Foreign Carbon Credit Purchasing Options Open to Japan to Achieve the Kyoto Target

Number 05

The Kyoto Protocol, adopted in 1997, committed industrialised countries to accept legally-binding targets to reduce greenhouse gas (GHG) emissions collectively by an average of 5% below 1990 levels in the first commitment period from 2008 to 2012. According to the latest report by the United Nations Framework Convention on Climate Change (UNFCCC) Secretariat in May 2006, the total emissions of industrialised countries that ratified the Kyoto Protocol had decreased by 6.2% in 2003 relative to the 1990 level - which means that the reduction targets for industrialised countries as a whole appear achievable. However, individual parties, including Japan and some EU member states, currently seem unlikely to meet their targets.

The Kyoto Target Achievement Plan (KTAP) adopted by the Japanese government in April 2005 estimates that the 2010 GHG emissions will be 6% higher than the 1990 level with existing policies and measures. Therefore it is necessary to reduce emissions by 12% in order to achieve the target of 6% below the 1990 level. Of the 12%, 6.5% is planned to be reduced by domestic policies and measures and 3.9% through the full utilisation of domestic sinks. The remaining 1.6% - which corresponds to about 100 million tonnes (Mt) CO2e during the first commitment period - will be acquired from abroad by using the Kyoto Protocol mechanisms. To this end, the government has set aside 5.7 billion yen (54 million US dollars in FY 2005) and launched the Kyoto Mechanisms Credit Acquisition Program in July 2006. It is still uncertain whether credits corresponding to 1.6% will be achieved with existing measures to utilise the Kyoto mechanisms. Moreover, since there is also uncertainty on reduction through domestic policy measures and utilisation of sinks, it may be necessary to acquire additional emission reduction credits (ERCs).

Recognising the need to establish a mechanism in Japan to secure credits from abroad corresponding to at least 1.6% based on KTAP, I propose two parallel but interlinked stages: 1) effective implementation of a national purchasing scheme and, 2) the establishment of a domestic cap and trading scheme linked to other domestic emissions trading schemes.


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