Combining ODA, CDM for mutual aid

Yuichi Suzuki / Yomiuri Shimbun Staff Writer

Against the backdrop of China's acceptance of greenhouse gas emissions trading involving Japan's official development assistance (ODA), yen loans to China are to be terminated as of the end of fiscal 2007.
China had opposed the idea, saying that if the country allows the Clean Development Mechanism (CDM) to be applied to ODA projects, then use of ODA funds will be limited to environmental projects, and this could reduce the money available for roads and bridges.
Under the CDM, industrialized countries are able to reach emission-trading agreements whereby they would offset the reduction targets they have set by buying some of the carbon dioxide emission reductions achieved by developing countries.
With the end of new yen loans, China will have no reason to object to applying the CDM scheme to ODA projects.
Instead, China will have a good opportunity to demonstrate the country is aggressively combating global warming because the amount of greenhouse gas emissions reduction is to be officially announced with specific figures, a senior Foreign Ministry official said.
Ahead of the 2008 Beijing Olympic Games, China also will be able to deflect global criticism as it has been tarred as a developing nation with little regard for environmental protection.
Meanwhile, the Japanese government considers it a matter of some urgency for the country to come up with a CO2 emissions reduction goal under the Kyoto Protocol framework.
Wednesday's broad agreement reached by the two governments on applying the the CDM scheme to ODA projects is to be applied to reductions achieved through yen loan projects and the Japanese government and companies therefore are expected to have preferential rights to purchase the emission reductions from China.
Analysts said the deal would be a favorable one also for Japan.
The Japanese government is considering using a special account for energy measures to purchase the emission reductions.
However, some in the government and the ruling parties remain critical. "It will become double assistance to China if Japan purchases the emission reductions from the country to which Japan provided ODA," a former cabinet minister said.
The Japanese government as well as the nation's industrial community must continue doing their best to cut domestic greenhouse gas emissions to achieve the goal set under the Kyoto Protocol without undue reliance on the recently approved arrangement.
(Jan. 4, 2008)