Demand for Carbon Credit Trading is Expected to Skyrocket
The Tokyo Metropolitan Government recently launched Asia’s first mandatory program to cut carbon emissions. The program will cover approximately 1,400 industries, commercial buildings and large office buildings within Tokyo. According to the Sustainability and Climate Change Reporter, “the Tokyo program is being touted as a potential model that could spread throughout Japan and other cities in Asia.”
The program is also noteworthy because it’s the world’s first urban cap and trade program to cover office buildings as emissions reduction targets.
Tokyo’s ground-breaking initiative echoes Arnold Schwarzenegger’s efforts as governor of California to push carbon emissions cuts on a state basis ahead of national US action.
The program will be rolled-out in two phases. In the fiscal 2010-2014 first phase of the scheme, the targeted entities will be required to cut carbon dioxide emissions by either 6 percent or 8 percent from base-year levels that are calculated from average emissions over a period of three consecutive years between fiscal 2002 and 2007.
In the fiscal 2015-2019 second phase, they will be required to slash emissions by 17 percent from their base-year levels.
To meet the emissions-cut targets, offices and factories in the capital can either make efforts on their own, such as updating to energy-saving equipment, or purchase carbon emissions credits from other entities that have reduced carbon emissions.
Actual trading under the mandatory system in Tokyo is set to begin in fiscal 2011 after data on reduction efforts in fiscal 2010 are finalized.
Interestingly, Tokyo’s CO2 trading scheme was launched just as Japan’s Sony Corporation announced its Road to Zero global environmental plan. The plan is a long-term goal of achieving a zero environmental footprint by 2050.
Zero by 2050? Now that’s a worthy goal. I’m not aware of any company in the U.S. having established a similar program. Does anyone out there know of one?
I’d hate to see another country take the lead on this.
P.S. My interest in international cap and trade systems stems from an innovative program my firm launched to accept carbon offset credits as partial payment for legal fees. Our firm’s program was the subject of a Wall Street Journal article, which you can read about here.
Be sure to read my two previous posts on the subject: