Carbon trading - Japan's draft climate bill approved

JAPAN: Japan's cabinet has approved draft legislation that sets the stage for carbon trading in the world's second-largest economy, aims for renewables to comprise 10% of energy sources by 2020 and lays the groundwork for requiring utilities to buy fixed-price renewable energy.

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Passage of the law would help fulfil the pro-renewables Democratic Party of Japan's (DPJ's) election promise to reduce Japan's greenhouse gas emissions to 25% below 1990s levels by 2020, through measures including an environmental tax. Submission of the draft law to parliament is expected later this year.

Ministries shaping the bill were caught between competing proposals, one with a greenhouse gas emission ceiling and the other with limited emissions per unit of output. A compromise was reached in which the country reportedly aims in principle for an across-the-board ceiling, but allows consideration for some industries to emit limited volumes of greenhouse gases in proportion to output.

Businesses, labour unions and the Ministry of Economy Trade and Industry are in favour, but foreign minister Katsuya Okada was among those opposed to the per-unit approach, arguing that it runs counter to the aim of reducing emissions.

Corporate opposition

The draft bill is ambiguous about nuclear power, showing a split opinion between the DPJ and their junior coalition partner, the Social Democratic Party of Japan (SDP). In the interest of cabinet unity, SDP consumer affairs minister Mizuho Fukushima endorsed a statement that nuclear power is essential for achieving a low-carbon society, but the draft legislation falls short of advocating construction of more nuclear power stations.

Japanese firms such as Toshiba are leaders in nuclear power and are keen for government help to secure overseas orders. But renewables proponents and many grassroots organisations are vocally opposed to nuclear energy.

Powerful business organisations have been quick to condemn the bill. Japan Business Federation chairman Fujio Mitarai says: "It is extremely regrettable that the cabinet made the decision without sufficient discussion and information disclosure."

A cabinet working group will soon formulate details of the proposed carbon-trading framework, but business opposition is likely to delay the policy-making process.

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