Japan starts Kyoto climate drive - in reverse

Posted in Japan | 06-Apr-08 | Author: Hisane Masaki| Source: Asia Times

TOKYO - Gasoline price cuts in Japan could not have come at a more awkward time diplomatically for the world's second-biggest economy and major emitter of gases widely blamed for global warming.

While lower gasoline prices, albeit likely to be short-lived, have come as a boon to Japanese motorists, they might hurt the nation's environmental credentials ahead of the summit of the Group of Eight (G8) leading industrialized nations in Hokkaido, northern Japan in early July.

Gasoline price cuts began on April 1 after a long-lasting but provisionally higher gasoline tax rate, which was still lower than in most other industrialized countries, was allowed to expire the day before due to strong objections from opposition parties.

The five-year "first commitment period" of the Kyoto Protocol on curbing global warming also officially started in Japan on April 1, the first day of the nation's fiscal year.

Gasoline is one of fossil fuels whose burning has resulted in increased global emissions of carbon dioxide (CO2), a primary heat-trapping greenhouse gas (GHG) that contributes to global warming. Japanese government officials say that gasoline price cuts might send a wrong message to the international community and raise doubts about the nation's firm commitment to the fight against climate change.

With climate change expected to top the agenda at the G8 summit, Prime Minister Yasuo Fukuda and other government officials have expressed Japan's strong desire to take the leadership role in international efforts to establish a new framework to replace the Kyoto Protocol, which expires in 2012. Negotiations on a post-Kyoto regime are under way to reach an agreement by the end of 2009.

G8 comprises the United States, Canada, the United Kingdom, Germany, France, Italy, Japan and Russia. Japan will also invite leaders from eight leading non-G8 GHG emitters, including China and India, for an "expanded dialogue" on climate change to be held on the last day of the G8 summit, in a bid to get them on board in reducing global emissions.

In early March, Fukuda inaugurated a panel of experts to discuss ways to address global warming, including the possible introduction of a mandatory GHG emissions trading system, ahead of the G8 summit. The 12-member panel is headed by business tycoon Hiroshi Okuda, a senior advisor for Toyota Motor Corp and special advisor to the prime minister.

Okuda once served as Toyota Motor chairman and as head of the Japan Business Federation (Nippon Keidanren), the nation's most powerful business lobby. Okuda still wields considerable influence in Japanese business circles. It is widely believed that Fukuda picked Okuda as his panel's head to quell opposition from some businesses to tougher anti-global warming measures, including a mandatory GHG emissions trading system.

Political tension over tax
The ruling and opposition parties have been locked in a sharp confrontation in the Diet, Japan's parliament, over a government tax bill aimed at maintaining provisionally higher rates for gasoline and other road-related taxes. At the center of the dispute is the tax surcharge of about 25 yen (24 US cents) per liter of gasoline.

The rates for road-related taxes were raised in the 1970s to expedite road development projects across the country. The higher rates were introduced as a provisional measure but have been maintained since. At present, revenues from such taxes, which will total an estimated 5.4 trillion yen in fiscal 2008, which started on April 1, are still mostly earmarked for road-related projects.

The government and the ruling parties have warned that without the provisionally higher rates, tax revenue shortfalls totaling about 2.6 trillion yen would occur annually - 1.7 trillion yen for the state and 900 billion yen for local governments.

The largest opposition group, the Democratic Party of Japan (DPJ), demanded that the provisionally increased road-related tax rates be scrapped from April 1 and that revenues from such taxes, which the party claims - and many experts agree - have often been used wastefully, be fully allocated for general purposes.

On March 27, only four days before the expiry date of the provisionally higher rates for gasoline and other road-related taxes, Fukuda, who doubles as president of the ruling Liberal Democratic Party (LDP), announced a compromise plan despite anticipated resistance from some lawmakers within the LDP.

Rejecting an opposition demand to scrap the provisionally higher rates for road-related taxes from April 1, Fukuda promised to use all of the estimated 5.4 trillion yen revenues from such taxes for general purposes from fiscal 2009.

But the DPJ immediately dismissed Fukuda's compromise plan as insufficient. Until Friday, the DPJ-led opposition camp had refused to even hold deliberations on the government tax bill in the House of Councilors, or the Upper House of the bicameral Diet, where the ruling camp lacks a majority. The bill cleared the ruling camp-controlled House of Representatives, or the Lower House, at the end of February.

