The nation has become the world's largest source of developing-world carbon credits purchased by Western firms, The Wall Street Journal Online reported, citing estimates from the World Bank.

The global market for carbon credits was valued at $21.5 billion in the first three quarters of 2006, roughly double the value during all of 2005, the report said.

China, which ranks behind the U.S. as the world's second-biggest emitter of gases that cause global warming, stands to earn about $1 billion in tax revenue from the trade over the next few years, the Journal reported, citing a spokesman from the World Bank.

China's rise as a leading player in the field has been facilitated by a selective tax and corporate-regulation policy. That policy has drawn fire from critics who say it reflects an attempt to cash on the lucrative new trade, according to the Journal

For example, China has mandated that only companies with majority mainland ownership can own projects generating carbon credits. Additional concerns are that Beijing has effectively imposed minimum prices for carbon credits and that it is using selective tax rates on carbon credits to help channel foreign investment toward projects that are deemed to improve its energy security.

The trade in global carbon credits was took root when industrialized countries sought to cap the amount of carbon dioxide and other gases companies can emit. Capping greenhouse gas emissions was viewed as important in reducing the build-up of gases that lead to global warming.