Japan issues first domestic carbon credits

Japan has approved its first set of domestic carbon credits, authorising three energy efficiency projects designed to cut annual carbon emissions by an estimated 990 tonnes.

Under the carbon trading scheme, carbon credits will be issued to convenience store chain Lawson, which funded energy-efficient lighting in classrooms at the University of Tokyo, and to Tokyo Electric Power Co for installing geothermal heat pumps at spa facilities in Yamanashi prefecture.

Meanwhile, Sumitomo Mitsui Banking Corp (SMBC) and gas utility Shizuoka Gas will receive carbon credits after converting a boiler at a domestic canned food producer to use natural gas instead of oil.

Under the domestic carbon credit system, large Japanese companies are awarded emission credits for undertaking projects that help smaller firms and other entities to reduce carbon dioxide emissions. They can then either use the credits to offset their own greenhouse gas emissions, helping them to meet emission targets, or to generate revenue by selling them through carbon trading markets overseas.

The scheme is in addition to the Japan Business Federation's voluntary action plan for meeting obligations under the Kyoto Protocol.

Since October 2008, Japanese companies have submitted a total of 118 projects for consideration under the offset scheme. However, the initiative still has a long way to go to meet Japan's goal of reducing carbon dioxide output through project-based credits by 1.8 million tonnes annually by 2012.

In related news, SMBC, Japan’s third largest bank, plans to start in-house trading of emissions rights, according to Japan’s Nikkei newspaper. SMBC, which has brokered $208.5m in carbon trades since 2006, intends to buy credits from projects in China, Southeast Asia and South America and on-sell them to domestic corporate clients.