Japan Voluntary Emissions Scheme Sees First Trade.

TOKYO, October 20, 2006, Reuters  - Carbon credits traded between domestic companies for the first time in Japan in a voluntary emissions scheme, an effort to help meet the country’s Kyoto Protocol target to cut pollution, companies said on Thursday.

Nippon Electric Glass Co. sold 200 tonnes of carbon dioxide (CO2) credits on Wednesday to Funai Consulting Co. on Japan’s Voluntary Emissions Trading Scheme, in which 31 organisations have pledged to cut emissions this fiscal year.
Japan has so far avoided mandatory emissions caps, but has given subsidies to help firms in the scheme cut emissions through investing in energy efficiency. Firms that overachieve targets can sell credits to those failing to meet their goal.

Nippon Electric Glass is likely to cut its CO2 emissions by more than its objective of 90,000 tonnes this year, by shifting its fuel to make advanced glass products used for cathode-ray tubes, company spokesman Kuniaki Kimura said.

A spokesman for Funai Consulting declined to give the price it paid for the emissions credits, but said it used the European Union’s Emissions Trading Scheme (EU ETS) as a benchmark.

“We used the EU ETS prices around June and July because there are no established benchmark prices in Japan,” the spokesman for the consulting firm said, adding it might resell the credits to other companies.

In Europe, benchmark EU ETS carbon emission credits for 2006 traded between 14 and 17 euros a tonne in June and July, plunging from highs above 30 euros struck in April. Prices closed at 12.90 euros a tonne on Wednesday.

The European Union has mandatory caps on heavy-emitting industries such as the power sector, refining and steel, leading to soaring trade and futures volumes on demand for credits.

Japan’s greenhouse gas emissions rose 0.6 percent in the fiscal year to March 2006, the government said this week, which leaves it 14.1 percent off a Kyoto target to cut emissions 6 percent on 1990 levels by 2008-2012.

Analysts blame the government’s reliance on voluntary corporate activities to cut greenhouse gases, while residential and commercial emissions are also on the up as Japan’s economy grows.

Despite government hopes that other companies will follow the initial trade, a possible precursor to a larger mandatory scheme, many companies are still sceptical.

“Our company will not join the voluntary emissions trading scheme next year,” Nippon Electric Glass’s Kimura said. “The government subsidies are not well linked to business investments to install equipment to cut emissions.”