Page 2 of 3 Japan goes on an air spending
spree By Hisane Masaki
million tonnes
of CO2, down 4.4% from fiscal 2005 but up 30.4%
from fiscal 1990.
According to estimates
released in early August by a joint council of the
Environment Ministry and the Ministry of Economy,
Trade and Industry (METI), Japan's GHG emissions
are likely to rise by a minimum of 0.9% and a
maximum of 2.1% in fiscal 2010 from the fiscal
1990 levels because the economy is expected to
grow stronger than expected earlier. This means
Japan might actually
need
to make an additional cut of between 1.5% and
2.7%, or between about 20 million and 34 million
tonnes CO2 equivalent per annum, possibly all
through government credit purchases.
Based
on the new estimates for fiscal 2010 GHG
emissions, the Finance Ministry said in late
October that that the government might eventually
have to spend at least 220 billion yen and up to
1.2 trillion yen on credits to achieve Japan's
Kyoto goal. The ministry's estimates for credit
purchase costs are based on the lowest and highest
transaction values in the EU's past emissions
trading - of $9 and $36 per tonne, respectively.
The joint council, comprising the
Environment Ministry's Central Environment Council
and METI's Industrial Structure Council, is
reviewing the government's program to attain the
Kyoto target, which was adopted soon after the
Kyoto Protocol took effect in February 2005. The
joint council is expected to issue a final report
by the end of the year that contains additional
measures to reduce GHG emissions. Based on the
final report, the government plans to revise the
2005 program next March.
Highly alarmed by
the August estimates for fiscal 2010 GHG
emissions, the government has pressed domestic
industries to do more to produce less such gases.
For Japan to reach its Kyoto goal, each of most
major domestic industries has mapped out a
voluntary action plan to cut GHG emissions.
The nation's 21 industries raised their
voluntary GHG reduction targets and pledged at the
joint council of the Environment Ministry and METI
in October to make additional emission cuts
totaling about 20 million tonnes CO2 equivalent
per annum, the amount seen as the minimum
necessary, based on the council's August estimates
for fiscal 2010 emissions, for Japan to achieve
its Kyoto target.
Still, the question is
that the council's August estimates themselves are
widely seen as being overly optimistic. Even some
council members question the credibility of the
estimates, which do not fully take into account an
anticipated effect on nuclear power generation of
a powerful earthquake that hit Niigata Prefecture,
central Japan, in July.
The 6.8-magnitude
temblor damaged and shut down indefinitely the
Kashiwazaki-Kariwa nuclear plant, the world's
largest nuclear power station in terms of output
capacity. The plant operator, Tokyo Electric
Power, estimates that the suspension will lead to
a 2% rise in Japan's GHG emissions in the current
fiscal year alone.
Resource-poor Japan,
which imports almost all of its oil and natural
gas, attaches great importance to nuclear power as
a key to ensuring national energy security, as
well as to reducing GHG emissions. Japan is
already the world's third-largest nuclear power
nation, after the United States and France, in
terms of the number of civilian nuclear reactors.
At present, Japan's nuclear plants supply about
30% of the country's electricity, significantly up
from just 6.5% three decades ago.
The
electric power industry's action plan for GHG
emission reductions, which is reflected in the
current government program to achieve Japan’s
Kyoto target, sets a specific goal of reducing CO2
emissions intensity (emissions per kWh of energy
used by the end user) by approximately 20% from
the fiscal 1990 level to about 0.34 kg-CO2/kWh by
fiscal 2010.
The 20% reduction target is
based on the assumption that nuclear power plants
will operate at more than 80% of capacity. But the
actual operation rate is now stuck below 70%
because of a series of accidents and mishaps at
many plants - and their cover-ups by power
companies. In fiscal 2006, the rate was 69.9%,
compared with 84.2% in fiscal 1998.
The
Environment Ministry said that if the operation
rate of nuclear power plants had been at the same
level as fiscal 1998, Japan's GHG emissions in
fiscal 2006 would have been 1.302 billion tonnes
CO2 equivalent, up only 3.3% from the 1990 levels,
instead of up 6.4% as preliminarily reported.
In a rush Japanese companies
are racing against the clock and further
accelerating their hefty investments in CDM and JI
projects abroad. As of October 24, the Japanese
government had approved a total of 247 such
projects since the end of 2002. Of the 247
projects, 149, or 60%, were approved this year
alone. China is by far the largest host nation of
CDM projects involving Japanese firms, followed by
such other major developing countries as Brazil
and India.
The electricity and steel
industries, two major CO2 emitters, reported to
the joint council of the Environment Ministry and
METI in October plans to significantly increase
their emission credit purchases, to a total of 164
million tonnes CO2 equivalent. The electricity
industry plans to increase the amount of credit
purchases it makes by 2012 to around 120 million
tonnes CO2 equivalent from the previously planned
70 million tonnes, while the steel industry plans
to purchase 44 million tonnes by 2012, compared
with the previously planned 28 million tonnes.
Energy-related firms such as
electric-power, oil and gas companies, and
steelmakers are not alone in rushing to
gas-reduction projects abroad. Since firms that
buy cheap credits only to sell them off for higher
prices could reap profits, major Japanese trading
firms are intent on cashing in on the new business
bonanza. They have already actively participated
in GHG-reduction projects abroad, acquired
emission credits generated from the projects and
sold the credits to Japanese clients.
Mitsubishi Corp, Japan's biggest trading
house, is by far the most aggressive Japanese
investor in CDM and JI projects. Mitsubishi is
involved in 44 - or about 18% - of the 247 such
projects approved by the Japanese government as of
October 24, either alone or in partnership with
other Japanese companies. At present, the total
amount of emission credits Mitsubishi has already
acquired or plans to acquire through CDM and JI
projects is estimated at around 14 million tonnes
CO2 equivalent per annum.
Another major
trading house Marubeni Corp is preparing to launch
up to 10 JI projects in Kazakhstan in hopes of
acquiring emission credits worth several million
tonnes CO2 equivalent per annum. Kazakhstan is not
a signatory to the Kyoto Protocol, but is expected
to ratify the treaty in the near future, paving
the way for JI projects in the resource-rich
Central Asian country.
Marubeni
specifically plans to launch between five and 10
methane recovery JI projects at Kazakh coal mines
and landfills. Methane is one of the six GHGs
controlled by the Kyoto Protocol. Marubeni has
apparently set its sights on Kazakhstan because
new opportunities for large-scale GHG-reduction
projects in the
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