The Tokyo Stock Exchange and the Tokyo Commodity Exchange are planning to create the nation’s first market for trading in greenhouse gas emissions as early as next year, according to officials of the exchanges.
The move comes after Prime Minister Yukio Hatoyama unveiled a new emission reduction target to combat global warming. Emissions trading is expected to encourage industries to achieve greenhouse gas reduction targets.
Through the market, trading houses that undertake greenhouse gas emission reduction projects in developing countries would sell emission reduction rights to other entities willing to count them in their own reductions.
Greenhouse gas emission credits, if allocated by the government to companies, may also become subject to trading on the market.
In September, Hatoyama pledged at the U.N. Climate Change summit that his administration will aim to reduce greenhouse gas emissions by 25 percent by 2020 from 1990 levels.
But the business community has called Hatoyama’s target too ambitious, saying efforts to meet the goal will inevitably force companies to invest heavily in energy-efficient equipment, putting more financial burden on already struggling Japanese firms.