Happy birthday to Kyoto, but ...

Posted in Japan | 13-Feb-07 | Author: Hisane Masaki| Source: Asia Times

TOKYO - The Kyoto Protocol to the United Nations treaty on climate change went into effect on February 16, 2005, after Russia became the 55th nation to ratify it. Since then 169 countries, representing virtually the entire world, have joined, including China. Notable exceptions are the United States and Australia.

Japan's ancient capital Kyoto, where the protocol was negotiated, is not about to let the second anniversary pass by without some kind of celebration. The city's Miyako Ecology Center recently launched a series of events dubbed "The Second Happy Birthday" with workshops, concerts and exhibitions. It will run through the end of February.

But the rest of Japan doesn't seem to be in a festive mood as the world's second-largest economy feels the heat to live up to the goals of the treaty amid increasingly gloomy prospects of meeting its international obligation to reduce emissions of carbon dioxide and other greenhouse gases, that is, those that accumulate in the atmosphere and trap the sun's heat, leading to an overall warming of the planet.

Under the terms of the Kyoto Protocol, industrialized countries must reduce their emissions of several greenhouse gases by an average of 5.2% from 1990 levels during 2008-12. The protocol sets separate gas-reduction targets for individual industrialized countries. In Japan's case it must reduce emissions by 6%, to 1.185 billion tons carbon dioxide equivalent from 1.261 billion tons.
Despite its firm commitment to the Kyoto Protocol, however, Japan's emissions have actually risen from the 1990 levels. While those from the industrial sector - which account for about 40% of the nation's total - may have declined slightly from the 1990 levels, those from household and transport sectors have risen strongly during the same period. Thus, in order to be in compliance Japan must now slash emissions by 14.1%.

Last Friday, the Intergovernmental Panel on Climate Change, the most authoritative group of climate scientists around the world, released a new report warning that global warming was "very likely" to have a human cause. The IPCC has projected a probable increase in average temperatures of 1.8-4 degrees Celsius by the end of the century, while sea levels are most likely to rise by 28-43 centimeters.

The latest report was the first of its kind to link abnormal weather to the increasing temperature of the planet. It said extreme weather such as torrential rain, heat waves, unusually mild winters and massive typhoons are not unrelated to global warming, adding that abnormal weather could strike parts of the world more often than in the past. Japan has experienced most of these weather anomalies in recent years, including devastating typhoons, concentrated heavy rainfalls, extremely heavy snowfalls and unseasonably warm weather.

According to another recent study, Japan's coastal areas, particularly bays open to the south, may be hit by bigger storm surges and higher waves in the future during typhoons made stronger because of global warming. The bigger typhoons will raise sea levels because of lower atmospheric pressure. The study was compiled by a group of experts at the Port and Airport Research Institute, an affiliate of the Japanese Land, Infrastructure and Transport Ministry. The maximum tidal levels will go up by about 3 meters from the current levels at Osaka and Hiroshima bays at the end of the 21st century, the study says.

Resource-poor Japan has made strenuous energy-saving efforts and technological innovations since the two oil crises of the 1970s. As part of its energy-conservation efforts, Japan has adopted a "top-runner system", under which the most energy-efficient products become the benchmark for their industries. Under the Energy Conservation Law revised in 1998, the top-runner system was applied to 21 items, including automobiles and refrigerators, and has proved successful.

The country is now the most energy-efficient in the industrialized world and faces great difficulties making further dents in greenhouse-gas emissions through domestic measures alone, such as further energy-saving efforts and carbon "sink" plantation projects that soak up carbon dioxide. According to one estimate, it costs Japan on average about US$110 to eliminate a ton of carbon dioxide, compared with about $80 for Europe and $50 for the United States.

Japan sees nuclear energy as crucial if it is to slash greenhouse gases, since nuclear power plants generate no carbon dioxide. But many of the nation's 55 nuclear reactors are 20-30 years old and won't be replaced by new ones until about 2030. Increasing their share of electricity to between 30% and 40% or more in 2030 from the current 30%, the goal set by the government last May, will place great strain on the older reactors.

It also remains to be seen whether Japanese power companies, facing tougher competition in the domestic market as a result of increased deregulation, as well as damaged public confidence in nuclear-plant safety in the wake of a spate of accidents and other problems - and their cover-ups - will be able to build new plants smoothly to replace the aging ones in the future.

The Ministry of Economy, Trade and Industry (METI) has recently drawn up a new target obliging electric-power companies to use renewable energy sources, such as wind and solar power, to generate electricity worth 1.63%, or 16 billion kilowatt-hours, of their projected electricity sales in 2014. But the new target marks only a marginal rise from the fiscal 2010 target of 1.35%, or 12.2 billion kilowatt-hours, set in 2003. Experts say that such a small increase will have only a limited impact on curbing global warming and that the new target is far less ambitious than the level of use of renewable energy sources in Europe.

Although the Environment Ministry has tenaciously pushed for the introduction of an environment tax on fossil fuels - which would be equivalent to 1.5 yen (about 1.25 US cents) per liter in the case of gasoline - to help reduce greenhouse-gas emissions, METI and domestic industries have opposed the idea, claiming that any such extra tax burden would erode corporate Japan's international competitiveness.

New efforts
Since the Kyoto Protocol became effective, the Japanese Environment Ministry has spearheaded two nationwide campaigns in a desperate bid to reduce carbon-dioxide emissions - the "Warm Biz" campaign of keeping office temperatures at about 20 degrees Celsius in winter and the "Cool Biz" campaign of encouraging office workers to dress lightly without a tie or jacket during their work hours in summer.

