Japan set to ditch carbon emissions trading plans

A plan to introduce carbon emissions trading is set to be axed by the ruling Democratic Party.

The scheme is due to be introduced into the Japanese parliament next year, but last week the party said it could hinder investment and needed to be studied further.

A Cabinet Office official told Reuters on Tuesday 21st December 2010 that the government would look carefully at the issue.

Analysts said the stance was tantamount to putting the plans on hold. The government, which will decide its stance by the end of this month, is expected to follow the Democratic Party's proposal.

"The Democratic Party is a ruling party. If the party makes such a decision, the government cannot help [sic] but respect it," said Kazuo Matsushita, Professor of the Graduate School of Global Environmental Studies at Kyoto University, speaking to Reuters.

"So far I have not seen any strong leadership from Prime Minister [Naoto] Kan on the environmental front," added Matsushita.

If the news is confirmed, it would mark a u-turn by the party, which last year said carbon trading was important to achieve reductions in greenhouse gas (GHG) emissions. It would also be another blow to the introduction of a worldwide emissions trading scheme, especially after cap-and-trade plans were abandoned in Australia and the United States.

The Democratic Party pledged in an election last year to set up a carbon trading market to help the nation cut GHG emissions by 25 per cent from 1990 levels by 2020, saying that emissions trading was a key way to achieve that goal and drive greater energy efficiency at home.

However, that was before Prime Minister Kan ran into a multitude of problems - a weak economy, decreased popularity, a public debt twice the size of Japan's economy and a divided parliament.

Additionally, if a carbon emissions trading scheme were approved by the government, it would need opposition help to pass the bills in parliament.

Additionally, business groups have voiced concerns that a trading scheme along with tough emissions reductions targets, could increase costs and affect Japan's export trade. This is a fact not lost on green campaigners.

"Negative impacts of the economic crisis are still being felt in many fields, Japanese industries in particular," said Naoyuki Yamagishi, WWF Head of Climate Change in Japan. Yamagishi also said that the close relationship between the Democratic Party and Japanese business was another reason for the change of policy.

"People in [sic] industry are beginning gain access to the Democratic Party. That's the other reason. These two factors, as a result, seem to have helped the party produce an outcome that is considerate to the business sector," Yamagishi said. Represented by the business sector are the Nippon Keidanren business lobby, which include steelmakers and power companies accounting for half of Japan's GHG emissions.

Though Nippon Keidanren encourages investment in renewable energy and energy conservation, some sections have argued that stricter emissions reduction targets in Japan will drive up unemployment.

Under emissions trading, a price is placed on GHG emissions from businesses through the issuance of tradable pollution permits tied to emissions reduction targets, designed to encourage investment in cleaner energy generation or energy efficiency.

Theoretically, the number of permits per tonne of emissions should decline over time, driving up the price. Firms that beat their emissions targets would then be able to sell excess permits to firms that fail to meet their mandatory cuts.

For the time being it seems Japan will put their proposals on hold, meaning the EU Emissions Trading Scheme will continue to be the major player in carbon trading for some time.

Author: Leroy Robinson | Climate Action

Image: mikearther | Flickr