TOKYO (Reuters) - Japan is considering introducing compulsory emissions caps and a domestic emissions trading scheme for its reluctant corporations, the Nikkei newspaper said on Wednesday.
Tokyo currently lets companies set their own targets and monitor themselves for compliance, and the country's most powerful business lobby strongly opposes a compulsory scheme.
But the Ministry of Economy, Trade and Industry appears to be breaking ranks with the firms it regulates. The ministry has set up an informal study panel to look into compulsory trading schemes, the Nikkei said. The panel reports to a senior official at the ministry's technology and environment bureau and will compile its findings in June, it said, without citing sources.
METI will then meet with other ministries and key industries to hammer out the details of a plan that could come into effect from 2013, after the expiry of the Kyoto Protocol, the world's current framework agreement to tackle global warming.
Tokyo argues that voluntary industry cuts and energy conservation by households will allow the country to meet its international obligations under the Kyoto Protocol.
Big Japanese manufacturers have argued that emissions caps will mean government meddling, unfair distribution of emission permits, restrictions on growth of healthy companies and subsidies for ailing ones.
Under Europe's flagship Emissions Trading System, member states allocate permits to industries based on their past emissions.
The system, which tends to provide more generous permits to bigger polluters, nearly collapsed when the price of carbon-emission rights crashed in 2006.
But the European Commission last month adopted a new plan in which member states auction most permits to industries instead of handing them out for free.
A METI official in charge of environmental and economic issues has said the revised European scheme would be fair and reasonable in terms of permit allocation.
Top Japanese government spokesman Nobutaka Machimura said last week there was no international or domestic consensus that cap and trade was the best way to cut emissions.
"I have heard some people think it will just be a new way for people in the City to make money," he said. "This must not happen, so if we are sure it is really an effective way to achieve reductions in carbon dioxide we should think about it seriously."
But Japan is looking increasingly isolated among rich world emitters as the European Union steps up its emissions trading scheme, and the U.S. Congress considers several bills for cap and trade schemes, even though the country has not ratified the Kyoto protocol.
(Reporting by Risa Maeda in Tokyo and Emma Graham-Harrison in Beijing; Editing by Mike Miller)
