SUNS 4339 Monday 7 December 1998
ENVIRONMENT: TOKYO JUMPS INTO EMISSIONS TRADING
Tokyo, Dec 4 (IPS/Suvendrini Kakuchi) -- Japan is gearing up to enter the lucrative business of trading in greenhouse gas emissions, prompting experts to predict that the world's second richest country will soon become a leading player in this trade.
"Japanese companies have the money and expertise to put them into the forefront of a new business called environmental trading, a business that is growing attractive for it offers a practical solution towards reducing pollution," says Naoki Matsuo of the Institute of Global Environmental Strategy, a think tank set up in January under the environment agency.
Russia features high on plans by Japanese business to cash in on emissions trading, because as a developing country Russia's standards for cutting the production of greenhouse gas emissions are much lower.
This scheme allows rich nations to pay countries producing less greenhouse emissions, in exchange for bits of their quotas for producing carbon dioxide, the main heat-trapping gas produced by the burning of fossil fuel.
This trade in emissions -- which some call equivalent to buying the right to produce more harmful greenhouse gases -- was approved at the third meeting of parties to the United Nations framework convention on climate change, in Japan in December 1997.
Environmentalists say Japan will also start looking into the Asian market under another U.N. agreement, called the Clean Development Mechanism (CDM), that allows developing countries into the emissions trading market.
"Under the CDM, developed countries can start projects in developing countries to earn credits for themselves and developing countries. In addition, the system allows the credits to be traded with rich countries which is what Japan is aiming for," explains Yurika Ayukawa of World Wildlife Fund Japan.
Officials see emissions trading as a way of allowing Japan to meet targets for reducing greenhouse emissions, while reducing the economic burden on local companies.
By 'buying' emissions, Japan can achieve its carbon dioxide reduction target faster than waiting for cuts gained through reductions at home or joint-implementation projects, they say.
No official figure has been given, but environmentalists quote some studies as saying it would cost Japan around 20 U.S. dollars to reduce per of tonne of carbon dioxide if traded with Russia, compared to around 200 dollars when achieved internally.
"Against such a backdrop we can see why carbon dioxide trading holds a huge attraction to the Japanese government and Japanese companies," says Ayukawa.
Japan's carbon dioxide emissions have grown by 10 percent since fiscal 1990. Businesses that promised voluntary reduction targets said this month that 28 industries recorded emitting 133 million metric tonnes of carbon dioxide. Thus, they have set back target dates for reducing such emissions from 2000 to 2010.
The emissions trading scheme with Russia was proposed by former Japanese prime minister Ryutaro Hashimoto when he met President Boris Yeltsin in April, under an economic pact that includes the reduction of greenhouse gas emissions.
Japanese firms are expected to invest in Russian projects to cut emissions at home, and subsequently count the reductions as part of Japan's. Japan has committed itself to an emission target reduction of 6 percent from 1990 levels between 2008 and 2012.
Russia, owing to its lower level of economic development, is required only to maintain emissions at 1990 level by that period. It has room to spare in meeting its quota of greenhouse emissions.
"Japan is looking at Russia and the Ukraine because of their potential. A huge country like Russia has much to offer when it comes to buying carbon dioxide quotas because of its low emissions and large quota," explains Matsuo.
The Ministry of International Trade and Industry (MITI) has a budget of $18.5 million for this year to carry out feasibility studies in Russia.
The New Energy Development Organisation, a firm affiliated with MITI, has been set up to monitor the trade in emissions.
This includes not only trading emissions for cash, but also developing joint implementation projects that require Japanese environmental technology toward reducing global warming in Russia, in return for credit for Japan.
For a start, Japanese companies, such as electrical and gas firms, will help solve problems of ageing Russian oil refineries. They will also help the country move away from industries that produce harmful emissions and encourage the use of gas instead of fossil fuel.
Major Japanese trading companies are already involved in the sale of carbon dioxide with Russia, acting as the go-between the buying and selling companies.
But while emissions trading comes in handy for the government, environmentalists are not in the least happy. They point out that emissions trading with Russia does not mean lower carbon dioxide
production, but only shifts it to a low energy policy .
Critics also see holes in emissions trading, which could be implemented by rich countries on assumptions that can actually increase carbon dioxide output.
Ayukawa adds that the existence of emissions trading does not mean governments and communities can rest easy on developing low-polluting, renewable energy like solar and wind power.
Besides, green groups say, global warming can be stopped only through reductions on the part of the biggest polluters like the United States, which had proposed the emissions trading scheme.
Activists fear that emissions trading shifts the focus on trading, rather than on projects that aim for actual and definite reductions in greenhouse gas production.
Yuri Onodera of Friends of the Earth Japan says pressure from powerful electric and oil corporations -- to preserve their commercial interests -- are pushing Tokyo to support emissions trading as the best way to meet the country's reduction targets.
"It's business as usual even when it comes to global warming," he says.
But Matsuo says it is "nonsense" to go along with green groups, supported by the European Union, which call for domestic reductions before trading.
"They are just not practical because reductions at home are very difficult and not cost-effective. The policy must focus on reduction both at home as well as with other countries," he explains.