The Environment Ministry will set up a market in fiscal 2005 so companies can engage in transactions of greenhouse gas emissions as a way to attain Japan’s emissions cut obligation under the 1997 Kyoto Protocol.
Ministry officials said Tuesday the ministry will begin publicly asking companies early next year to participate in such trade on a voluntary basis. Several dozen companies are expected to take part, they said.
The ministry will request several billion yen in subsidies under the fiscal 2005 budget to help with Japan’s efforts to implement the Kyoto Protocol to curb global warming.
Participating companies will join the new program with self-set targets for cutting emissions that will be examined by a third-party body.
The ministry will grant the companies subsidies to cover necessary equipment investment. Failure to clear the targets will mean that the companies will have to return the subsidies to the ministry.
The ministry will create a market to trade rights to emit greenhouse gases between companies experiencing trouble reducing their emissions and those having no problem doing so.
The companies must reach their targets within two years. They will be able to purchase emissions quotas from other participants and use afforestation projects or other efforts to cut greenhouse gases overseas as substitutes for emissions reduction.
One official said the new attempt will enable the ministry “to help some companies that cannot buy new equipment due to the recession.”
Britain has already introduced an emissions trade market, and the European Union will begin emissions rights transactions in January among companies within its member states.
Signatories of the Kyoto Protocol agreed to reduce greenhouse-gas emissions by 5.2 percent from 1990 levels between 2008 and 2012.
The pact requires Japan to cut such emissions during the period by 6 percent, the United States by 7 percent and the European Union by 8 percent.