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Japan to test carbon trade; puts off interim CO2 goal

(Corrects name in 15th paragraph to Democratic lawmaker Katsuya Okada, instead of Katsuya Fukuda) (Adds opposition party comment)

TOKYO, June 9 (Reuters) - Japan will start a trial system for carbon trade this year, Prime Minister Yasuo Fukuda said on Monday, unveiling a climate change policy that set a goal for cutting greenhouse gas emissions by 2050, but stopped short of what environmentalists say is key.

Japan will aim to cut its emissions by 60-80 percent by 2050 and announce an interim target sometime next year, Fukuda said in a speech one month before hosting a G8 summit, where global warming is high on the agenda.

Tokyo will also contribute up to $1.2 billion to a new multilateral fund with the United States and Britain that will help developing countries fight global warming, Fukuda said.

The world's fifth-largest emitter, Japan estimates it can cut greenhouse gas emissions by 14 percent by 2020 from current levels, Fukuda said, in a nod to pressure to set a firm interim target as host of the G8 summit next month.

"When talking about the near future, we no longer have the luxury of encouraging others or spending time playing a game of setting targets for political propaganda," said Fukuda.

Environmentalists, however, were disappointed.

"The G8 leaders need to make concrete steps forward to a low carbon world, and Japan's Prime Minister Fukuda needs to push hard to trigger that leadership," said Kathrin Gutmann, WWF Climate Policy Coordinator, in a policy statement.

"In this light, Fukuda presents only a blurred vision and the lack of a 2020 target for emissions reduction is utterly disappointing," Gutmann said in a statement.

WWF chided Fukuda for setting the base year for reductions at current levels rather than 1990, as used by the European Union, because Japan's emissions have risen since then.

Japan hopes to clinch agreement on a "shared vision" to halve global emissions by mid-century at the Group of Eight summit, where a climate change session will also be attended by big emerging countries such as China and India.

"It is impossible to achieve this goal without the participation of major emitter countries and unless all the countries of the world take part in some form," Fukuda said.

TRIAL CARBON TRADE

The European Union, which has set a target of reducing emissions by 20 percent by 2020, and developing countries argue rich nations should take the lead by setting bold 2020 targets for reducing emissions that cause global warming.

But the United States, a top emitter along with China, has said it will only accept binding emissions curbs on condition major emerging countries also agree, something they have so far refused to do so. Washington's stance, however, is likely to change after a new president takes office in January 2009.

Opposition party lawmakers and environmentalists had urged Fukuda to take a bold stance on an interim target to persuade industry and voters to get serious about climate change and convince emerging countries to join a new global framework.

On Monday, the opposition Democratic Party charged his proposals fell short. "The content is extremely meager," said Democratic lawmaker Katsuya Okada, sponsor of a bill to set a mid-term target to cut emissions by 25 percent from 1990 levels.

"It is completely unclear how he will confront the G8 summit with such content and what he will try to achieve."

Fukuda said Japan would introduce in the autumn a trial system for carbon trading, seen as one effective way to reduce greenhouse gas emissions. But he steered clear of giving a date for the launch of a full-scale trading scheme.

Unlike the European Union, which imposes a cap-and-trade system to bind polluters to mandatory emissions limits, Japan has encouraged voluntary reduction pledges from industries.

Some Japanese industries, such as steelmakers, oppose a European-style system, saying it would hurt their global competitiveness.

Fukuda proposed raising the proportion of Japan's energy from "zero emission power" sources such as nuclear, solar, wind and hydro power to more than 50 percent from the current 40 percent, and said an environment tax should be considered as part of overall tax reforms to be debated later this year.

Japan is the only one among the world's top five emitters under pressure to meet a Kyoto Protocol target.

Domestic industries still resent the tough target of reducing emissions by 6 percent set for Japan under Kyoto, which binds 37 industrialised nations to cut emissions by an average 5 percent below 1990 levels by 2008-12. ($1=104.90 yen) (Additional reporting by Linda Sieg; Editing by David Fox)

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