Aug. 3 (Bloomberg) -- A framework to reduce carbon emissions to combat climate change needs to be put in place to replace the Kyoto Protocol when it expires in 2012, Asia-Pacific finance ministers said.

Australia, which hosted the 21-member Asia-Pacific Economic Cooperation meeting of finance ministers in Coolum, Queensland, spearheaded climate change as a topic at the meeting, which included the world's two largest carbon dioxide emitters, the U.S. and China. Market-based strategies for cutting so-called greenhouse gases blamed for global warming were discussed, according to Australian Treasurer Peter Costello.

``We considered the global architecture for addressing climate change and shared the view that it is important to establish an effective framework beyond the Kyoto Protocol'' the ministers said in a communiqué released at the end of the three- day meeting. APEC recognizes ``the need to take strong and early action to address the challenge of climate change while maintaining economic growth.''

China, a developing nation, is not subject to targets under the only international treaty requiring emissions cuts, the Kyoto Protocol. The U.S. and Australia have declined to ratify the treaty, arguing it would harm economic growth.

China is the world's largest user and producer of coal, a source of carbon when burnt. China overtook the U.S. as the world's largest carbon emitter last year, the Netherlands Environmental Assessment Agency said in June.

China Energy Consumption

Developed countries have the responsibility to help developing nations solve the problem of reducing carbon emissions, China's Finance Minister Jin Renqing said today in Coolum. The world's fastest-growing major economy plans to cut energy consumption by 20 percent over the next five years and will seek technologies to reduce emissions, he said.

``We are willing to shoulder the shared but differentiated responsibilities,'' Jin said.

Energy demand in the APEC region is anticipated to increase by 2 percent a year until 2030, the Australian government estimates. Scientists say global warming caused by man-made emissions of carbon dioxide is causing glaciers to melt, sea levels to rise and coral reefs to die out.

``The recognition of an effective protocol beyond Kyoto is very significant,'' said Costello. ``It was a breakthrough to hear the Chinese minister talking about market mechanisms'' to cut carbon emissions, he said.

The move by APEC follows the call by the Group of Eight members in June for new treaty talks to involve all major carbon emitters, including developing countries such as China, and for negotiations to take place under the watch of the United Nations.

European Trading

The European Union set up the largest greenhouse-gas trading system in 2005. Factories in the EU were granted a limited number of permits in the first phase of the program and can buy extra permits to emit more carbon dioxide. They can sell the surplus if they emit less, creating an incentive to lower emissions.

Climate change will cause extinctions of animals to mount, water shortages to spread and droughts and floods to become more frequent as man-made emissions of greenhouse gases make the earth warmer, the United Nations warned in April.

APEC economies represent half the world's trade. The biggest member economies are the U.S., Japan and China. Other members are Australia, Brunei, Canada, Chile, Hong Kong, Indonesia, Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, the Philippines, Russia, Singapore, South Korea, Taiwan, Thailand, and Vietnam.

Last Updated: August 3, 2007 02:28 EDT