JAPAN and Emissions Trading Regimes

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JAPAN and Emissions Trading Regimes

• CATEP Workshop
• 2003.2.7-2.8
• Yukari TAKAMURA
• (Shizuoka University, Japan)
• e-mail jlytaka_at_ipc.shizuoka.ac.jp

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1. Introduction

• Overview of
• 1. Current status of Japanese climate
  change policy
• 2. Discussions on emissions trading regimes
  in Japan

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2. Greenhouse Gas Emission Trends(1)
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2. Greenhouse Gas Emission Trends(2)

• Japans Kyoto target
• 6 down from 1990 levels
• GHG emissions in 2000
• About 8 above 1990 levels
• Estimated emissions in 2010
• About 7 above 1990 levels
• Japan needs to cut about 13 from 1990 levels by
  2008-2012.

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3. History of Climate Change Policy
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4. Overview of 1998 Guideline(1)

• Essential Measures to Prevent Global Warming
• Principles towards achievement of the 6
  reduction target
• Comprehensive promotion of measures to prevent
  global warming
• Promotion of measures to reduce CO2 emissions,
  focusing on measures related to energy supply and
  demand
• Promotion of measures to limit emissions of other
  greenhouse gases
• Promotion of measures involving CO2 sinks such as
  afforestation,
• Strengthening research and development of
  advanced and innovative environmental and energy
  technologies
• Strengthening earth observation system, etc.
• Promotion of international cooperation

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4. Overview of 1998 Guideline(2)

• Reconsidering lifestyles
• Stimulating public discussion about the
  introduction of daylight saving time
• Changing society to help promote the safe and
  appropriate use of bicycles
• Improvement of institutions for
  education/awareness-raising and information
  dissemination
• Exemplary actions by government
• Expansion of greening activities as a way to
  prevent global warming
• Implementing model projects which lead to
  innovation in social systems

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5. Revised 1998 Guideline (1)

• Step-by-step approach
• 1st step 2002-2004
• 2nd step 2005-2007
• 3rd step 2008-2012
• Voluntary approach during 1st-step period
• No new regulatory measures

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5. Revised 1998 Guideline (2)
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6. Kyoto Mechanisms in the Guideline

• No quantified target, no specific policy for
  Kyoto Mechanisms
• Credits acquired by businesses
• Businesses can use credits to meet their
  targets.
• Credits are counted toward industrial
  sectors efforts.

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7. Discussions on Emissions Trading Regime

• First initiative from the Ministry of the
  Environment
• 1st report by experts group(June 2000)
• 2nd report by experts group(July 2002)

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8. First Report on Domestic Emissions Trading

• Focuses on a cap-and-trade regime.
• Considers major issues and possible options in a
  comprehensive way.
• Examines existing trading regimes in other
  countries.
• No specific policy direction rather evaluation
  of possible options in case a regime is
  established.

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9. Second Report on Domestic Emissions Trading

• Step-by-step approach

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10. Linkage with Other Trading Regimes
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11. After the Second Report

• No further consideration so far
• Experimental trading in cooperation with the Mie
  Prefecture

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12. Planned METI Initiative

• No official discussions so far
• Consideration of a domestic trading regime to
  start in April 2003.

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13. Basic Approach of the Planned Regime(1)

• Businesses voluntarily set their own CO2
  reduction targets.
• Target based on past performance
• METI reviews appropriateness of targets and
  measures to be taken.

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13. Basic Approach of the Planned Regime(2)

• Subsidy awarded to enterprises achieving their
  targets.
• One-half the amount of an enterprises
  capital investment necessary for achieving its
  target
• Budget is planned to be about 500 million
  yen for the coming fiscal year (April 2003-March
  2004).

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13. Basic Approach of the Planned Regime(3)

• Emissions trading between regime participants
• Third-party certification entity certifies
  emission credits.

