The Japanese Background Ken Yamaguchi Mitsubishi Research Institute
The Japanese Background Ken Yamaguchi Mitsubishi Research Institute Inc. Sustainable Development Research Dept. SB 18 Bonn, June, 2003 1 Mitsubishi Research Institute Inc. Sustainable Development Research Dept.
What is MRI? 2 n A Japanese private think tank established in 1970, with a wide variety of activities n Has 14 years’ experience on climate-related research, since 1988 Toronto conference n Has the largest research staff among the Japanese think tanks n Has worked closely with both the Japanese government and industry on this issue n Is involved in the internal discussions within Keidanren, and has wide network in Japanese business n Able to introduce suitable contacts to foreign counterparts Mitsubishi Research Institute Inc. Sustainable Development Research Dept.
MRI’s recent climate-related activities n Activities to explore and forecast the “carbonconstrained world” n n 3 Carbon Offset Initiative JEMS (Japan Emissions Management Simulation) Cooperation with UNIDO Strategic consulting on corporate climate policy Mitsubishi Research Institute Inc. Sustainable Development Research Dept.
Overview of presentation n 4 Kyoto Protocol and Japan Domestic emissions trading Post-2012 Mitsubishi Research Institute Inc. Sustainable Development Research Dept.
Kyoto Protocol and Japan n n Formulated the outline of measures in March, 2002 National communication on May, 2002 Ratified KP on June, 4, 2002 JI/CDM Application finalized October, 2003 n 5 Two projects approved (gov’t-sponsored energy project in Kazakhstan, private sector biofuel in Brazil) Mitsubishi Research Institute Inc. Sustainable Development Research Dept.
KP and Japan n Japan’s emission profile n n Has to decrease emissions by 6% So far it has increased by about 8% Without measures, may increase by another 10% Decrease in 1997 -98 mainly due to recession Data: Japanese government 6 Mitsubishi Research Institute Inc. Sustainable Development Research Dept.
Why Japan faces the toughest challenge (Even though every country says so…) GHG Emissions 2000 n Japan n n Already energy-efficient Already afforested (>60%) Few non-CO 2 measures (waste, pasture, aluminum) Close links with CO 2, energy trends Data from the governments 7 Mitsubishi Research Institute Inc. Sustainable Development Research Dept.
KP and Japan-domestic compliance n n No additional measures until 2005 If likely to miss target, then additional measures from 2005 n n Scenario of compliance n n n 8 Carbon / energy tax? Emissions trading? Bring back to 1990 level through energy-related measures 0. 5% reduction through methane / N 2 O 2. 0% increase through use of HFC, PFC, SF 6 3. 9% reduction through sinks 2. 0% reduction through “revolutionary tech. / further efforts” Remaining 1. 6%…? ? ? Mitsubishi Research Institute Inc. Sustainable Development Research Dept.
Domestic emissions trading n Industry views n Against caps, but against tax Why should industry bear the burden? n n n Gaps in the expectation n 9 Industry the only sector where emissions are kept constant Industry: stabilization Government: 7% reduction Recent change in organization may be important Data: Japanese government Other: Energy transformation, process, waste Mitsubishi Research Institute Inc. Sustainable Development Research Dept.
Kyoto Mechanisms - status of discussion n “To be pursued due to its cost-effectiveness” n METI&Mo. E. . . co-leaders in climate policy n Creation of domestic registry to be operational by 2005 n n 10 http: //www. registry. go. jp Keep abreast of the work in progress in EU, a market four times as large Mitsubishi Research Institute Inc. Sustainable Development Research Dept.
Kyoto Mechanisms - status of discussion n METI n n 11 “KM helpdesk” to facilitate private sector involvement: Received inquiries for 50 CDM projects / 20 JI projects Emphasis on JI / CDM. . . industry influence Investigation of risk insurance scheme (via NEXI, etc. ) Affiliate organizations’ intentions to become the project implementation entity, a la Senter? . . . Plans to allocate 1. 9 bn JPY (c. 16 million USD) to fund a quarter of CDM/JI finance n Condition: no oversea transfers Mitsubishi Research Institute Inc. Sustainable Development Research Dept.
Kyoto Mechanisms - status of discussion n MOFA n JBIC announces its intention to be a fund for KM n n 12 Potential conflict with its ODA activities Potential conflict with METI Much know-how in disbursing funds (e. g. hydropower) Mo. E n Step 1 (2002 -2004): Voluntary ET for experience-gaining n Step 2 (2005 -2007): Build up on the experience n One-year commitment periods, bankable unlimited OTC trading of 6 gases n Interest towards the UK ETS. . . due to its tax implications? Mitsubishi Research Institute Inc. Sustainable Development Research Dept.
Possible ET schemes n Government does everything n n 13 If industry is deemed as meeting its target (not very likely after the nuclear problems) 100 Mt-CO 2 X 10 USD/t-CO 2 = 0. 1% of government budget, 10% of FY 2003 climate policy budget Government bids against credits gained by the industry Industry bears targets Mitsubishi Research Institute Inc. Sustainable Development Research Dept.
A Government perspective n n Public-private funding Pending issues n n Turf issues ODA concerns Budget Which organization Company A shall be the Fund? assistance risk insurance financial assistance 14 Projects finance credits KM Fund Company B Sectoral compliance (industry scheme) Gov’t National Compliance Mitsubishi Research Institute Inc. Sustainable Development Research Dept.
Outlook for CP 1 n n n Japan stands to be the largest buyer of emissions reduction credits (perhaps on the order of 100 Mt-CO 2/yr). Electricity industry has the largest carbon exposure (and interest in projects), but some other sectors are also candidates. Role of government is probably significant n n n 15 Active role in project development Passive role as a purchaser, possibly with a bidding process A possibility: Emissions trading for the industry / carbonenergy taxation for other sectors (after 2005) Mitsubishi Research Institute Inc. Sustainable Development Research Dept.
Post-2012: ready to fight? n n No official position yet METI-affiliate committee’s report (2003/5) n n 16 Kyoto Protocol is unfair Need to incorporate US and key developing countries Emphasis on policies and measures New framework should be bottom-up, should not be preoccupied with enforcement Mitsubishi Research Institute Inc. Sustainable Development Research Dept.
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