Insurance giant American International Group (AIG) has announced funding for environmentally friendly projects that would offset the equivalent of all the greenhouse gases the company produced in 2006.

The projects, which include reforestation, the use of waste gas for lighting and cooking, and establishing more efficient ways of using water, will take place in the US and China, and AIG will provide $4 million of funding.

In a statement released this week, New York-based AIG, which employs around 200 people at its Bermuda offices, said that completing the projects would generate more than 620,000 tonnes of carbon dioxide offset credits, an amount that represents all of the greenhouse gas emissions attributable to AIG's global operations in 2006 as determined by its global greenhouse gas emissions inventory. The credits will then be retired as part of the company's ongoing environmental strategy.

"These projects reaffirm our commitment to an environmental plan that includes mitigating the greenhouse gas impact of our global business operations through energy efficiency and internal measures, the purchase of renewable energy, and the funding of offset projects," said AIG president and chief executive officer Martin Sullivan. "We're extremely proud that these efforts are based in both China, the country of AIG's origin, and the United States, where we are headquartered today."

The portfolio of agricultural projects in China, which were originally announced in October 2007, are located in the Xinjiang and Sichuan provinces. The China projects are being developed by US-based Environmental Defence Fund and will be supported and assessed by Boston-based non-profit organisation EcoLogic. The offsets will be registered and retired in the China Beijing Equity Exchange.

Among the most notable benefits, the China projects will:

• Allow crops to be grown with lower consumption of water and fossil fuels.

• Promote more efficient use of nitrogen fertilizers.

• Produce biogas from human and agricultural wastes that will be used for cooking and lighting.

• Improve water management in rice farming and production.

• Help retain water, control dust and reduce soil erosion through trees planted in desert lands.

"The Xinjiang and Sichuan projects contribute to sustainable solutions that will benefit the people of China," said Daniel Dudek, chief economist for Environmental Defence Fund. "We're extremely pleased to be partnering with AIG on efforts focused on improving the quality of life in rural parts of the country."

In the US, a portfolio of three projects will focus on reforestation and ecosystem enhancement.

• A project funded through Equator Environmental, LLC, will result in marginal farmlands in North Dakota, South Dakota and Montana being converted back to native grasslands. This effort will be registered and offsets retired in the Environmental Resources Trust, Inc.

• A project funded through Trust for Public Land will result in the reforestation of marginal cropland in the Mississippi River delta region of Louisiana. This effort will also be registered and retired in the GHG Registry.

• A project funded through The Conservation Fund will result in improved management of California harvested timberlands designed to produce increased standing volume of biomass fuel. This effort will be registered in the California Climate Change Action Registry and retired in the GHG Registry.