By Risa Maeda and Takeshi Yoshiike

TOKYO, Dec 3 (Reuters) - Japan, the world's fifth-biggest polluter, will announce within weeks its first set of deals to buy greenhouse gas emission rights from east European nations, a senior Japanese official said, helping it offset its own emissions surpluses.

While the global credit crunch has reduced the supply of project-based emission offsets under the Kyoto Protocol, a government-level emissions trading scheme under Kyoto allows countries to sign contract for much larger -- and often cheaper -- emissions rights.

"There are several countries with which we almost have a basic agreement. The timing would be within weeks," Yasuhiro Shimizu, executive director at the New Energy and Industrial Technology Development Organisation (NEDO), told Reuters in an interview late on Tuesday.

The agreements would cover the price and volume of offsets to be exchanged, though more talks may be needed on details such as how to monitor the usage of the proceeds to fight global warming, he said.

Japan is at odds with Hungary on the price of one such deal, but others are in the pipeline after talks with about 10 countries over the past two years, Shimizu said.

"If Hungary doesn't change its stance, we are hardly going to make concessions. We would suspend the talks if and when necessary," he said.

NEDO is in charge of buying offsets from abroad and plays a key role in helping Japan meet what looks like an increasingly unlikely emissions-reduction target.

Under the Kyoto pact, Japan aims to cut greenhouse gas emissions to 6 percent below the 1990 level over the five years to March 2013. But they were 8.7 percent above that level in the year ended in March, as voluntary pledges on emissions cuts by major industries had little effect. [ID:nT173861]

BUYERS' MARKET

Tokyo has pledged to buy offsets of 100 million tonnes in carbon dioxide equivalent in the 2008-2012 Kyoto period. In the two years through March NEDO bought the equivalent of 23.1 million tonnes.

It has so far bought offsets under Kyoto's Clean Development Mechanism (CDM) scheme only, which allows rich-nation polluters to fund emission cut projects in developing countries and in exchange receive offsets called CERs.

Another Kyoto scheme called Joint Implementation (JI) allows rich nations to buy offsets from similar projects in former communist countries, while a third allows nations that are well below their targets to sell excess quotas in the form of credits, called AAUs, that are not necessarily related to emissions cuts.

Critics have dubbed this kind of offset credits "hot air" as they are not generated by investment in clean energy and are a cheap way for countries to meet Kyoto commitments.

This has led governments to introduce binding clauses to the deals that force the seller to reinvest the proceeds in low-emissions technologies.

Japan exchanged a memorandum of understanding last December to buy AAUs from Hungary, and it is also in talks with Ukraine, the Czech Republic, Poland, Russia and Latvia, Shimizu said.

"It's basically a buyers' market as there is oversupply," he said. "Ukraine alone has the potential to sell up to 1.2 billion AAUs," he said, referring to an estimate by the World Bank.

But Shimizu said these deals would not keep Japan from buying other project-based offsets under Kyoto.

"We'll keep buying credits from CDM and JI schemes as well, taking into account the balance in the type of offsets," he said.

Shimizu said AAUs should cost less due to doubts over their environmental integrity, although the contracts usually have binding clauses limiting the use of the money paid to green projects.

The lack of an open market also means such investments are riskier than early stage investments in projects under the other Kyoto schemes, he said.

NEDO and big Japanese companies such as utilities have been buying Kyoto offsets, which are usually denominated in euros as Europe was the first introduced marketable financial instruments for CERs.

In theory, Japanese entities should benefit from the recent rise in the yen versus the euro, but Shimizu said NEDO would not be taking advantage of that.

"We're seeking a fair price for both sides," he said. ($1=93.14 Yen) (Editing by Hugh Lawson)

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