Pioneering scheme by Metropolitan Tokyo a ‘World First’
Effective April 1, 2010, the Tokyo Metropolitan Government has introduced an emission trading scheme for businesses as part of its plan to cut greenhouse gas emissions by 25% by 2020, compared to 2000 levels. The scheme may also provide business opportunities for foreign companies with technology products and services that can help reduce greenhouse gas emissions.
Tokyo’s pioneering initiative is claimed to be the world’s first urban ‘cap-and-trade’ scheme to cover office buildings in its emission reduction targets. The city accounts for about 5% of Japan’s total carbon emissions – lower than its population would indicate, due to fewer factories in the metropolitan capital area.
By introducing the scheme, Tokyo has jumped ahead of Japan’s national government which is also contemplating a mandatory national ‘cap-and-trade’ program but has yet to implement it. Hopefully, Tokyo’s initiative will help induce the national government into action and provide a benchmark design for a nationwide program.
The new mandatory emission regulations cover about 1,400 entities which are major CO2 emitters and together account for about 20% of all emissions in Metropolitan Tokyo. Under the scheme these are required to reduce their emissions by 6% or 8% – depending on the type of entity – for the fiscal 2010-2014 period from their base-year levels. For the second phase, which covers fiscal 2015-2019, the same entities are required to cut their emissions by 17% compared to the base levels.
To achieve the set targets business can either make their own efforts and investments for improved energy efficiency and reduced emissions – or they can purchase emission credits from other entitites that have exceeded their carbon dioxide targets and/or buy renewable energy certificates issued by power generators. However, credits purchased outside Tokyo cannot be more than one third of the required cuts.
Actual trading under the new system is to begin in fiscal 2011 after reduction efforts in fiscal 2010 have been assessed. Entities that fail to meet their reduction targets will be ordered to cut their emissions by 1.3 times the amount they failed to cut and may face fines up to JPY500,000. In addition, the names of such companies will also be made public as a further ‘incentive’ for them to comply with the new rules.
One company, Mitsubishi Estate Co., has already made a head start by acquiring all electricity for its Shin Marunouchi Building from renewable energy sources – including a wind power station in Aomori. Outside Tokyo, Saitama Prefecture – among others – is now also reported to be considering a similar program.
For more details and related information about the above scheme here are 4 useful Web links ( all in English):
Tokyo Metropolitan Government. A very good summary of the scheme in slide format.
Japan Times article on this topic. More descriptive than the TMG summary and also refers to relevant related information.
Foreign Press Center Japan brief summary article; second part of 2-part article on TMG Eco projects.
Tokyo Climate Change Strategy . A 27-page pdf document in English by TMG describing in some detail Tokyo’s 10-year climate change program to reduce greenhouse gas emissions by 25% by 2020, from which the ‘cap-and-trade’ program derives.