Hidenori Niizawa University of Hyogo, Japan. Agenda

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1 US-Japan Workshop on Local Climate Initiatives: State Roundtable on Global Climate Change IGES/CCAP March New York City Emissions Trading in Japan Hidenori Niizawa University of Hyogo, Japan Agenda What is the role of local governments in emissions trading? What is the role of local governments in mitigating climate change? international agreement > national policy > local, individual action 2

2 Contents role of local governments recent national policy developments the Kyoto Mechanisms voluntary emissions trading extension of the Energy Saving Law design of national emissions trading bottom up international market making 3 Many Local Governments Have GHGs Control Plan aggregation of their targets may not be consistent with the national target targets are not legally binding some prefectures choose per capita target no substantial control policy advertisement, subsidy for renewable energy, rely on the article 3.4 sink, BaU reduction by recession of local economy most of targets will not be achieved (survey by the Asahi Shimbun) 4

3 Local GHGs Emission Target? climate change : location of sources and sinks doesn t matter Is local target necessary? rationality of each local target is based on allocation of the national target flexibility of local target is needed 5 Local Autonomy of Environmental Policy in Japan the National Air Pollution Control Law delegates the decision of emission standards to prefectures ordinance local law : legally binding vote by the prefectural assembly agreement and administrative guidance enforced by implicit threats outside of prefectural assembly 6

4 In Case of Local Pollution Local governments initiated policies since 70 by ordinance, agreement and guidance. example 1972 decision of damages by the Mie District Court 1973 Mie Prefecture s ordinance for air pollution control: total load regulation 1974 amendment of the national Air Pollution Control Law 7 Kyoto City s Ordinance 1 st ordinance of GHGs control Target in 2010: 90% of GHGs emission in 1990 (article 3) current situation: 101% in 2000 obligation of large emitters (article 20) emission reduction plan report of progress publication of the plan and the report The target is not allocated to sources. 8

5 Win-win strategy with local issue examples of related local issue local air pollution heat island location of heat source matters limitation difference of problems GHGs reduction will be more binding beyond BaU reductuion is international concern 9 What is the Role of National and Local Governments? national government : make a price of carbon national emissions trading is better than local emissions trading local governments : make circumstances to be price elastic 10

6 National Policy Developments - the Kyoto Mechanisms industrial sector has interest inconsistency with voluntary, sector wide, relative target commitments by industrial sector may result in cap & trade governmental purchase of CERs and ERUs The budget in 2005 is 5700 million yen. 11 National Policy Developments - voluntary emissions trading experience in UK participation is limited because of resource constrain is not final solution, tentative, transitional Does voluntary emissions trading lead to mandatory emissions trading? 12

7 National Policy Developments - extension of the Energy Saving Law covers more than industrial sites transportation sector is newly included obligation of plan making and reporting instruction lack of transparency, arbitral, discretion 13 Design of National Emissions Trading voluntary or mandatory upstream, downstream or mixture absolute target, relative target or mixture coverage of sources and sinks monitoring penalty monetary penalty real compensation of excess emission link with the Kyoto Mechanisms link with foreign domestic emissions trading schemes relation with other policies The Energy Saving Law, energy taxes allocation others 14

8 EU approach Some Approaches start with low carbon price but mandatory emissions trading US approach? start with States action Japanese approach start with the Kyoto Mechanisms start with voluntary emissions trading 15 Bottom up International Market Making weak enforcement of the Kyoto Protocol or other alternative regimes is inevitable emissions trading necessitates penalty national law can be enforced bilateral merge of regional and national markets may overcomes the enforcement issue through mutual recognition (article 25 of EU ETS) however, targets should be sanctioned internationally 16