Japan plans to introduce a pilot carbon dioxide trading program in October as part of a new policy to reduce greenhouse gas emissions 60 percent to 80 percent by 2050, the government said Tuesday.
The carbon emissions trading program, along with proposals to increase solar energy use and promote electric cars, is part of a plan by Japanese Prime Minister Yasuo Fukuda to reach the country’s emissions goal.
Fukuda first discussed the new policy in June, and the government aims to reduce emissions to the current level by the mid-century. Fukuda has committed to contributing up to $1.2 billion to a new fund supported by the United States and the United Kingdom that will assist developing countries curb global warming.
Fukuda’s cabinet approved his plan Tuesday, though the policy lacks key details. It is not yet certain how the country would implement the plan. The cost of the carbon-trading program as well as the funding for renewable energy projects still need to be hashed out. The Japanese government plans to develop rules for the program by September.
Creating a carbon-trading market would be a big step for Japan, and it would open up opportunities for domestic and overseas investors and banks to profit from this increasingly popular approach to reducing the emissions that contribute to global warming.
The European Union runs an emissions-trading program that sets carbon emission limits for different industries and allow companies to buy and sell those allowances. A coalition of western U.S. states and Canadian provinces is drafting a plan to set up a cap-and-trade program as well (see U.S. and Canada to Create Carbon Cap-and-Trade System).
In Fukuda’s plan, Japan would build nine nuclear reactors by 2020. By that time, half of the cars sold in the country would run on low-emission technologies, such as hybrid-electric engine systems, fuel cells and compressed natural gas.
Using more solar power is also part of the plan. Fukuda’s government could resurrect a policy that requires utilities to buy solar energy through long-term contracts, at prices set by the government (see Japan Wants to Resurrect Solar Incentives). The country also wants to make sure solar panels are installed on more than 70 percent of new residences by 2020.
Policies such as these have created a booming solar energy market in Germany and Spain while also benefiting solar panel makers and power plant developers from the United States, China, Japan and Europe (see Spanish Solar Group: Don’t Change Feed-In Tariffs).
Although Japan has supported its solar energy industry in the past, it hasn’t been as generous to the wind energy sector. A lack of public incentives and resistance from utilities are among the major problems for developing wind farms in the country (see Japan’s Wind-Power Problem).
Fukuda’s new plan is ambitious. The prime minister, who took office last September, has a lot of work to do considering that the country is having trouble meeting the mandate by the 1997 Kyoto treaty to reduce greenhouse gas emission to 6 percent below the 1990 levels by 2012 (see Adding New Fuel Standards, Solar Incentives).