Australia is to help China develop what could be the world's largest solar city.
It will also fund the trial of an Australian system to monitor the health of three rivers - the Yellow, Pearl and Da Ling - in China.
Prime Minister Kevin Rudd revealed details of the projects while visiting a power plant on the outskirts of Beijing on Friday.
The coal-powered plant is the site of a pilot post-combustion carbon capture project, a joint initiative of the CSIRO, the China Huaneng Group and China's Thermal Power Research Institute.
Australia will fund a feasibility study into the development of the largest solar-powered city in the world at Weihai, in north-east China.
It will also fund a pilot project of Australian carbon-measuring systems in regional China.
Mr Rudd said there would also be a new ministerial level dialogue between the two countries that will provide high-level oversight to clean energy technologies, climate change science, adaptation and building the capacity of China to respond to climate change.
"These practical climate change and water projects are making a small but significant contribution to the Chinese government's efforts to be part of the global solution to climate change," Mr Rudd said.
"If successful, each of these small projects has the potential to be rolled out nationally across China."