They will take advantage of an arrangement under the Kyoto Protocol, a UN pact on global warming, that accords emissions rights to countries and firms in return for their help in reducing greenhouse gases in developing countries.

The fund will be established on December 1 with these companies and two state-run financial institutions investing some 140 million dollars, the major newspaper Mainichi Shimbun said.

The companies include Toyota Motor Corp., Sony Corp., Tokyo Electric Power Co., Mitsubishi Corp. and other giants in the power utility, petroleum, machinery, steel, cement, gas and trading sectors, the report said.

The Japan Bank for International Cooperation and the Development Bank of Japan are also partners in the fund.

The emission rights, obtained under the Kyoto Protocol arrangement known as the Clean Development Mechanism, are allotted to the fund partners in proportion to the amounts of their investments, Mainichi said.

Four projects have been initially studied by the fund, the report said.

They include construction of plants for wind power generation in the Middle East and Africa, construction of facilities to collect and reuse methane gas from garbage dumps in Central and South Americas, and a project to collect and reuse methane gas from coal mines in Asia.

About 50 inquiries have been made from developing countries about the fund, Mainichi added.

The fund, which will expire in 2014, aims to gain rights to 15 million tonnes of carbon dioxide, which accounted for 1.1 percent of domestic emissions in Japan in 2003, the report said.

Another daily said that trading house Sumitomo Corp. and two other Japanese firms planned to earn greenhouse gas emissions rights by collecting methane gas generated at Chinese coal mines and using it to produce electricity.

Sumitomo will work on the project with Chugoku Electric Power Co. and Niigata Power Systems Co., a subsidiary of Ishikawajima-Harima Heavy Industries Co., the leading business newspaper Nihon Keizai reported.

They are expected to become the first Japanese companies to launch a programme in China under the Clean Development Mechanism, the report said.

More Japanese firms are likely to follow in their footsteps and pursue similar projects in China, which produces the largest amount of global warming gases after the United States, the report said.

The project is expected to begin after it wins approval from the United Nations and the governments of Japan and China.

Any reductions that are achieved will count toward helping Japan meet its obligation to slash emissions under the Kyoto Protocol.

The 1997 UN protocol requires industrialised countries -- with the exception of the United States which alone accounted for 36.1 percent of greenhouse emissions in 1990 -- to cut their emissions of greenhouse gases to below 1990 levels by 2008-2012.

The United States has refused to ratify the protocol. China is a Kyoto member but as a developing country does not have to meet specific targets for cutting emissions.

Japan must make a six percent reduction in such emissions, which accounted for some 8.5 percent of the global total in 1990.

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