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Japan's CDM Rush to BRIC Countries
[Commentary] Most greenhouse gas-reduction projects now go to China, India and Brazil
Hisane Masaki (hmasaki)     Print Article 
Published 2007-03-30 05:16 (KST)   
Pressure on Japan to reach its tough greenhouse gas reduction target under the Kyoto Protocol has spurred the nation's firms to implement Clean Development Mechanism (CDM) projects, with a particular focus on three of the four emerging economies known collectively as BRIC -- Brazil, Russia, India and China.

Japan, hamstrung by its own success in increasing efficiency, is to rely on credits gained from providing technology to fast-growing economies.

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Of the CDM projects approved by the Japanese government since the beginning of this year, 80 percent are in China, India and Brazil, highlighting the group's high growth rate and its need to improve efficiency rapidly.

The BRIC countries came to prominence in a 2003 report from Goldman Sachs, which made a series of radical predictions, including a statement that China would be the world셲 largest economy by the middle of the century.

Under the Kyoto Protocol, industrialized countries were required to reduce their emissions of carbon dioxide and other greenhouse gases from 1990 levels during the first commitment period of 2008-12. The protocol sets separate gas reduction targets for individual industrialized countries -- 6 percent in Japan's case.

Despite its commitment to the protocol, though, Japan's emissions have actually risen by about 8 percent from 1990. As a result, the country is forced to use Kyoto-mandated schemes -- including CDM -- which allow carbon emissions reductions in other countries to count towards its target.

Many Japanese companies see not only a need to hedge against future risks but a new -- and potentially lucrative -- business opportunity in emissions reductions, since demand for the right to emit greenhouse gases is growing.

Japan began to approve CDM and Joint Implementation (JI) projects at the end of 2002. As of March 8 this year, a total of 128 projects, most of them CDM, had been approved.

The number of approved projects began to rise after the Kyoto Protocol took effect in February 2005. Of a total of 93 CDM and JI projects approved by the Japanese government in about 14 months since the beginning of 2006, 53 are in China, India and Brazil, with 26 in China, 14 in India and 13 in Brazil.

Led by growth in CDM projects in three of the BRIC powers, the total number of CDM and JI projects approved by the Japanese government has risen sharply in recent months.

From the beginning of this year to March 8 alone, 30 CDM and JI projects were approved, compared to last year's total of 63. Of the 30 new projects, 24, or 80 percent, are in China, India and Brazil, with five in China, 12 in India and seven in Brazil.

Meanwhile, the Japanese government started buying emissions credits last summer through the government-affiliated New Energy and Industrial Technology Development Organization (NEDO).

The government earmarked 5.4 billion yen (US$45.9 million) in the current budget to purchase credits.

In addition, the government-affiliated Japan Bank for International Cooperation (JBIC), one of the world's biggest international financial institutions, is now focusing on expanding its environment-related business activities.

JBIC has signed CDM partnership agreements with the governments and organizations of many developing countries, including El Salvador, Sri Lanka, Malaysia, Thailand, Indonesia and the Philippines, as well as China, India and Brazil.

The CDM partnership agreements are intended to help Japanese firms participate in CDM projects and thereby acquire emissions rights for greenhouse gases.

CDM is a win-win mechanism for both developed and developing countries. Under CDM, "credits" won in developed nations can be counted as cuts in emissions for the investor country.

Meanwhile, developing nations that take part in CDM projects benefit by receiving technology transfers from their developed partners while also seeing less pollution emitted.

Ironically, Japan has been forced into these mechanisms because of its efficiency. The country, which has virtually no natural resources, has made strenuous energy-saving efforts and technological innovations since the two oil crises of the 1970s and is now said to be the most energy-efficient in the industrialized world.

As such, though, Japan can now export technology to other states, providing the means to effect its CDM projects, assistance which the fast-growing economies certainly need.

Greenhouse gases from China, India and Brazil are rising in line with the rapid pace of their high-flying economies. China is the world's second-biggest carbon dioxide emitter, after the U.S. Russia and India are the world's third- and fifth-largest, respectively. Japan is the world셲 fourth-largest CO2 emitter.

China
Mitsubishi Corp's waste pressure-recovery and 30 MW power project at a steel mill in Qian'an in the province of Hebei will reduce greenhouse gas emissions by 145,000 tonnes per year. Mitsubishi will acquire emissions credits generated from the project for a 10-year period starting in June 2007.

Nippon Steel Corp's 25 MW power project using a waste heat recovery system at a steel plant in Jinan, the capital city of Shandong province, will reduce CO2 emissions by 159,000 tonnes per year. The top Japanese steelmaker will acquire emissions rights generated from the project over a 10-year period starting in April 2007.

Marubeni Corp's 6 MW power project using recovered waste heat at a cement plant in Zibo City in Shandong province will reduce CO2 emissions by 34,000 tons per year. Marubeni will acquire emissions rights generated from the project over a seven-year period starting in May 2007.

Mitsui & Co.'s 12.9 MW hydroelectric power project in China's Tibet Autonomous Region will reduce greenhouse gas emissions by 56,000 tons CO2 per year. Mitsui will acquire emissions credits generated from the project over a seven-year period starting this month.

Sumitomo Corp.'s 32 MW hydroelectric power project in Gansu province will reduce CO2 emissions by 112,000 tons per year. Sumitomo will acquire emission credits over a seven-year period starting in April 2007.

India
Mitsubishi UFJ Securities Co.'s 5 MW biomass power project at a wood-processing facility in the northern Indian state of Haryana will reduce CO2 emissions by 29,000 tons per year. Mitsubishi UFJ Securities will receive credits from the project over a seven-year period starting in September 2007.

Japan Carbon Finance's five wind power projects in India will reduce greenhouse gas emissions by a total of 428,000 tons per year. Three of the five projects are in the southern Indian state of Karnataka and the other two in the northern state of Rajasthan. Japan Carbon Finance will acquire emissions credits generated from the five projects over a 10-year period starting in April 2007.

JP Steel Plantech Co.'s 110 MW power project using waste heat at a steel mill in the Indian province of Orissa will reduce greenhouse gas emissions by 557,000 tonnes CO2 per year. The Japanese firm began receiving emissions rights generated from the project in January 2007 and will continue for 10 years.

Ricoh Co.'s five wind power projects in India will reduce greenhouse gas emissions by a combined 184,000 tons per year. Ricoh will acquire emissions credits over a 10-year period, although the starting date varies according to the projects.

Brazil
Chugoku Electric Power Co.'s bagasse co-generation project at two sugar plants in the southeastern Brazian province of Minas Gerais will reduce greenhouse gas emissions by 30,000 tons per year. Chugoku Electric Power will acquire emission credits generated from the project for a seven-year period starting in June 2007.

Chugoku Electric Power's six other CDM projects were approved earlier this year. All these projects have already been registered with the U.N. CDM Executive Board. The six projects will reduce greenhouse gas emissions by a combined 397,000 tons per year.

One of the six is a biomass power project in the State of Rio Grande do Sul, while the other five are hydropower projects -- one each in the state of Rio Grande do Sul and the state of Mato Grosso and three in the state of Minas Gerais.

Chugoku Electric Power will acquire emissions credits over a seven-year period, although the starting date varies according to the projects.
Hisane Masaki is a Tokyo-based journalist, commentator and scholar on international politics and economy. This article was originally published in Global Carbon Emissions Monitor (GCEM), a subscriber-only magazine published by UK-based NewsBase Ltd.

©2007 OhmyNews
Other articles by reporter Hisane Masaki

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