Japan, China to Hold Climate Talks to Seek Projects

By Shigeru Sato and Yuji Okada

Sept. 12 (Bloomberg) -- Japan and China, Asia's two biggest oil consumers, will hold a third round of talks this year to promote clean-energy joint ventures, like the project agreed with China Huaneng Group today, Japan's trade minister said.

China's biggest power company and Japanese utility Chugoku Electric Power Co. signed an agreement for a project to reduce emissions at a coal-fired Chinese power plant, Chugoku Electric said in a statement in Tokyo today.

China is switching to alternative energy sources amid soaring oil prices and increasing concerns about pollution. Japan wants to boost investment in emissions-reduction projects, in part to gain United Nations emissions credits to achieve a target set under the 1997 Kyoto Protocol. The collaboration reflects improved diplomatic ties that frayed under former Japanese Prime Minister Junichiro Koizumi, who left office in 2006.

``Japan and China should deepen climate talks for cooperation while relations between the two countries, which became sour a couple of years ago, are good,'' Trade Minister Toshihiro Nikai told reporters in Tokyo.

This year's forum will follow a meeting in Beijing last year and another in Tokyo in 2006, Nikai said.

Under the agreement signed today, Chugoku Electric and its Japanese partners will help Huaneng upgrade a 300-megawatt coal- fired plant in Hebei Province. Proposed retrofitting work would help Huaneng cut annual emissions of carbon dioxide by as much as 90,000 tons, the Japanese utility said.

``Japan's government wants to support this project,'' Nikai said. ``The government talks apparently have helped increase joint projects by Japan and China.''

Under the UN Clean Development Mechanism, polluters in developed nations can buy credits from projects that reduce greenhouse gases in poorer countries to offset their own emissions. The credits are tradable in Europe, while Japan is set to start a market for them this year.

Japan emitted 6.2 percent more greenhouse gases in the year ended March 2007 than in 1990. Under the Kyoto climate-change pact, the country has pledged to cut emissions by 6 percent from the 1990 level by the end of 2012.

To contact the reporters on this story: Shigeru Sato in Tokyo at ssato10@bloomberg.net; Yuji Okada in Tokyo at yokada6@bloomberg.net.