July 8, 2011 / 4:13 PM / 9 years ago

Japan backs studies on alternative CO2 credits

TOKYO (Reuters) - Japan this week awarded subsidies of almost 2 billion yen ($24 million) to dozens of feasibility studies into emissions-cutting measures abroad, aimed at developing an alternative to the U.N.’s carbon market, a government official said.

Japan, the world’s fifth-largest greenhouse gas emitter, wants to encourage developing countries, in particular in Asia, to use its often costly technology to achieve emission cuts.

Tokyo is also hoping that the offsets generated if and when bilateral agreements are reached would be used, under a U.N. climate change framework, to help it to meet a pledge to cut its emissions by 25 percent from 1990 levels by 2020.

The United Nations’ carbon offset scheme, in which Japan is a major buyer, has been criticised for taking too long to process projects and restricting the number of projects with the same methodology.

Critics say this has limited the number of approved projects using Japan’s clean-energy and energy-saving technologies.

Japan’s government plans to spend a total 2.5 billion in the fiscal year to next March to recruit firms to study emission-cutting projects aimed at generating so-called “bilateral offsets”, said Keisuke Murakami, director at the trade ministry’s global environmental affairs office.

The second and last round, to award the remaining subsidies totalling a little more than 500 million yen in projects, mainly in Africa, would be held in August, he told Reuters in a telephone interview on Friday.

This is the second year of such spending by Japan. But a radiation leakage crisis triggered by the March 11 earthquake and tsunami has forced Tokyo to halve the budget from what was initially planned. In fiscal 2010/11, Tokyo spent 760 million yen in total for the same purpose.


The country’s pledge on emissions cut for 2020 look much tougher to meet after the nuclear crisis fuelled concerns over the safety of the low-carbon energy.

But Japan has so far maintained the 2020 target, while working on a comprehensive review of its energy policy.

Of the 26 projects in 11 countries selected this week, seven will be carried out in India and there will be six each in Vietnam and Indonesia.

The choice reflects Tokyo’s aim to create a bilateral carbon dioxide (CO2) cut and carbon offset scheme in these countries first. Japan has reached agreements with India and Vietnam to hold meetings on a bilateral offset scheme.

Murakami said official-level talks with Indonesia on the same subject are set to start later this month.

The business areas of the awarded projects range from information technology and renewable energy sources to energy-efficient steel-making and coal power methods.

The more than 30 companies recruited included research firms, steel and heavy machinery makers, utility, oil, mining, construction and trading companies.

Potential emission cuts, if and when these subsidised studies lead to real business, would be well over 20 million tonnes of CO2 a year, Murakami said, roughly 2 percent of annual greenhouse gas emissions in Japan. ($1 = 81.245 Japanese Yen)

(Editing by Anthony Barker)

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