TOKYO (Reuters) - Japan is looking to over 1,000 companies, including big firms, to join in a local over-the-counter market for carbon offsets that is being launched to spur voluntary efforts to cut emissions, a government official said.
“We’re expecting major companies which currently take part in the voluntary action plan to join in,” Yasuo Takahashi, director at Ministry of the Environment’s office of market mechanisms, said in an interview for Reuters’ global environment summit.
Japan will start later this month to accept applications from companies joining in the new market, which will be floated on a trial basis.
Emissions data in the year to next March will be available around next August, so trading may start after that, with assessment of CO2 surpluses or deficits based on a company’s existing voluntary emissions target.
In the trial market, a company’s target limits either the total volume of energy-origin carbon dioxide it emits or the amount of CO2 per unit of production.
The latter allows a company’s emissions to rise along with economic growth as long as energy efficiency improves as much as pledged to the government, showing a stark contrast to the European Union’s cap-and-trade emissions trading scheme.
In Japan, industries under the nation’s biggest business lobby, the Japan Business Federation (Keidanren), set their own CO2 targets, which became the basis of the government’s commitments under the Kyoto Protocol.
Under Kyoto, Japan is obliged to cut greenhouse gas emissions by 6 percent in the 2008-2012 period from 1990 levels.
Having exceeded its target in the past few years and appearing likely to do so in the first Kyoto year, Japan cannot help but try new steps to contain emissions.
But the electric power sector, one of the biggest potential offset buyers, has been reluctant to use any market scheme based on a particular company rather than an industry sector, further overshadowing the fate of the new market.
Takahashi oversees the ministry’s subsidized over-the-counter trading scheme, which commits small companies to a mandatory emissions cap. Its fourth phase is due to start next year.
The Voluntary Emissions Trading Scheme (J-VETS) has lured over 220 companies since 2006. But the role of the scheme is almost over, and the subsidies companies can request for energy saving spending are being cut to a total 2 billion yen ($20 million) next year from 3 billion yen.
“Given about 200 companies in J-VETS, the number for the trial market should top the 1,000 level,” Takahashi said, adding that trading rules will be revised every year to better reflect users’ demand and increase the credibility of prices.
“We want to utilize inputs from J-VETS, such as emissions assessment, reporting and verification methods,” he added.
Carbon offsets were traded at an average 1,250 yen ($12) per metric ton in J-VETS’ second phase ended in August, up 3 percent from that in the first phase.
The ministry has not fully understood what factors determined the prices, Takahashi said.
(Editing by Michael Watson)
For summit blog: http://summitnotebook.reuters.