Nippon Steel Corp. and Mitsubishi Corp. will undertake the world's biggest carbon trading transaction in collaboration with a major Chinese chemical firm beginning in 2007, the two Japanese firms said Thursday.
Dongyue Chemical, China's largest chlorofluorocarbon producer, has applied to the Chinese government to cut its emissions of HFC23 gas, a byproduct of CFC production, and sell the reductions as greenhouse gas emission rights equivalent to an annual 10 million tons of carbon dioxide -- the largest-ever carbon trading transaction -- to Japanese firms, the two said.
Under the 1997 Kyoto Protocol's Clean Development Mechanism, companies in developed countries can obtain carbon credits in exchange for helping developing nations reduce greenhouse gas emissions.
Nippon Steel and Mitsubishi said the envisaged reduction will involve a plant that can break down HFC23 gas, which is designated by the protocol as a powerful heat-trapping gas.
The plant, which is slated to go online in mid-2007, will cut emissions of the gas by the equivalent of 55 million tons of carbon dioxide by the end of 2012.
Nippon Steel will offer technological support to Dongyue, while Mitsubishi will broker the transaction.
JGC Corp., Marubeni Corp. and Daioh Construction Co. announced in August plans to launch a similar business also in China.