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