Aug. 16. 2005
Marubeni would like to announce that an agreement on a Clean Development Mechanism (CDM) project with Zhejiang Juhua Co., Ltd. (hereafter, JH), a chemical products manufacturer of Zhejiang Province, China, has been signed jointly with JGC Corporation and Daioh Construction Co., Ltd. This project is part of efforts to reduce global greenhouse gas emissions and involves Japan being the investing country and China the host country.
This project is the first CDM project developed and realized in China by Japanese firms and is one of the world’s largest CDM projects in terms of the amount of greenhouse gas emission reduction.
1. Overview of the Project
This CDM project involves emissions credits being acquired through recovery and decomposition of HFC23, global greenhouse gas, emitted at JH’s HCFC production plant in Quzhou City, Zhejiang Province, China (hereafter, the JH CDM Project). This will be conducted by JMD Greenhouse-Gas Reduction Co., Ltd. (hereafter, JMD; see Note 1), the joint venture between Marubeni, JGC and Daioh Construction, jointly with JH. JMD and JH signed the CDM project agreement in Hangzhou City, Zhejiang Province, China on August 11.
Considering HFC23 has 11,700 times the global warming potential of carbon dioxide, the JH CDM Project expects to achieve vast reductions in greenhouse gases of the world’s largest scale equivalent to about 40 million tons of CO2.
2. Scheme of the JH CDM Project
In the JH CDM Project, JMD will provide JH with HFC23 decomposition technology and finance funds for construction of decomposition facilities, while JH will implement the decomposition project. JMD will provide all emissions credits obtained from this decomposition project to users of emissions credits in Japan, mainly Marubeni (see Note 2 on Scheme of JH CDM Project).
Furthermore, the majority of profits earned in the JH CDM Project are scheduled to be returned to China through the Chinese Government for such projects as those involving improvement of the environment.
3. Significance of the JH CDM Project and Future Schedule
In the Kyoto Protocol adopted in 1997, Japan committed itself to reducing greenhouse gas emissions by 6% compared to the level in 1990 over the five-year period from 2008 through 2012 (first commitment period). To achieve this commitment, Japan has been estimated to require a reduction of 12% or more by 2010.
However, emission reductions would be difficult in Japan considering that thorough energy-saving measures are already in place. Thus, Japan is faced with the challenge of acquiring several tens of millions of tons per year of emissions credits through such steps as implementing CDM projects with developing nations.
On the other hand, the emissions credits acquired in the JH CDM Project considerably surpass the emissions credits earned through other CDM projects implemented to date and thus are expected to contribute greatly toward achieving Japan’s target greenhouse gas emission reductions set in the Kyoto Protocol. Moreover, the JH CDM Project is viewed to also hold extreme significance in that it will be the first CDM project realized with China, a strong prospective host country for CDM projects, and Japan.
The JH CDM Project must obtain the approval of both the Japanese and Chinese Governments and undergo examination and registration by the UN before it can commence construction of facilities around the end of this year. Decomposition of HFC23 is set to begin in the first half of 2007.
4. Marubeni’s Efforts toward Greenhouse Gas Emission Reduction
Marubeni inaugurated the Environmental Business Promotion Committee in fiscal 2004 and established the CO2 Emissions Credit Subcommittee as a subcommittee that specializes in studying the emissions credits business. In addition, the Emissions Credit Business Team was newly set up in April 2005 to exclusively handle emissions credits. Marubeni aims to launch a “one-stop-shop” type of business for emissions credits.
The Plant, Power & Infrastructure Projects Division responsible for this project development has been promoting renewable energy business projects (geothermal and wind power generation businesses) since the 1990s and started conducting electric power consolidation business (power and green certificates trading business) in the UK. Furthermore, in addition to the JH CDM Project, the Division is advancing other various types of CDM/JI projects. Specifically, projects being promoted include wind power generation in South Korea and reduction of methane gas in coalmines in Central Asia. Further, development of power generation, city gas and regional general development businesses will be considered in line with the commitment to greenhouse gas reductions.
Marubeni intends to proactively develop the emissions credits business by utilizing its general trading firm functions in collaboration with the division responsible for development of the CDM/JI projects and the Emissions Credit Business Team.
[ Overview of JMD Greenhouse-Gas Reduction Co., Ltd.]