Page 2 of
2 Happy birthday to Kyoto, but
... By Hisane Masaki
standards that require auto makers
to improve the fuel efficiency of their vehicles
by an average of 23.5% by 2015 from 2004 levels.
The tougher requirement is expected to place a
heavy burden on auto makers to develop technology
and may affect their management strategies. The
ministries plan to revise regulations this summer.
The Land, Infrastructure and
Transportation Ministry will soon begin talks with
the Japan Freight Railway Co, auto-parts makers
and
food-processing companies to discuss ways to shift
the means of transport away from trucks to trains.
As of fiscal 2005, Japan's transport sector
produced 257 million tons of carbon dioxide, about
20% of the nation's total emissions and up 18.1%
from the fiscal 1990 levels.
Prime
Minister Shinzo Abe vowed to achieve the reduction
target under the Kyoto Protocol in a speech to the
Diet (parliament) on January 31. He has also
instructed Environment Minister Masatoshi
Wakabayashi to draw up a new "environment nation
strategy" during the next fiscal year starting in
April to spell out Japan's measures to fight
global warming. The instruction comes ahead of the
start next year of the Kyoto Protocol's "first
commitment period" and, also next year, the summit
of the Group of Eight developed nations in Japan,
at which global warming is expected to be
discussed.
Kyoto mechanisms With
dark clouds hanging over its
greenhouse-gas-reduction commitment under the
Kyoto Protocol, Japan's government and businesses
are increasingly turning to an array of "Kyoto
mechanisms" as attractive means of achieving the
target at a lower cost while maintaining the
international competitiveness of the nation's
economy.
These involve "credits" that
firms earn in return for gas-reduction investments
in developing countries, which can be counted as
cuts in their own emissions - and in turn, in
Japan's - under a system called the Clean
Development Mechanism (CDM), one of the three
mechanisms introduced under the protocol to help
industrialized countries meet their reduction
targets. Developing nations that take part also
benefit by receiving technology transfers from
their industrialized partners.
The two
other mechanisms are Joint Implementation (JI) and
international emissions trading. JI is similar to
CDM, but it covers gas-reduction projects in
industrialized countries that can afford to cut
more gases than required by the protocol, such as
Russia and other former Soviet republics and
Eastern European countries. In international
emissions trading, greenhouse-gas emission credits
are traded.
In January 2005, the European
Union established the world's first multilateral
emissions-trading market. Japan followed last
April with its own version - the Japan Voluntary
Emissions Trading Scheme (J-VETS). But major
emitters, such as oil and power companies, have
shied away from participating for fear that
mandatory emission restrictions might be imposed
on them in the future.
Last October,
emissions credits for carbon dioxide traded
between Japanese companies for the first time
under J-VETS. Nippon Electric Glass Co sold
credits for 200 tons of carbon dioxide to
Tokyo-based Funai Consulting Co. The company also
switched fuel for a glass-melting furnace at its
factory in Higashi-Omi, Shiga prefecture, from
heavy oil to liquefied petroleum gas. As a result,
the glass-bulb maker was able to cut
greenhouse-gas emissions more than it had
expected.
Many Japanese companies not only
feel the necessity to hedge against future risks
but also see new - and potentially lucrative -
business opportunities in emission reduction,
since demand for the right to emit greenhouse
gases is growing. Firms that earn emission credits
through CDM and JI projects abroad can count them
in their reduction efforts, and surplus credits
can be sold through emissions transactions on the
markets.
Firms that buy cheap credits only
to sell them off for higher prices could reap
profits. Energy-related firms such as
electric-power, oil and gas companies are not
alone in rushing to gas-reduction projects abroad.
Major Japanese trading firms are also intent on
cashing in on the new business bonanza. The number
of projects approved by the government has been
rising sharply since the Kyoto Protocol came into
force, and the number has been growing at an
accelerated pace in recent months.
Of the
115 projects approved by the Japanese government,
66 have been approved since last June, many of
them CDM projects in Asian and Latin American
countries. CDM projects also have to be approved
by the governments of host countries and by the
United Nations. Some of the projects have already
been registered with screening boards such as the
UN's CDM Executive Board.
Meanwhile, the
Japanese government has begun to make full-scale
use of the CDM and other Kyoto mechanisms. It
started buying greenhouse-gas-emission credits
last summer through the government-affiliated New
Energy and Industrial Technology Development
Organization. The government earmarked 5.4 billion
yen ($45.9 million) in the fiscal 2006 budget for
purchasing credits. The maximum funds for credit
acquisition in fiscal 2006 totaled 12.2 billion
yen.
In addition, the
government-affiliated Japan Bank for International
Cooperation, one of the world's biggest
international financial institutions, is now
focusing on expanding its environment-related
business activities. JBIC is rushing to sign
partnership agreements with many developing
countries, such as El Salvador, Sri Lanka,
Malaysia, Thailand, Indonesia, the Philippines,
India and Brazil. The CDM partnership agreements
are aimed at helping Japanese firms participate in
CDM projects and thereby acquiring emission rights
for greenhouse gases.
Focus
countries Among other countries, three
emerging economic powerhouses, China, Brazil and
India, are becoming increasingly strong magnets
for Japanese CDM projects. Of the 115 Japanese
government-approved projects, 52 are in the three
countries, 25 in China, 17 in Brazil and 10 in
India. Of the 25 projects in China, 23 have been
approved since last June. China is the world's
second-largest carbon-dioxide emitter after the
United States, followed by Russia, Japan and
India.
Since December, the Japanese
government has approved 10 CDM projects in Brazil,
mostly hydroelectric power projects. The 10
projects will reduce greenhouse gases by a
combined 491,000 tons carbon dioxide equivalent
per annum. Ricoh's five wind-power CDM projects in
India were approved by the Japanese government
last month. The five projects will reduce
greenhouse-gas emissions by a combined 184,000
tons per annum.
Hisane Masaki is
a Tokyo-based journalist, commentator and scholar
on international politics and economy. Masaki's
e-mail address is yiu45535@nifty.com.
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