Japan to float trial carbon market with 202 users

By Risa Maeda

TOKYO, March 26 (Reuters) - A trial carbon market is to float in Japan with 202 compliance participants, the government said on Thursday, marking a rather low-key start for a country whose greenhouse gas emissions are well above its Kyoto target.

Japanese industry's voluntary reductions in energy-origin carbon dioxide (CO2) are a core part of Japan's plan to meet its commitments under the Kyoto Protocol, and a carbon market is in theory helps to promote their efforts by putting a price on CO2.

In the year to March 2008, Japan, the world's fifth-biggest greenhouse gas emitter, saw its emissions rise 2.3 percent to a record 1.37 billion tonnes in CO2 equivalent.

Japan's Kyoto commitments are to cut emissions to 1.19 billion tonnes on average in the five years to March 2013, down 6 percent from the 1990 levels.

Launched as a trial base in October, the domestic carbon market is aimed to become the nation's broadest emissions market, where emissions rights generated by clean energy projects abroad under Kyoto's market schemes can be traded.

The market's compliance participants include major emitters such as utility and steel companies, a step forward from its smaller predecessor, called J-VETS market.

But a government survey of applicants showed only 20 percent of the respondents said they would take part in trading, with 40 percent saying they didn't know. The remaining 40 percent said they had no immediate plan to trade any.

"Most of the participants have not made up their mind yet," said Hiroshi Kamagata, a counsellor in charge of climate policy at the Cabinet Secretariat.