Hungary signs agreement on carbon credit sale to Japan

Dec 18, 2007, 11:17 GMT

Budapest - Hungary's Environment Minister Gabor Fodor on Tuesday signed a framework agreement to sell carbon credits to Japan, the ministry said Tuesday.

Fodor and Japanese Ambassador to Hungary Shinichi Nabekura signed the agreement, which appears to contain scant details and be non-binding.

'The statement of intent lays down the main framework; discussions on the quantity and the price will continue in 2008,' the ministry said in a statement.

Since the Kyoto Protocol came into force in 2005, nations have been able to buy carbon credits to allow them to meet their emissions' targets.

This is the first time Japan has agreed to buy credits and also the first time Hungary has agreed to sell them.

Without the credit purchase, Japan would fail to fulfil its Kyoto obligation to cut six per cent from its 1990 levels of carbon dioxide and other greenhouse gas emissions by 2012.

Japan, which the World Bank ranks as the third-largest economy in the world behind the US and China, saw its emissions actually rise 7.8 per cent in 2005 from 1990 levels.

Despite signing the agreement, Hungary said it would consider talks with other parties.

'The signature of this agreement does not bind Hungary to the Japanese government - we are open to talks with other states or companies,' the ministry said.

Former communist countries such as Hungary have credits to spare as their emissions have dropped significantly since state-owned heavy industries closed with the break up of the Soviet Union between 1989 and 1991.

Hungary is also committed to reducing emissions by 6 per cent from its baseline.

However, as an economy in transition, it was free to choose its baseline and selected the period between 1985 and 1987, when its energy consumption was at a high.

By 1994, emissions had dropped by 18 per cent compared to the baseline and have not risen significantly since.

Critics of trading carbon credits say the system does not bring about any concrete reduction in emissions and fails to emphasize the need to move away from fossil fuels to renewable energy sources.