The Australian coal mining companies will supply Tohuku, Japan's fifth largest power utility, with coal as well as emissions allowances gained by reducing gas emissions in Australia.

The deal is a first for Japanese companies in which fuel and emissions rights have been bought in this manner. Details including volume and pricing are still being finalised but the coal companies are believed to have offered to supply 300,000 tonnes of coal a year. Details would be worked out before the start of the sales contract which is April next year.

Powercoal expects to reduce carbon dioxide emissions by about 1.6 million tons a year by collecting methane gas produced through coal mining and other activities.

Centennial Coal plans to reduce CO2 by 25,000 tons a year by planting trees.

At a United Nations climate conference in December 1997, Japan pledged to cut emissions of six greenhouse gases, including CO2, by 6% by the 2008-2012 period from 1990 levels. The country generates 90% of C02 emissions from energy consumption.