JAPAN RELENTING ON CAP-AND-TRADE?

C O N F I D E N T I A L TOKYO 000525

SIPDIS

SIPDIS

STATE FOR IO, G, EAP/J, EEB/ESC, AND
OES/EGC -- HWATSON, BDEROSA-JOYNT, AND
DNELSON
WHITE HOUSE FOR CEQ
DOE FOR S-3

E.O. 12958: DECL: 02/27/2018
TAGS: ENRG SENV KGHG JA
SUBJECT: JAPAN RELENTING ON CAP-AND-TRADE?

Classified By: Ambassador J. Thomas Schieffer, Reasons (b) and (d)


1. (SBU) Summary: The Ministry of Economy, Trade and Industry
(METI) has confirmed recent press reports that it formed a
task force to prepare recommendations for a possible
cap-and-trade system in Japan. The influential Japan
Business Federation (Nippon Keidanren) came out in support of
the study as well. While working level METI officials deny
the move represents a change in GOJ policy, it is a new step
for METI, long the strongest opponent of cap-and-trade in the
GOJ. End summary.


2. (C) Japanese press reported February 20 that METI had
formed a task force to prepare recommendations for
implementing a cap-and-trade emissions reduction scheme in
Japan. While accepting domestic emissions reduction
commitments under the Kyoto Protocol, Japan has no mandatory
domestic emissions trading system and has opposed mandatory
national caps for a successor treaty. Emboffs contacted METI
Global Envinronmental Affairs Deputy Director Susumu Okamoto,
who denied this step is a policy change for METI or for
Japan. Okamoto insisted METI has always said such measures
"should be considered." He pointed out the task force has no
deadline for making a report, and could ultimately recommend
voluntary cap-and-trade, alternative measures such as a
carbon tax, or make no recommendations at all. Nevertheless,
Okamoto acknowledged this is the first time METI has gone as
far as a formal study of a domestic cap-and-trade system.


3. (SBU) In another departure, Fujio Mitarai, head of Canon
and Chairman of Keidanren, told the press February 21 it is
"important to discuss" cap-and-trade. The press portrayed
the move as significant, since Keidanren has consistently
opposed cap-and-trade and has strongly influenced METI's
stance. Further reports February 25 said Keidanren will
begin collecting data in March on possible emissions cuts for
different industries, in hopes of getting the GOJ to use its
data to set targets. Keidanren hopes as well to recommend a
specific mechanism by April. The business organization still
wants any targets to be nonbinding, but is under pressure
since Keidanren's Voluntary Action Plan (a sector-based
scheme for improving energy efficiency) has not made a dent
in Japan's growing emissions.


4. (SBU) Comment: METI long opposed cap-and-trade -- and
generally carried the day in GOJ interagency debates --
because of the powerful influence of Japanese industry and
Keidanren. It is unclear when the task force will produce a
report or what it will contain. However, the development
follows other subtle indications of movement within the GOJ.
Japan's delegation to December's UN climate conference in
Bali was headed by an Environment Minister who has made
comments in favor of Kyoto-style commitments in the press.
Japan's chief negotiator on climate, who is a special advisor
to the prime minister, has made statements more in line with
Kyoto. The Foreign Ministry's DG covering climate change has
repeatedly stated his opposition to the EU's approach on cap
and trade, but has expressed concern as well that the EU
approach could carry the day for a post-2012 framework.
METI's formation of a cap-and-trade task force may be an
indication the GOJ is looking at various options as
international discussions of energy/climate change proceed.
End Comment.
SCHIEFFER