Japan aims to limit speculation in emissions trade

LONDON Tue Nov 25, 2008 12:49pm EST

LONDON (Reuters) - Japan's prime minister wants to limit speculative trading in his country's carbon emissions trading scheme, a senior policy negotiator said on Tuesday.

Kunihiko Shimada, principal international policy coordinator for the Ministry of the Environment, said Japanese Prime Minister Taro Aso said he wants to examine ways of curbing speculative trading in Japan's emissions trading trial scheme.

"This is a directive coming from the top...they have issues with speculative trading," Shimada told Reuters on the sidelines of a carbon markets conference.

"Transparency and avoiding speculative trading are key issues in the development of our emissions trading scheme," Shimada said, adding that strategy is still a work in progress.

Carbon dioxide trading, a market tipped to be worth $100 billion globally this year, helps reduce greenhouse gases by allowing industry to buy and sell emissions permits.

Speculative emissions trading involves buying and selling permits to profit from price fluctuations rather than buying for compliance purposes under an emissions trading scheme.

Speculative trading in energy has come under fire this year, with many critics blaming it for catapulting crude oil prices up by almost 50 percent in the first half of this year.

Japan began trialing a voluntary emissions trading scheme last month, based on companies' pledged emissions cuts, with hopes the program could become a forerunner of a mandatory scheme.

Shimada also said that Japan, the world's fifth largest greenhouse gas emitter, would announce interim emissions reduction targets in "a couple of months."

(Reporting by Michael Szabo; Editing by Anthony Barker)