Japan to start trial carbon trading in October

TOKYO (Reuters) - Japan, under pressure to find other incentives than government spending to reduce greenhouse gas emissions, approved an October start for the trial trading of carbon dioxide, the main gas blamed for global warming.

“We’ll set down rules in September on how to take part (in a trial carbon trading scheme) and in October we’d like to get started,” Hiroshi Kamagata, director for the cabinet secretariat at the Cabinet Office, said at a briefing on Tuesday.

Tuesday’s cabinet agreement took forward an announcement by Prime Minister Yasuo Fukuda last month that Japan would introduce carbon pricing to help the world’s fifth-biggest polluter move towards becoming a low carbon society.

Fukuda had called for an autumn start to such a scheme.

“Japan should take the lead in building a low carbon society. This is the first concrete step toward that,” Fukuda said when cabinet members met in the morning.

Japan’s trial emissions trading scheme may draw limited domestic support. Key steelmakers and other big emitters in the country argue that a move closer to a European Union-style cap-and-trade system, which binds polluters to mandatory emissions limits, would curb their growth.

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But the introduction of such a scheme could lure overseas banks and other institutions wishing to trade emissions permits, analysts said.

Tuesday’s plans lacked key details such as how much the scheme would cost and how costs would be apportioned to the government, corporate and household sectors.

The plans also did not detail Japan’s medium-term emissions target. The country’s long-term goal is to cut emissions by 60-80 percent from current levels by 2050.

“The next fiscal year’s budget is to be discussed later, firstly by the ministries concerned. We haven’t done any calculation yet,” Kamagata told reporters.

Japan has, until now, encouraged voluntary reduction pledges from individual industries and refrained from announcing a medium-term emission cut target, which it says is a key issue in U.N. talks until the December 2009 conference in Copenhagen on a pact to replace or extend the Kyoto Protocol after 2012.

It is under pressure to meet its Kyoto obligations to cut emissions by 6 percent from the 1990 levels during 2008-2012.

Tokyo has said it would spend $30 billion of taxpayers’ money in the next five years to support innovative technology so that global emissions will fall drastically in a long term.

“In order to take leadership in upcoming multilateral negotiations on climate change, Japan will definitely meet the Kyoto obligations,” Prime Minister Fukuda was quoted by Kamagata as telling an earlier cabinet meeting.

($1=107.45 Yen)

Editing by Anthony Barker