JAPAN TO START VOLUNTARY CARBON FOOTPRINT LABELING

C O N F I D E N T I A L SECTION 01 OF 02 TOKYO 002964 SIPDIS STATE FOR IO, G, EAP/J AND OES/EGC - HARLAN WATSON, TRIGG TALLEY, EDWARD FENDLEY, NORMAN BARTH, AND CLARE SIERAWSKI CEQ FOR JAMES CONNAUGHTON, LANDON VAN DYKE NSC FOR JONATHAN SHRIER USDOC FOR NOAA CLIMATE CHANGE OFFICE - SID THURSTON AND ITA OFFICE OF JAPAN - K ROTH USDA FOR JESS PAULSON DOT FOR LINDA LAWSON AND CAMILLE MITTELHOLTZ EPA FOR CHRIS GRUNDLER USDOE FOR S-3 FAA FOR CARL BURLESON PASS TO USAID E.O. 12958: DECL: 10/23/2013 TAGS: SENV KGHG ENRG EAGR PREL JA SUBJECT: JAPAN TO START VOLUNTARY CARBON FOOTPRINT LABELING WITH DOMESTIC COMPANIES TOKYO 00002964 001.2 OF 002 Classified By: Ambassador J. Thomas Schieffer for Reasons 1.4 (b),(d) ¶1. (C) Summary: The Ministry of Economy Trade and Industry (METI) plans to start an experimental voluntary carbon footprint labeling program involving approximately 30 domestic companies in early to mid 2009. Industry associations will design the basic methodology for computing the carbon footprint of different product categories, subject to review by an expert GOJ panel. METI will try to harmonize their methodologies with an eventual ISO international standard in three years. Embassy officers from the Department of Commerce, Economic Section and Foreign Agricultural Service raised several concerns about the new plan to METI officials implementing the program. End Summary. Guidelines for Voluntary C02 Labeling Program Published -------------- -------------- ¶2. (U) METI published draft guidelines October 8 for a trial program whereby 30 domestic companies will voluntarily label 49 products with their carbon footprint, i.e., the number of grams of CO2 equivalent greenhouse gasses (GHG) emitted during the product's life-span (its manufacturing, packaging, transportation and disposal). The program will initially cover basic consumer goods and will expand to additional products and services in coming years. The guidelines will put all products under specific Product Category Rules (PCR) that outline the basic methodology for calculating the carbon footprint. For example, a can of beer would have its own unique set of carbon footprint indicators, different from a bottle of shampoo or some other product. Industry associations will draft initial proposals for calculating the carbon footprint of their products and a GOJ expert panel will review the proposals and decide which ones to adopt. Japan to Pursue ISO Standardization -------------- ¶3. (C) METI Senior Director of the Commerce and Distribution Policy Group Takuma Inamura told emboffs October 14 that METI plans to contribute to the development of a new international carbon footprint standard in the International Organization for Standardization (ISO). Japan will participate in ISO carbon footprint talks scheduled for late January 2009 in Malaysia. METI consulted with the U.K., Germany and France in developing the guidelines and says it took into consideration WTO, ISO and other international standards so the program would not have a trade barrier effect. They expect a new ISO standard to be agreed upon in about three years at which time METI will adopt the ISO standard. Ministry of Environment Not On Board -------------- ¶4. (C) METI is seeking public comments on its initial draft of carbon footprint guidelines until October 28. According to METI officials, the Ministry of Agriculture, Forestry and Fisheries (MAFF) contributed numerous comments thus far and indicated its support for the current draft. The Ministry of Environment (MOE),conspicuously, has not commented on the METI draft. Kohei Nakano, from MOE's Market Mechanism Office, told econoff October 17 that MOE considers carbon footprint labeling to be the sole responsibility of METI. MOE will focus instead on "visualization" (i.e., how society at large should visualize GHG emissions) and a carbon offset program. The MOE is pursuing its own carbon offset labeling scheme for consumer products, in parallel with METI's TOKYO 00002964 002.2 OF 002 efforts. (Reporting on MOE's nascent carbon offset program will follow Septel.) Timeline -------------- ¶5. (C) METI plans to exhibit trial product labels, based on its initial tentative guidelines, at the Eco Products Trade Show December 11-13 in Tokyo, where it will seek consumer feedback. Carbon footprint labels could begin to appear on products from the 30 initial volunteer companies as early as April 2009, though Inamura admitted this development would likely be delayed until as late as summer 2009 while PCRs are finalized. METI plans to make information on their methods of calculating carbon footprints publicly available on the Internet. METI will host the web site with the methodologies starting in 2009, but eventually will contract that function to a private vendor. Initially, METI will certify the accuracy of the product labeling. However, it will charge a single third-party organization with certifying carbon footprint labels in the future. U.S. Concerns -------------- ¶6. (C) Emboffs raised several concerns with the program to METI officials at an October 14 meeting. DOC officer pointed out that many small and medium enterprises could not afford the cost of calculating carbon footprints for their products. METI responded that they are working on a database to streamline this process and that it would grow over time with industry participation. Agoff noted foreign products would likely have a larger carbon footprint than domestic counterparts due to increased emissions during shipping. METI said it has not yet decided on how to represent fairly the differences between domestic and imported products in their labels, but stated the initial program applies only to domestically-manufactured products. METI will form a study group in 2009 to refine PCRs and will invite foreign manufacturers to participate. It said foreign firms should contact METI directly if they want to join. ¶7. (C) In meetings and phone conversations, U.S. industry representatives noted similar concerns to DOC officer and Agoff. These include fears the labeling scheme will become a de-facto standard and that foreign products not bearing the label could be competitively disadvantaged. Two major U.S. companies cited the potential for inaccurate and inconsistent labeling that could draw companies into a race to report lower numbers. Industry also cited the potential for legal and competitive challenges stemming from the lack of uniform, transparent and technically-proven calculation methodologies. Finally, industry claims the labeling scheme, in its current form, fails to take into consideration product performance and that consumers may be induced to purchase less effective products based on their lower carbon footprint index. SCHIEFFER