Japan shelves carbon emissions trading scheme

TOKYO (Reuters) - Japan postponed plans for a national emissions trading scheme on Tuesday, bowing to powerful business groups that warned of job losses as they compete against overseas rivals facing fewer emissions regulations.

A worker rides past an oil factory at Keihin industrial area in Kawasaki, south of Tokyo in this October 23, 2009 file photo. REUTERS/Issei Kato

The government has submitted a climate bill to parliament that includes a one-year deadline to design a national trading scheme. After Tuesday’s delay, that bill faces revisions in the next parliamentary session that begins in January.

The decision is a blow to the European Union’s hopes that other top greenhouse gas polluters will introduce emissions trading schemes and follows setbacks to similar efforts in the United States and Australia.

A U.N. meeting in Cancun, Mexico, this month failed to clear uncertainty over a global climate framework beyond 2012. This is likely to cause some big emitters to take their time in rolling out tougher greenhouse gas regulations, particularly for carbon dioxide (CO2) from burning fossil fuels such as coal and oil.

Neighboring South Korea has delayed the introduction of its emissions trading laws into parliament until February because of business concerns.

Japan’s National Strategy Minister, Koichiro Gemba, who was appointed to review the government’s core green policy steps, said the trading scheme needed further careful study, indicating that it had effectively been shelved.

He stressed, however, that it had not been scrapped entirely.

“Overseas circumstances have changed. Our views on emissions trading schemes have also changed,” Gemba said, referring to developments including U.S. and Australian moves since the government approved its draft climate bill in March.

“But we haven’t given up on plans to introduce an emissions trading scheme,” Gemba told a news conference after ministers in charge of climate issues met on Tuesday morning.


Japan, the world’s fifth-biggest greenhouse gas emitter, had been expected to launch a trading scheme that would curb companies’ emissions from as early as 2013, after principles for the plan had been discussed within the government.

Earlier this month, however, the ruling Democratic Party said an emissions trading scheme could hamper investments in key industries.

Gemba said it was important to get the timing of the launch right, while the design of the scheme would depend in part on businesses’ requirements. He said he no longer believed that forcing companies to accept allocated emission caps, as in Europe, would work in Japan.

Tokyo is expected to seek other ways to bind companies to emissions goals so the country can meet an ambitious pledge to cut greenhouse gas emissions by 25 percent by 2020 from 1990 levels.

Japan’s emissions reduction target, one of the toughest among major emitters, would be virtually impossible to meet without deeper emission cuts by manufacturers, power generators and offices and commercial operations, which together account for 60 percent of the country’s emissions.

Japan also has a longer-term target to cut carbon dioxide from fossil fuels by 30 percent from 1990 levels by 2030.

Tokyo remains committed, however, to levying a new tax on CO2 in October next year and to expand a pilot plan floated last year for increased renewable sources of electricity, with related bills to be submitted in the next parliamentary session.

Japan has been holding bilateral talks with developing nations to transfer clean-energy technologies and receive emissions offsets to meet its 2020 goal.

Subsidies of 5.2 billion yen ($63 million) are budgeted for companies to carry out feasibility studies on such bilateral offsets in the next fiscal year, more than six times this year’s spending.

Tokyo’s top priority is to have budget-related bills passed by the end of the current fiscal year to March 31, followed by fiscal and social welfare reforms.

($1 = 82.78 Yen)

Editing by David Fogarty