Japan to Buy Excess Czech Emissions Allowance
Date: 24-Sep-08
Country: JAPAN/CZECH
Japan, the world's fifth-biggest emitter, is seeking emissions credits overseas after lagging behind in its obligation to cut emissions to 1.19 billion tonnes in carbon dioxide equivalent by 2012, or 6 percent below 1990 levels. It emitted 1.340 billion tonnes in the year ended in March 2007.
The deal could be lucrative for the Czech Republic as Tokyo needs to buy 100 million tonnes of credits between 2008 and 2012, worth around US$3.7 billion based on current European carbon emission futures prices of 25.2 euros (US$36.55) a tonne.
The memorandum of understanding, signed in Prague, is the third such agreement for the Japanese government following the similar accords with Hungary and Ukraine.
Japan, which accounted for 4 percent of the world's carbon dioxide emissions in 2005, said it and the Czech Republic would cooperate in the UN's Joint Implementation (JI) programme and Green Investment Scheme (GIS) but the agreement did not state how many tonnes of carbon dioxide credits the Japanese government will buy.
"It is impossible to say at the moment how many (credits) Japan will buy because it, along with the price of each sold unit, will be a subject of further negotiations," the Czech Environment Ministry said in a statement.
The Czech Republic aims to sell a total of 100 million pollution rights by 2012 which the ministry said could fetch 10 billion crown (US$611.2 million)-25 billion crowns.
The Kyoto Protocol binds some 37 industrialised nations to limits on their greenhouse gas emissions by 2012, but allows governments to sell surplus emissions rights, known as Assigned Amount Units (AAUs), to other countries that overshoot their emissions targets, including Japan.
Japan is in talks with countries including Poland and Russia on similar deals.
Former communist countries in Europe are well within their targets to cut emissions by 8 percent compared to 1990 levels, because of the collapse of their smokestack industries and carbon emissions in the 1990s.
Under the UN-run Kyoto Protocol on global warming, the JI programme allows rich countries to meet emissions caps by investing in emissions-cutting projects in other developed nations.
The Green Investment Scheme was created to force governments selling emissions rights to invest the revenue in clean energy projects.
(Reporting by Osamu Tsukimori in Tokyo and Jana Mlcochova in Prague)
