Japan 2007 carbon credit figures released

Tuesday, 22 April 2008

The Japanese government signed contracts for emissions credits covering 16.66 million tonnes of carbon dioxide in fiscal 2007 and could double that in 2008 – but the private sector may need to buy still more to make up for lost nuclear output.

 

Countries who have undertaken to cut their carbon dioxide (CO₂) emissions by agreed amounts under the 1997 Kyoto Protocol can purchase emissions credits, based on the CO₂ saved by clean energy projects in other countries, to offset some domestic emissions and help meet those commitments. The 16.66 million tonnes of credits were purchased on behalf of Japan's Ministry of Economy, Trade and Industry (Meti) and Ministry of the Environment through the New Energy and Industrial Technology Development Organization (Nedo).

 

Nedo launched its emission credits acquisition program for 2008 on 1 April, with a budget of up to ¥81.2 billion ($798 million) for contracts made in the 2008 financial year but covering the period up to 2013. This would represent something in the region of 30 billion tonnes at current carbon emissions prices (UN-approved carbon offsets, or CERs, for guaranteed 2008 delivery were trading at €16.39 ($26) per tonne as of 14 April, according to the Reuters CER index).

 

Under the Kyoto Protocol, Japan has until 2012 to reduce its emissions to 6% below 1990 levels, that is, 1.19 billion tonnes per year. In the Japanese government's 2005 Kyoto Protocol Target Achievement Plan, the government estimated that even with ambitious domestic efforts to cut emissions there would still be a shortfall of 1.6% of the total emissions – or 100 million tonnes over the five years up to 2012 specifically covered by the Kyoto protocol. This shortfall would have to be met through the so-called Kyoto Mechanisms including the purchase of carbon emission credits.

 

Utilities may have to buy more

 

The 100 million tonnes of carbon that the Japanese government anticipates offsetting is in addition to the carbon emission targets set for sectors including manufacturing and energy generation. Japan's electricity utilities are relying heavily on nuclear generation to meet their voluntary action plan target of a 20% reduction in CO₂ emission intensity, but with Kashiwazaki Kariwa - the world's largest nuclear power plant - out of action since a July 2007 earthquake, the sector faces even more of a challenge.

 

In December 2007 the Federation of Electric Power Companies (FEPCO) reported to Meti that, with its emissions expected to be around 0.37kg CO₂/kWh, it is not likely to achieve its 2008 targets – even before the effects the earthquake are taken into account. The private sector could be facing the prospect of having to buy at least twice as many offset credits as the government, according to Yoichi Kaya, director general of the Research Institute of Innovative Technology for Earth (RITE), a climate change institute founded with Meti support in 1990. "Electric power companies are in a tough situation as the 120 million tonnes (of offsets) they have secured would not be enough given a halt of the Kashiwazaki Kariwa plant," Kaya was quoted as saying in a Reuters report.

 

The earthquake has had other effects on Japan's nuclear industry as well as putting a sizeable chunk of nuclear capacity out of action. The incorporation of new seismic assessments have already resulted in delays to the planned start ups of four new nuclear plants being built by Kashiwazaki Kariwa operator Tokyo Eelctric Power Company (Tepco), as well as a delay in the planned start of construction at another. Tepco has estimated that it will face losses of some ¥155 billion ($1.44 billion) as a result of the magnitude 6.8 earthquake.