Japanese metropolis launches Asia’s first emissions cap-and-trade scheme

Plans for a national Japanese emissions trading scheme may still be mired in confusion, but that has not stopped Tokyo winning the race to launch Asia’s first carbon trading initiative.

The city last week kicked off its long-awaited carbon trading scheme, which will require 1,400 of Tokyo’s most energy and carbon intensive organisations to meet legally binding emission targets modeled on those used in Europe’s cap-and-trade scheme.

During the first phase of the scheme, which runs up to 2014, participating organisations will have to cut their carbon emissions by six per cent.

Those that fail to operate within their emission caps will from 2011 be required to purchase emission allowances to cover any excess emissions, or alternatively invest in renewable energy certificates or offset credits issued by smaller businesses or branch offices. However, under the rules of the scheme, credits issued outside of Tokyo can not exceed a third of the emission cuts required of participating organisations.

Those firms that fail to comply with the new rules will face fines and could also be named and shamed by the government. According to local reports, organisations that do not operate within their caps will also be ordered to cut emissions by 1.3 times the amount they failed to reduce emissions during the first phase of the scheme.

City officials said that in the long term the aim was to cut the metropolis’ carbon emissions by 25 per cent on 2000 levels by 2020.

Yuki Arata, the director for emissions trading at the Tokyo metropolitan government’s environment bureau, told news agency AFP that the scheme was also intended to work as a “model for the Japanese government”.

Last month, the national government controversially delayed a decision on how to roll out its planned cap-and-trade scheme, approving a draft version of its climate change bill that failed to finalise the details on how the scheme will work.

While the government remains committed to implementing a cap-and-trade scheme and to cutting emissions by 25 per cent by 2020, it has delayed until after this summer’s election its decision on whether to impose absolute or carbon-intensity caps through the scheme and is also yet to finalise how targets will be imposed on different industries.