Japan, Russia in talks for emission credits trading

The government plans to begin talks with Moscow to buy greenhouse gas emissions credits that will help Tokyo reach its target emissions cuts pledged under the 1997 Kyoto Protocol, officials said over the weekend.

Japan hopes to buy emissions quotas from Russia, whose quotas far exceed the level it actually generates.

Tokyo plans to buy about 100 million tons worth of emissions credits to meet its goal of reducing emissions by 6 percent from the 1990 levels within the 2008-2012 commitment period.

Russia is estimated to have the most "surplus" emissions credits. In fact, Russia's surplus is about 40 times the amount Japan plans to purchase, officials said.

Tokyo and Moscow officials will hold their first working-level meeting in Tokyo late this month to discuss the deal, the officials said. Senior officials from the foreign, environment and industry ministries and their Russian counterparts will be involved.

On the agenda will be Japan obtaining credits from Russia in exchange for emission-cutting projects Japan has implemented in Russia. Japan also aims to buy credits from Russia. Both arrangements are allowed under the Kyoto Protocol. Discussions will also likely cover the international reduction framework expected after the Kyoto Protocol commitment period expires.

One criticism likely to be leveled is that the system of trading surplus quotas does not directly reduce emissions.

Tokyo wants to win the understanding of the international community by adopting a "green investment scheme," under which revenue from trading credits is to be spent on environmental measures in the selling country.

But some officials worry Russia may start selling large quantities of credits after its transaction with Japan, triggering confusion in global emissions trading. The move may also delay efforts to meet reduction targets in various countries.

Japan has also begun negotiating with the Czech Republic and Poland, which also have many surplus credits, and other nations.

In December last year, Japan signed an agreement with Hungary to buy emissions credits.

The Ministry of Economy, Trade and Industry estimated 8.32 billion tons in surplus emissions credits will become available for trade in 2008-2012, including 4.44 billion tons in Russia, 2.41 billion tons in Ukraine and 1.47 billion tons in 12 new EU members.

Meanwhile, Japan was expected to fall short of its goal by 260 million tons. The 15 EU nations would have a total shortfall of 1.59 billion tons, while Norway and others up to 200 million tons.

Aggregate demand for credits was estimated at between 1.92 billion and 2.05 billion tons.(IHT/Asahi: February 11,2008)