TOKYO (Reuters) - Japan’s planned CO2 trading scheme should be based on voluntary targets for emission cuts instead of mandatory ones to attract big emitters to join, a government advisory panel said on Wednesday.
The trial scheme is due to start by the end of October and will not need to adhere to mandatory volume targets used in a similar system in the European Union, the panel said.
The targets proposed by the panel would limit either the total volume of energy-origin carbon dioxide (CO2) a company emits or the amount of CO2 per unit of production.
Japan’s major polluters, including the steel and electric power sectors, have already agreed on targets based on emissions per production unit. That method would allow their emissions to rise along with economic growth as long as energy efficiency improves.
The panel’s proposals will be taken into consideration when Japan decides on details of the trial trading scheme between companies exceeding their CO2 target and those below it.
“It will supplement the existing voluntary reduction scheme,” Yutaka Fujiwara, director of environment and economic policy at the Ministry of Economy, Trade and Industry, said after the panel’s discussion.
Japan, the world’s fifth-biggest emitter, launched an industry-led voluntary scheme in 2005 to meet obligations under the Kyoto Protocol to cut greenhouse gas emissions by 6 percent between 2008 and 2012 from 1990 levels.
Sector-based pledges are not legally binding, but a company that misses its target has to pay a penalty to the government in the form of emissions offsets, approved by the United Nations, from climate-friendly projects overseas.
Japan’s steel and electric power companies have resisted government control over their production through CO2 caps, arguing their past spending has helped improve energy efficiency. Japan is one of the world’s most energy-efficient countries.
The advisory panel proposed that three types of carbon offsets should be traded: offsets from major companies adhering to voluntary targets, as well as from small companies and clean energy projects overseas.
Those offset trades would add to an existing emissions trading scheme in which companies are partly subsidized to spend on energy saving. The scheme is currently in its third phase.
Editing by Sophie Hardach