Japan's Government Fudges Start of Carbon Trading Amid Industry Opposition

Japan’s government took a step back from plans to start carbon trading in 2013 amid opposition from industries that say emission-trading rules would add to costs and limit their ability to compete against rivals in China and India who don’t face the same restrictions.

Environment Minister Ryu Matsumoto declined to commit to the 2013 date in a press conference today after a meeting with other ministers to discuss the nation’s emissions trading plans. In August, an environment ministry panel recommended starting emission trading in fiscal 2013.

“We will continue to study carbon trading taking into account various opinions,” Matsumoto said at the press conference. When questioned on when Japan’s carbon trading market would start, he wouldn’t give a date.

The ministers agreed that while a carbon trading scheme is a “pillar” of anti-global warming efforts, there are concerns it will deter investments in growing industries, said Masato Okawa, an official at the National Policy Unit of the Cabinet Secretariat who attended the meeting.

A September survey by Keidanren, Japan’s largest business lobby group, found that 61 of the 64 companies that responded said they oppose carbon trading, citing competition from countries like India and China that are not bound by similar pollution limits.

Lagging Tokyo

Any delay would leave the national government further behind the capital in introducing carbon trading. Tokyo’s government started a cap-and-trade program in April as part of Governor Shintaro Ishihara’s plan to cut greenhouse gas emissions by 25 percent this decade. The Tokyo market had its first emissions trade in August.

Japan’s government also said last month it won’t help extend the Kyoto Protocol accord to curb greenhouse-gas emissions after its targets expire in 2012, calling the treaty “outdated” because it only regulates 27 percent of global emissions and doesn’t include the U.S. and China.

The stance drew criticism from the G77 group of developing countries at United Nations climate talks in Cancun, Mexico, earlier this month.

The Ministry of Economy, Trade and Industry said yesterday it will provide 110 billion yen ($1.3 billion) in subsidies to 153 low-carbon projects nationwide. Companies receiving the money plan a total 530 billion yen in capital investment to produce energy efficient cars and electronic products, while creating jobs.

With assistance by Stuart Biggs in Tokyo. Editors: Peter Langan, Aaron Sheldrick

To contact the reporters on this story: Chisaki Watanabe in Tokyo at cwatanabe5@bloomberg.net.

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net.

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