The LDP-led coalition, which wants to reinstate the provisionally higher road-related tax rates as soon as possible despite an anticipated public backlash against a resurge in gasoline prices, is now poised to resort to the constitutional power it currently enjoys in the Lower House to railroad through the controversial tax bill later this month.

If the opposition-controlled Upper House votes down the bill, the ruling coalition-dominated Lower House can override the Upper House decision on the strength of the LDP-led coalition's two-thirds majority.

Under Article 59 of the constitution, a bill can be sent back to the Lower House for a second vote if the Upper House votes it down or holds off on taking a vote on it within 60 days of receiving it - by April 29 in the case of the contentious tax bill. The bill will become law if passed in the second Lower House vote with the support of a two-thirds majority.

The ruling camp used the rarely used constitutional power in January to enact a controversial bill to resume Japan's refueling mission in the Indian Ocean in support of the United States-led anti-terrorism operations in Afghanistan.

Despite the expiry of the gasoline tax surcharge on gasoline, prices for the fuel have not yet gone down automatically by the same amount nationwide as most gas stations first need to sell the already taxed gasoline stored in their tanks. The gasoline tax is levied when oil wholesalers ship their products.

Still, many gas stations began to offer discounts at a loss immediately to survive cut-throat competition. According to a survey released by the Oil Information Center on Wednesday, the nationwide average retail price of regular gasoline stood at 142.2 yen per liter on April 1, down 10.7 yen from the day before.

Kyoto goal 'within reach'
The gasoline price cuts come at a time when Japan is in hot water over reaching its GHG emission reduction goal under the Kyoto Protocol.

Japan must reduce its annual GHG emissions by 6% on average between fiscal 2008 and 2012 from the 1990 level, yet its emissions in fiscal 2006, which ended in March 2007, were 6.4% above the fiscal 1990 level, according to preliminary government figures. Failure to fulfill its commitment under the treaty would represent an embarrassing loss of face for the nation and deal a serious blow to its clout in the world of environmental diplomacy.

On March 28, Fukuda's cabinet formalized a revised and strengthened version of the 2005 program aimed at achieving the nation's Kyoto target. The cabinet's formal endorsement of the revised Kyoto program, which includes additional emission reduction measures by industries and others, came only four days before the official start in Japan of the Kyoto Protocol's "first commitment period".

The revised Kyoto program is in line with a final report approved in early February by the joint council of the Ministry of Economy, Trade and Industry (METI) and the Environment Ministry, which reviewed the original program adopted in April 2005, two months after the Kyoto Protocol took effect. The revised program contains additional measures that are expected to slash GHG emissions by a total of 37 million tonnes CO2 equivalent per annum.

The revised Kyoto program calls for the government to check progress on anti-global warming measures included in the program every six months - in June and December. In fiscal 2009, the government will conduct a comprehensive evaluation of estimates for GHG emissions during the Kyoto Protocol's five-year commitment period.

On the issue of whether to introduce an environment tax, levied primarily on such fossil fuels as oil and coal, and a mandatory emissions trading system, which is already in place in the European Union (EU) and is regarded by some as highly effective in reducing emissions, the revised Kyoto program states that they are "issues that should be considered as soon as possible".

Although government officials say the Kyoto goal is now "within reach" thanks to the additional measures stipulated in the revised program, many critics say the government is too optimistic. The government could be forced to change the program again to take further emission reduction measures or increase emission credit purchases from abroad, due to a possible lack of progress in cutting emissions.

Environment Minister Ichiro Kamoshita has repeatedly said that if Japan fails to make sufficient progress toward the Kyoto goal, various new administrative measures will become necessary, including the introduction of a mandatory emissions trading system.

The Japanese government only recently began to consider the possible introduction of a mandatory emissions trading system in earnest, after METI and the Japan Business Federation (Nippon Keidanren) dropped their vehement oppositions. METI has said that any mandatory emissions trading system does not need to be introduced during the Kyoto Protocol's first commitment period of 2008-2012.

Government in disarray
METI and the Environment Ministry are also locking horns publicly over how much Japan can reduce GHG emissions by 2020 to fight global warming. The verbal sparring between the two key government ministries in charge of Japan's anti-climate change efforts broke out after METI released a new long-term energy demand and supply outlook on March 19.

In the energy outlook, METI estimated that Japan's GHG emissions will total 1.214 billion tonnes CO2 equivalent in fiscal 2020, down 11% from 1.359 billion tonnes in fiscal 2005, which ended in March 2006, if companies and households make "maximum" energy conservation efforts, including the introduction of state-of-the-art products and technologies.

