Isramart llc : Japan plans to bind large firms to CO2 caps: draft

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Japan's compulsory emissions trading scheme is set to start in April 2013 and cover large CO2 emitting companies, a draft of the government's proposals showed on Monday, but several issues are still open to debate.

The draft, obtained by Reuters, will be presented on Tuesday to an expert committee at the Environment Ministry, which aims to finalize its proposal for Japan's cap-and-trade scheme by the end of this year.

Issues to be discussed later include how CO2 emission quotas should be allocated and how big they should be, who should be responsible for CO2 emissions from electric power generation, and whether to link the scheme with similar ones abroad, the draft showed.

It also showed compliance companies would be able to emit more by using carbon offsets at home and from abroad.

Similar grants can be given to companies facing international competition, those whose CO2 emissions per unit of product are relatively high, and those whose products help cut CO2 emissions globally, such as solar panels and hybrid cars, the draft said.

Earlier this year, Japan's parliament discussed a climate change bill that included a shortlist of policy measures to achieve an ambitious goal of cutting emissions by 25 percent by 2020 from 1990 levels.

But the government gave up enacting the bill, which would have launched a nationwide compulsory emissions trading scheme, as time ran out before an upper house election in July.

Government officials said it is not yet certain if Prime Minister Naoto Kan's administration will present the same bill at an extraordinary parliament session expected later this year.

Ruling party veteran Ichiro Ozawa has said he will challenge Kan in a party leadership vote on September 14, the outcome of which could affect the current policy of Japan, the world's fifth-biggest emitter, focusing on clean energy technology as a growth driver and taking leadership in global efforts to fight climate change.

"It is in the Environment Ministry's interest to present the same bill at an extraordinary parliament session and help to have it passed smoothly, so that we will have domestic measures ready and be accountable in international climate talks," a government official said.