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Japan Inc salivates over prospect of $3 trillion Asian eco-market

Major Japanese construction company Shimizu is working to install underground geothermal heat-pump systems in the Mongolian capital of Ulan Bator to ease air pollution.

TOKYO -- Backed by subsidies from their government, Japanese companies are pitching their advanced environmental technologies in emerging Asia, where economic expansion and population growth are sharply boosting demand for all things green.

     The overseas push comes as Japan Inc. tries to create a mechanism under which the country earns emissions credits for helping developing nations address environmental problems. Tokyo hopes that by supporting corporate efforts to introduce their products and services abroad, not only will the credit system will have a better chance of taking root, but Japanese companies will also gain better access to a market their country's trade ministry projects will be worth roughly $3 trillion by 2030.

Power merchants

In the lush, green highlands of the Sagaing region of northwestern Myanmar, rice paddies stretch far into the distance. The area may be picturesque, but it is also one of the country's poorest, with many local residents still dependent on candles for lighting.

     In this remote corner of Myanmar, Tokyo-based Seabell International, a maker of tiny hydropower turbines, will this spring embark on a project to supply electricity to a rural village.

     In autumn 2012, Akira Hidesawa of Seabell International visited Myanmar's capital of Naypyitaw at the request of the southeast Asian country. During the visit, Deputy Minister of Agriculture and Irrigation Khin Zaw asked Hidesawa to help the country build up its energy infrastructure, telling him there was no time to lose because Myanmar was in a hurry to develop its economy.

     Myanmar is an agrarian nation crisscrossed with irrigation channels, which is why the government targeted Seabell. While micro-hydro turbine systems tend to generate power by capturing the energy of falling water, Seabell's generators tap the power of streams on flat land and thus can be installed even in irrigation canals. Seabell is working with the government of Myanmar to set up its generators in irrigation systems in four regions, including Sagaing, by the end of this year, with plans to supply electricity to nearby farming villages.

     It will not be cheap, however. It costs roughly 10 million yen ($97,000) to install one generator -- a steep price for the cash-strapped government of Myanmar. But with an eye toward the emissions-credit scheme and promoting Japanese business overseas, Tokyo will offset some of those costs with subsidies to enable the plan to move forward. The opportunities are tantalizing, especially given the Japanese government forecast that Asia's environment market will jump 370% from 2005 to about $3 trillion in 2030.

     Seabell is receiving Japanese government assistance for the power project, which the company says could see 3,000 to 4,000 generators installed across Myanmar. The two governments will likely agree to introduce the so-called joint credit mechanism soon.

     "We will gain experience in Myanmar," said a Seabell official. "We aim to promote our products in other less-developed countries in Southeast Asia, such as Laos and Cambodia, where they are also rushing to supply electricity to as many parts of their countries as possible."

Bringing the heat    

Thousands of kilometers to north, major Japanese construction company Shimizu is working to fight air pollution in Mongolia. In the capital city of Ulan Bator, the temperature plunges as low as minus 40 C in winter. The skies there are often blackened with dust, and some experts say the city is worse than Beijing when it comes to PM2.5, the ultrafine particulate matter considered extremely hazardous to human health. A big part of the problem, they say, is all the coal being burned in the yurts clustered in the area north of the city.

     To help ease this problem, Shimizu is working to set up geothermal heat-pump systems through the emissions-credit mechanism. The plan calls for establishing a network of underground pipes that will supply heated water to public building and other facilities. The aim is to reduce the dependence on coal-heated water boilers. A Mongolian energy official said the country is moving to introduce a feed-in tariff system to promote the use of geothermal energy.

     Japan faces some hurdles in getting the credit system to succeed, mainly because only a handful of advanced economies, including the U.S. and some European countries, have signed on. Tokyo is trying to persuade more governments to participate by emphasizing how far the system would go toward reducing their emissions.

     "The challenge is whether it will be approved as an international framework to replace the Kyoto Protocol," said Akihiro Sawa, head of the International Environmental Economic Institute.

(Nikkei)

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