A Japanese firm and a Chinese chemical plant have agreed on the world's largest ever greenhouse gas discharge reduction and emission credit purchase deal.
Under the agreement, Japan's JMD Greenhouse Gases Reduction Co., Ltd and the Juhua Co., Ltd based in East China's Zhejiang Province, will establish a Clean Development Mechanism (CDM) project under the Kyoto Protocol to help the state-owned Chinese firm reduce by nearly 40 million tons of its carbon dioxide discharges over seven years.
Under the CDM project, the world's largest by far in terms of the volume of reduced greenhouse gases that are blamed for global warming, the JMD will provide all funding and technologies to decompose HFC23 discharged by a chemical plant owned by Juhua, the largest chemical enterprise in Zhejiang and a key manufacturer of fluorine products in China.
HFC23, or trifluoromethane, is one of the most potent greenhouse gases responsible for climate change through global warming. It has a global warming potential that is 11,700 times that of carbon dioxide. HFCs are among the six greenhouse gases included in the Kyoto Protocol.
In return, the JMD will be able to purchase emission credits at a price of at least 6.5 U.S. dollars per ton, which is equivalent to at least 36.5 million U.S. dollars every year or a total of 255.8 million U.S. dollars for the seven contractual years based on the anticipated annual reduction of more than 5.62 million tons of carbon dioxide.
About 65 percent of the profits to be earned by Juhua will go to the Chinese government.
The JMD can sell the credits to other Japanese users that face serious challenges in meeting the greenhouse gas reduction targets of the Kyoto Protocol.
The Tokyo-based JMD was jointly established by JGC, Marubeni and Daioh and specializes in greenhouse gas reduction trading.
Juhua, a listed company in the Shanghai Stock Exchange in China, mainly manufactures raw materials for HFCs, fluorine resins, fluorine chemicals and other fluorine-related products for the domestic and export market.
The Kyoto Protocol, which took effect in February last year, sets binding targets for industrialized countries on the reduction of greenhouse gas emissions that would lower the risk of global climate change.