Among other recent developments, the Land, Infrastructure and Transportation Ministry and METI have agreed to introduce new standards that require auto makers to improve the fuel efficiency of their vehicles by an average of 23.5% by 2015 from 2004 levels. The tougher requirement is expected to place a heavy burden on auto makers to develop technology and may affect their management strategies. The ministries plan to revise regulations this summer.

The Land, Infrastructure and Transportation Ministry will soon begin talks with the Japan Freight Railway Co, auto-parts makers and food-processing companies to discuss ways to shift the means of transport away from trucks to trains. As of fiscal 2005, Japan's transport sector produced 257 million tons of carbon dioxide, about 20% of the nation's total emissions and up 18.1% from the fiscal 1990 levels.

Prime Minister Shinzo Abe vowed to achieve the reduction target under the Kyoto Protocol in a speech to the Diet (parliament) on January 31. He has also instructed Environment Minister Masatoshi Wakabayashi to draw up a new "environment nation strategy" during the next fiscal year starting in April to spell out Japan's measures to fight global warming. The instruction comes ahead of the start next year of the Kyoto Protocol's "first commitment period" and, also next year, the summit of the Group of Eight developed nations in Japan, at which global warming is expected to be discussed.

Kyoto mechanisms
With dark clouds hanging over its greenhouse-gas-reduction commitment under the Kyoto Protocol, Japan's government and businesses are increasingly turning to an array of "Kyoto mechanisms" as attractive means of achieving the target at a lower cost while maintaining the international competitiveness of the nation's economy.

These involve "credits" that firms earn in return for gas-reduction investments in developing countries, which can be counted as cuts in their own emissions - and in turn, in Japan's - under a system called the Clean Development Mechanism (CDM), one of the three mechanisms introduced under the protocol to help industrialized countries meet their reduction targets. Developing nations that take part also benefit by receiving technology transfers from their industrialized partners.

The two other mechanisms are Joint Implementation (JI) and international emissions trading. JI is similar to CDM, but it covers gas-reduction projects in industrialized countries that can afford to cut more gases than required by the protocol, such as Russia and other former Soviet republics and Eastern European countries. In international emissions trading, greenhouse-gas emission credits are traded.

In January 2005, the European Union established the world's first multilateral emissions-trading market. Japan followed last April with its own version - the Japan Voluntary Emissions Trading Scheme (J-VETS). But major emitters, such as oil and power companies, have shied away from participating for fear that mandatory emission restrictions might be imposed on them in the future.

Last October, emissions credits for carbon dioxide traded between Japanese companies for the first time under J-VETS. Nippon Electric Glass Co sold credits for 200 tons of carbon dioxide to Tokyo-based Funai Consulting Co. The company also switched fuel for a glass-melting furnace at its factory in Higashi-Omi, Shiga prefecture, from heavy oil to liquefied petroleum gas. As a result, the glass-bulb maker was able to cut greenhouse-gas emissions more than it had expected.

Many Japanese companies not only feel the necessity to hedge against future risks but also see new - and potentially lucrative - business opportunities in emission reduction, since demand for the right to emit greenhouse gases is growing. Firms that earn emission credits through CDM and JI projects abroad can count them in their reduction efforts, and surplus credits can be sold through emissions transactions on the markets.

Firms that buy cheap credits only to sell them off for higher prices could reap profits. Energy-related firms such as electric-power, oil and gas companies are not alone in rushing to gas-reduction projects abroad. Major Japanese trading firms are also intent on cashing in on the new business bonanza. The number of projects approved by the government has been rising sharply since the Kyoto Protocol came into force, and the number has been growing at an accelerated pace in recent months.

Of the 115 projects approved by the Japanese government, 66 have been approved since last June, many of them CDM projects in Asian and Latin American countries. CDM projects also have to be approved by the governments of host countries and by the United Nations. Some of the projects have already been registered with screening boards such as the UN's CDM Executive Board.

Meanwhile, the Japanese government has begun to make full-scale use of the CDM and other Kyoto mechanisms. It started buying greenhouse-gas-emission credits last summer through the government-affiliated New Energy and Industrial Technology Development Organization. The government earmarked 5.4 billion yen ($45.9 million) in the fiscal 2006 budget for purchasing credits. The maximum funds for credit acquisition in fiscal 2006 totaled 12.2 billion yen.

In addition, the government-affiliated Japan Bank for International Cooperation, one of the world's biggest international financial institutions, is now focusing on expanding its environment-related business activities. JBIC is rushing to sign partnership agreements with many developing countries, such as El Salvador, Sri Lanka, Malaysia, Thailand, Indonesia, the Philippines, India and Brazil. The CDM partnership agreements are aimed at helping Japanese firms participate in CDM projects and thereby acquiring emission rights for greenhouse gases.

Focus countries
Among other countries, three emerging economic powerhouses, China, Brazil and India, are becoming increasingly strong magnets for Japanese CDM projects. Of the 115 Japanese government-approved projects, 52 are in the three countries, 25 in China, 17 in Brazil and 10 in India. Of the 25 projects in China, 23 have been approved since last June. China is the world's second-largest carbon-dioxide emitter after the United States, followed by Russia, Japan and India.

Since December, the Japanese government has approved 10 CDM projects in Brazil, mostly hydroelectric power projects. The 10 projects will reduce greenhouse gases by a combined 491,000 tons carbon dioxide equivalent per annum. Ricoh's five wind-power CDM projects in India were approved by the Japanese government last month. The five projects will reduce greenhouse-gas emissions by a combined 184,000 tons per annum.

Hisane Masaki is a Tokyo-based journalist, commentator and scholar on international politics and economy. Masaki's e-mail address is [email protected].

Hisane Masaki is WSN Editor Japan.