The Japanese steel industry plans to clear its Kyoto Protocol obligations by acquiring emissions credits in exchange for providing China with technological know-how.

The Japan Iron and Steel Federation (JISF) said it was directly approached by the China Iron and Steel Association for technical assistance and decided Thursday, at a meeting in Tokyo of its steering committee, to pursue the matter.

China's steel industry is far less energy efficient than Japan's, using 1.5 times more power to make the same amount of steel. At the same time, it spews out far more pollution than factories in Japan.

Because China is still classed as a developing country, it is not bound by the Kyoto Protocol that sets greenhouse gas emissions reduction targets.

But with its rapidly developing economy, China faces staggering rising costs for resources and air pollution that its industries generate.

The tech-transfer could be highly beneficial for Japan because it will allow the JISF to apply for the Clean Development Mechanism (CDM), offered under the Kyoto Protocol, which took effect Feb. 16.

The CDM allows industrialized countries to earn emission credits for their investments in emission-reducing projects in developing countries.

While Japan is considered a technological forerunner when it comes to energy-conservation, it still lags in its efforts to meet its Kyoto Protocol goals.

The steel industry, for example, has set a target of cutting greenhouse gas emissions by 10 percent.

But in fiscal 2003, the industry as a whole only managed to reduce greenhouse gas emissions by 6.4 percent, compared to fiscal 1990-even though it had invested an average of 120 billion yen annually over the past 15 years on environmental projects.

The industry has introduced a number of energy conservation projects to recycle heat generated from blast furnaces for use in power generation, as well as systems that detoxify sulfur dioxides that are created while processing raw ingredients.

As part of its China effort, the JISF will showcase specific technologies and measures at a symposium to be held later this year. It will also offer guidance to companies that show interest in implementing them.

The Chinese companies will be responsible for the capital investment for facilities and setup costs.

The CDM is one of the three international ``flexibility'' mechanisms included in the Kyoto Protocol that make it easier and more cost-effective for industrialized nations to meet the greenhouse gas emission reduction targets.

At the same time, the mechanisms offer developing countries more opportunities to acquire funds and technology.

The two other Kyoto mechanisms are: Joint Implementation, which permits industrialized countries to cooperatively implement emissions reduction projects and receive emission credits for results; and International Emissions Trading, which allows industrialized countries to meet their commitments by selling and purchasing emissions credits among one another.

Tokyo has so far approved 15 CDM projects.

Kajima Corp., for example, received approval for its bio-gas collection and electricity-generation project at a waste-processing plant in Malaysia last month.

Tokyo Electric Power Co. has also received approval for a project in Chile, and Sumitomo Corp. for a project in India.

All these projects are corporate-based. The JISF project with China will be the first industry-wide effort.

With the entire steel industry of Japan pledging technical support, considerable reductions in greenhouse gas emissions in China can be expected.

But how much of the measurable amount will be turned over as credit to Japan will depend on upcoming negotiations.

According to Nippon Keidanren (Japan Business Federation), the total figure for greenhouse gas emissions (converted to carbon dioxide) in Japan for fiscal 2003 was about 1.3 billion tons, with the steel industry accounting for just more than 10 percent.

On the other hand, China was responsible for emitting about 3 billion tons in total for 2000-amounting to 13 percent of the world total.

Officials could not offer figures for just the Chinese steel industry's contribution to total emissions. However, considering that crude ore processing in China has doubled in the past four years, and the total processing volume for last year was 2.4 times the amount processed in Japan, the total amount in credits could be considerable.(IHT/Asahi: February 26,2005)