Japan's Sumitomo Mitsui Bank said Wednesday it will tie up with the Bank of Brazil to secure credits for Japanese firms in cutting greenhouse gases under the Kyoto Protocol.
Sumitomo Mitsui's Brazilian subsidiary and Brazil's central bank plan to jointly finance Brazilian environmental projects in which Japanese firms would participate, the Japanese bank's spokesman said.
The Kyoto Protocol mandates cuts in greenhouse gas by developed countries in a bid to halt global warming but rich countries can also earn credits by helping developing nations cut back on emissions — often a more cost-effective option.
"Usually many Japanese firms look towards India, our closer neighbor, to buy emission credits but we decided this time to look at the other end of the world," said the spokesman.
"Brazil also has many small projects such as setting up methane-burning systems in (pig farms) which we can offer to smaller Japanese firms that don't emit as much greenhouse gas as large companies do," the spokesman added.
The Sumitomo Mitsui Financial Group last year started a project to earn greenhouse gas emission rights by collecting methane gas generated at Chinese coal mines and using it to produce electricity.
The Kyoto treaty requires Japan to cut greenhouse gas emissions six percent by 2012 from 1990 levels — a goal which looks increasingly difficult to meet after a rebound in Japan's economy.
The United States and Australia have boycotted the Kyoto Protocol, which is named after Japan's former capital, saying it is unfair because it makes no demands of fast-growing developing countries such as China and India.
The United States is the world's largest source of greenhouse gas, emitting 36.1 percent of the world's total in 1990.
