Japan revives push for climate bill

Japan’s government agreed on Friday to resurrect a climate bill calling for an emissions trading system and an environment tax, but it remains unclear if the legislation will be enacted in a divided parliament.

Prime Minister Naoto Kan has said he wants to prioritize passing the bill during an extra parliament session ending on December 3., which will also focus on a proposed supplementary budget to support the fragile economy.

But Kan could face a tough time getting it passed. Opposition parties can block legislation in the upper house and the same bill was shelved earlier this year after parliament ran out of time for debate.

Japan is the world’s fifth-biggest greenhouse gas emitter and its pledge to cut greenhouse gas emissions by 25 percent from 1990 levels by 2020 if all major emitters adopt similar ambitions is government policy.

But officials from its top eight industries said on Friday the bill would have a negative impact on jobs, income and the economy as a whole.

They also repeated their arguments that they could lose out to global rivals which they said were bound to lower emission-cut targets.

“We are concerned that putting a cap on emissions means putting a cap on production,” said Takashi Sekita, chairman of the environment and energy committee at the Japan Iron and Steel Federation.

“I don’t think we can stand still if that comes on top of a strong yen and competition against South Korea and China,” he said at a news conference.

THREE KEY POLICY MEASURES

Enacting the bill would make the tough 2020 goal legally binding and set a one-year deadline for Japan to design a compulsory emissions trading system. Currently it only has a voluntary market at the national level based on companies’ pledged emission-cut goals.

The bill also includes a plan for Japan to consider imposing an environment tax from next fiscal year, an aim to boost renewable energy sources to 10 percent of primary energy supply by 2020 from around 3 percent currently and a target to cut emissions by 80 percent by 2050.

In addition to the environment tax and emissions trading scheme, the government has been considering broadening the existing rules to make consumers share the costs electric power firms pay to introduce renewable energy in a so-called “feed-in” tariff system.

Kan said on October 1 that he wants to introduce a full-fledged feed-in tariff system and impose further deregulation to boost the usage of renewable energy.

But Sekita, who is also senior vice president of JFE Steel Corp, said the system would raise energy costs and directly hurt earnings of certain manufacturers.

“It depends on the design of the system, but electric furnace steel makers would see a large part of their current profits being wiped out.”

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