June 4, 2008

Prime Minister of Japan Calls For Emissions Trading Scheme

A Japanese newspaper announced that Japan's prime minister will call for a study on how to introduce an emissions trading scheme. This comes ahead of a G8 summit meeting scheduled in July where global warming will be a key topic.

A target for cutting greenhouse gas emissions by 60 to 80 percent by 2050 will be announced by Prime Minister Yasuo Fukuda. However, there is still debate over setting a target for cutting emissions by 2020 or 2030, a key demand of emerging nations in U.N.-led talks on climate change.

Emissions trading has become an essential weapon for companies and governments fighting climate change in a in a carbon market worth $64 billion last year. Industries have to buy permits to emit greenhouse gases such as carbon dioxide with cap and trade schemes.

In 2005, Japan launched a voluntary scheme, but this month a working panel organized by the Environment Ministry drafted four options for a carbon trading scheme.

But steel industries, among others, are concerned it will reduce their global competitiveness.

Nippon Steel Corp said it is still opposed, despite a popular Japanese newspapers claim that Japan's power and steel industries had softened their opposition to a carbon trading scheme.

Nippon Steel released a statement saying that there is no truth in the report that they would approve a carbon trading scheme under certain conditions.

The Federation of Electric Power Companies of Japan also flatly denied similar claims.

About 190 nations have agreed to negotiate by the end of 2009 a successor treaty to the Kyoto Protocol, which binds 37 advanced nations to cut emissions by an average of 5 percent below 1990 levels by 2008-12.

Last year, Japan, Germany, France, Britain, Italy and Canada were the only members of the G8 to consider halving global emissions by mid-century. Russia and the United States opposed the agreement.

But there is much debate among the G8 and between advanced and developing countries over how to share the burden for fighting climate change.

The G8 was urged to set a global target of halving emissions by 2050, but no specific interim targets have been set.

Washington wants the main forum for emissions cuts to be the Major Emitters or Major Economies grouping, which was set up by the United States last year and includes Brazil, China and India and other industrial powers alongside the G8.

"The biggest problem for Prime Minister Fukuda is that he is faced not only with the Bush administration, but also Japanese economic circles are taking a firm negative stance on carbon trade," said former Japanese Environment Minister Yuriko Koike.

"These are the two big problems."