Japan has proposed an international goal of halving global GHG emissions by 2050 from the current level. But the country has yet to set a medium-term numerical target for reducing its own GHG emissions. The METI estimates have drawn much attention as they are expected to serve as a basis for Japan to set such a medium-term target.

At a regular press conference held two days after the METI estimates were released, Environment Minister Kamoshita criticized them, saying they "could cause a misunderstanding among foreign countries that Japan is reluctant to address environmental problems".

The Environment Ministry believes that more GHG emissions can - and must - be cut by 2020 through various emission reduction efforts, including a drastic review of Japanese people's life and business styles and the introduction of such new policy measures as a mandatory emissions trading system and an environment tax.

At a regular press conference held only a few hours after the METI estimates were released, the Environment Ministry's administrative vice minister Yoshio Tamura said that he thinks Japan will set a medium-term national emission reduction target, "taking into account various factors, including policy instruments".
Under the Kyoto Protocol, Japan is obliged to cut its annual GHG emissions by 6% on average between 2008 and 2012 from the 1990 level. But the METI-estimated emission amount of 1.214 billion tonnes in fiscal 2020 is only 4% below the fiscal 1990 emission amount of 1.261 billion tonnes.

According to a pessimistic estimate by the Intergovernmental Panel on Climate Change (IPCC), the United Nations' Nobel Peace Prize-winning network of scientists, industrial nations need to reduce their GHG emissions by 25% to 40% below 1990 levels by 2020.

The EU has set a target of cutting its GHG emissions by 20% by 2020, compared with the 1990 emission level. The EU and China are also demanding that developed countries agree to cut their emissions by at least 20% by 2020 from 1990 in a post-Kyoto international regime.

At a regular press conference held three days after Kamoshita criticized the METI estimates, METI's administrative vice minister, Takao Kitabata, countered that "on the whole, it [METI's estimated fiscal 2020 emission level] is a goal that can only be reached by clearing a fairly high hurdle".

About 190 countries agreed at United Nations-sponsored talks in Bali, Indonesia last December to launch two-year negotiations on a replacement for the Kyoto Protocol, which legally requires only rich nations to slash emissions by an average of 5% between 2008 and 2012 from 1990 levels.

Japan has rejected the idea of keeping 1990 as the base year for emission cuts under a post-Kyoto climate pact, saying it was unfair to Japanese industry, which had made strenuous efforts to enhance energy efficiency in the 1970s and 1980s. Japan has claimed that the 1990 base year is advantageous to Europe as some current EU nations were then heavily polluting members of the Soviet bloc.

Japan also believes that changing the base year from 1990 to a much later year would lower hurdles for fast-growing developing countries, such as China and India, which have no emission reduction obligations under the Kyoto Protocol and whose emissions began to shoot up in the 1990s.

Although Japan has not yet formally proposed any new specific base year for calculating emission cuts, Kitabata, the top METI bureaucrat, said that he thinks 2005 would be a "fairer" base year than 1990.

Kitabata said that the Japanese industry is now the world's most energy efficient and that Japanese people have also made at least as much energy-saving efforts as their counterparts in the United States and Europe. It is "self-degrading" to argue that Japan is not serious about addressing global warming, he said.

Under the current Japanese government plan, the 3.8% portion of the targeted 6% GHG emission reduction under the Kyoto Protocol is to be achieved by carbon "sink" plantation projects at home and the 1.6% portion is to be achieved by government acquisitions of emission credits from abroad. The remaining 0.6% portion is to be achieved by domestic emission reduction efforts by companies and households.

METI's Kitabata pointed out that the METI-estimated GHG emission level in fiscal 2020, which is down 11% from the fiscal 2005 level, has been calculated, excluding emission cuts made through sink projects and emission credit purchases from foreign countries.

Kitabata noted that the EU's target emission level in 2020, which is 20% lower than in 1990, is down 14% compared with the 2005 level. If the EU target actually includes forest absorption of CO2 and if Japan is permitted again to achieve a 3.8% emission reduction through forest absorption, the METI-estimated fiscal 2020 Japanese emission level will represent a reduction of over 14% from the fiscal 2005 level, matching the EU target, he said.

Therefore, the METI estimates for fiscal 2020 Japanese emissions "should be rated highly", he said.

Hisane Masaki is a Tokyo-based journalist, commentator and scholar on international politics and economy. Masaki's email address is yiu45535@nifty.com