City of Tokyo Launches First Cap-and-Trade Program in Asia

With the launch of a mandatory program designed to reduce CO2 emissions from large office buildings and industrial facilities, Tokyo’s metropolitan government is implementing the first cap-and-trade scheme in Asia.

The plan, which aims to reduce greenhouse gas emissions by 25 percent from 2000 levels over the next decade, will require targeted buildings and factories to cut emissions by increasing increments from base-year levels calculated between 2002 and 2007.

The first phase will take place between 2010 and 2014 and will require emissions reductions of 6 or 8 percent. The 2015 to 2019 phase will require reductions of an additional 17 percent from those base-year levels.

Reductions can be achieved through self-directed efficiency measures or through the purchase of emissions credits via a cap-and-trade system, set to launch in fiscal year 2011.

Credits can be purchased from companies that have made more than the required reductions; power generators will also be able to sell renewable energy certificates. Credits from operations outside of Tokyo can only account for one-third of any entity’s required reductions.

Businesses or entities that fail to make the required cuts will face financial penalties and will be asked to make even greater emissions cuts than were initially required.

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