Japan's Voluntary Emissions Trading Scheme Starts

The Japanese Ministry of the Environment has selected 34 companies and corporate groups as participants in the nation's Voluntary Emissions Trading Scheme which started in fiscal 2005, it was announced on May 17, 2005. They were chosen from among applicants who responded to an open invitation and screened based on their cost-effectiveness for this program. Among them are INAX Corp., Nippon Electric Glass Co., Mitsubishi Gas Chemical Co. and Yamazaki Baking Co.

Under the scheme, the ministry subsidizes the installation cost of CO2 emissions reduction equipment to help businesses that are actively attempting to reduce greenhouse gas (GHG) emissions. In exchange for the subsidy, the participants are required to commit to a certain reduction in their CO2 emissions. The scheme also allows them to trade CO2 emission quotas to meet their reduction targets. Through this scheme, the ministry aims to achieve a cost-effective and substantial reduction in GHG emissions, and accumulate knowledge and experience relating to domestic CO2 emissions trading. The total government budget for the subsidy is 2,596,340,000 yen (about U.S.$23.6 million).

The total of emissions reductions promised by the individual companies for fiscal 2006 is 276,380 tons, or 21 percent of their average annual CO2 emissions in the base years, fiscal 2002 to 2004. The reduction in CO2 emissions over the officially-recognized service life of the subsidized equipment is calculated at about 3.7 million tons.

The participating companies must have their base year emissions independently verified by the end of October 2005, and make the relevant equipment operational by the end of fiscal 2005. Throughout fiscal 2006, they will implement their CO2 reduction projects using the equipment. After the end of fiscal 2006, the actual CO2 emissions during the year will be calculated and verified. The CO2 emissions quota trading system will also start in April 2006. If a participant cannot achieve its reduction target despite the emissions trading, the participant may be required to refund its subsidy.

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Posted: 2005/09/25 10:49:22 AM
Japanese version