhouse gases in developing countries. IHCF intended to buy carbon credits from the chemical factory in China and sell them in the European markets to companies that needed additional allowances in order to meet their caps. From the figures included in the investor proposal, it was clear that carbon trading in Europe had taken off in a big way. In the previous three years, the market in Europe had grown from a few hundred million to around €60 billion.
The documents were full of jargon and acronyms that were difficult to follow but I figured out that the UN could issue carbon credits under something called the Clean Development Mechanism, or CDM. Over the past decades, emissions had soared in China, India, Brazil and parts of Africa as these countries began to industrialize. The CDM aimed to encourage the use of low-carbon technologies in the developing world by providing an opportunity to make money from the sale of carbon credits. If a project based on low-carbon technology was too expensive and wouldn’t make returns by itself – as was often the case – developers there could apply to the UN to generate credits and boost their profits so they became financially viable.
On the surface, the CDM seemed like an imaginative way to help reduce the carbon footprints of the vast new infrastructures being built in the developing world. It didn’t just apply to chemical plants; cement factories, coal mines, ironworks and steel mills could all apply for credits if they led to lower emissions. The most important area seemed to be the power sector, which was encouraged to move away from coal, but by far the largest number of credits seemed to come from projects aimed at cutting industrial greenhouse gases from chemical plants in China. While I still wasn’t clear about the technical details, it was obvious that IHCF thought they could make a fortune from the deal.
We changed flights in Hong Kong and by late morning, we had arrived in Hangzhou under clear summer skies. Hangzhou was the capital of China for a time during the Song Dynasty and the ancient city lies around the shorelines of a lake immortalized over the centuries for its spectacular natural beauty. As the car sped along the embankments, I could see the peaks of little islands jutting out of the water. In the far distance, the powdery blue silhouette of mountains rose up above the canopy of trees on the opposite bank. Reeds and rushes lined the water’s edge. On the stone-flagged pathways that meandered around the lake, women in high-collared jackets practised tai chi between clumps of rustling bamboo. Sunlight flashed on the ripples that trailed from little wooden boats. Nearby, from the tops of the sloping temple roofs, the faintest trace of smoke drifted up from the incense burners inside. I caught a glimpse of a pagoda rising up through the sandalwood trees on the hill behind the lake and commented to Mina on how beautiful it all was. ‘Too right, mate,’ she said, looking across the water. ‘If I had me swimmies with me, I’d be right in there!’
Just after lunch, we drove over to meet Wang. He was staying near Hangzhou’s main railway station in a hotel owned by the factory. It was one of a string of hotels left over from the days of China’s planned economy, when everything was owned by the state. In those days, everyone belonged to a work unit that provided schools, hospitals, housing and, in this case, even hotels, where the factory managers could stay during the long and tedious meetings with the province’s Chemical Bureau.
Bundles of laundry hung from the upstairs windows of the rows of shabby shops around the station. Long loops of wires sagged between telegraph poles and the narrow streets were congested with traffic. The whole area was dilapidated and the heat was oppressive as we sat in a taxi lined up at some broken traffic lights. On the cracked pavements outside the hotel, hawkers sold bowls of fried bean curd and chives from under sheets of canvas slung between bamboo poles. Inside, there was a wooden counter at the end of a lobby, with a couple of bored receptionists playing games on their mobile phones. On the wall behind them, the name ‘Quintessence Hotel’ stood out in gold letters and a line of clocks told the time in London, Moscow, Sharjah and Beijing. On the end of the counter there was a stack of company brochures that advertised paints, dyes and adhesives, with photographs of the reactor towers in the factory at Quzhou.
We signed a slip of paper and went up to the fourth floor. Next to the elevator there was a little pantry where a girl was asleep over a table with her head cradled in her arms. Enamel mugs were piled up next to a big water boiler that bubbled gently in the corner with hot water to make tea. Down the corridor, the carpets were wrinkled and stained and around the doorways the paint was battered and scratched. Everywhere smelled of mildew. At the end of the hallway there was a sign in English that read ‘Holding Talks Room’. As we approached the door, Mina held back to let me go in first, but I took her arm and gently pushed her forward. It was important that she lead the discussions. I still knew almost nothing about the business, so I couldn’t negotiate with Wang. I planned to spend most of the first day invisible and listening.
Inside we found the familiar scene of a big circular table in the middle of the room with a bunch of plastic flowers in a dusty glass vase at the centre. The wallpaper was peeling away at the bottom of the walls and a row of badly fitting windows looked out onto a schoolyard below. The shouts and cries of a children’s playground rose up through the air. In the corner, a broken metal coatrack leaned against a huge air conditioner that had a notice pasted across that said ‘Under Maintenance’. The air was hot and damp.
Wang was waiting inside with a couple of assistants. He was plumper than I had imagined, quite short and balding. He leaped to his feet as we walked in and was obviously pleased to see Mina. He didn’t bother to ask who I was; I guessed that the team from IHCF had changed so much that his curiosity wasn’t aroused by just one more new face.
For the next five hours, I sat and listened, occasionally helping to straighten out the odd confusion with Wang’s translator. The table was big enough to seat at least fifteen people, so there was plenty of space; I sat away from Wang, near one of his assistants, who chain-smoked his way through the afternoon. Mina and I had agreed beforehand that she should run through the contract, clause by clause. That way we might nail down