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14. Emissions Trends in Tokyo(1)

• CO2 Emissions Trends in Tokyo
• Emissions in 1998
• 6 above 1990 levels
• Estimated emissions in 2010
• 15 above 1990 levels
• Reduction target by 2010 -6
• A cut of about 21 is needed.

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14. Emissions Trends in Tokyo (2)

• Importance of Tokyos actions
• 12 million population (about 10 of Japanese
  population)
• Scale of economy
• Equivalent to Canada
• 5 of Japans total CO2 emissions
• 1 of total CO2 emission of all developed
  countries

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14. Emissions Trends in Tokyo(3)
Source Tokyo Fundamental Program on the
Environment Institute of Energy
Economics (Japan), EDMC Handbook of Energy
Economic Statistics in Japan
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15. TokyosStop global warming campaign

• Stop global warming campaign (started in Feb.
  2002)
• Effective regulatory measures at the
  national governmental level are insufficient and
  delayed.
• Remedial actions
• Encourage increased discussion on the
  global warming issue.
• Urge the national government to adopt
  and enforce effective measures by taking the
  initiative.

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16. Five Proposed Policies

• Require large corporations, including office
  buildings, to reduce CO2 emissions.
• Establish a CO2 Credits Trading Market.
• Require new buildings to use solar and other
  renewable energy.
• Enforce and expand the energy efficiency
  standards for automobiles
• Dont buy, sell, make energy-consumptive products.

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17. NewPrincipal Policies of Tokyo(1)

• Promulgated in Nov. 2002.
• Three Fundamental ideas
• Build a new social system that internalizes
  environmental friendliness.
• Pursue actions developed by Tokyo for its own
  needs, instead of simply depending on national
  government measures.
• Stimulate Tokyos economy by encouraging actions
  to mitigate global warming.

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17. NewPrincipal Policies of Tokyo(2)

• Six challenges
• Require large-scale business establishments to
  reduce their CO2 emissions.
• Require new buildings to be more
  energy-efficient.
• Implement programs to provide consumers with
  information on energy conservation.
• Strengthen measures to reduce motor vehicles CO2
  emission.
• Encourage the conversion to renewable energy.
• Pursue heat island mitigation actions in line
  with current urban policy.

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17. NewPrincipal Policies of Tokyo(3)

• Discussion by the Tokyo Environmental Council
  continues.
• The Council will issue a report within a
  year.

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18. Emissions Trading under New Principal
Policies

• CO2 Credits Trading Market seems to have
  disappeared from the principal policies.
• Mandatory reductions imposed on large-scale
  business establishments first.
• Emissions trading is a possible option for those
  not easily able to meet their targets.

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19. Private Sector Takes the Lead(1)

• Private sector steps out ahead of national and
  local governments.
• Tokyo Stock Exchange considers establishing a
  market.
• Creation of new businesses

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19. Private Sector Takes the Lead(2)

• Credits trading already started
• Buyer Electric Power companies
• Oil companies
• Trading companies
• Seller Electric Power companies
• (Australia, Chili)
• Coal companies(Australia)
• Afforestation
  companies(Australia)
• Chemical company (Canada)
• Slovakian Government

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19. Private Sector Takes the Lead(3)

• Intra-company Trading
• Examples
• HITACHI(electrical appliance company)
• Matsushita Electric Industrial
  Company(National /Panasonic brand)

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20. Conclusion(1)

• Progress of consideration is slow and any trading
  regimes have not taken shape yet.
• However, it is being considered as a possible
  policy option by both the national and local
  governments.

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20. Conclusion(2)

• National Government
• Voluntary participation and voluntary
  target-setting?
• Tokyo
• Mandatory participation and mandatory
  target-setting?
• No consideration yet on how to link a national
  regime and Tokyos one.

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20. Conclusion(3)

• The linkage issue has not been discussed in
  detail yet.
• However, the need to consider the linkage issue
  is clearly recognized.

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20. Conclusion(4)

• Business
• The bigger the market, the more profitable
  the trading and the more cost-effective the
  reduction.
• More business will be created.
• Would linkage lead to an invasion by bogus
  credits?