Home' acuity : Acuity June 15 Contents Tokyo
Home to 13 million people and one fifth of the Japanese
economy, Tokyo is also home to the world’s first urban
emissions trading scheme. Launched in 2010, the scheme covers
the city’s large offices and factories, which together account for
a fifth of Tokyo’s emissions. It operates like any other cap and
trade ETS, with a cap set for emissions and facilities forced to
either reduce their own emissions or buy credits.
According to the head of the scheme within the Tokyo
Metropolitan Government, Masahiro Kimura, strong
leadership by the governor saw the scheme passed
unanimously by the assembly after a “constructive” public
discussion. As he wrote in an article for ICAP earlier this year:
“Our experience with introducing the Tokyo Cap-and-Trade
Program also demonstrates the importance of involving major
stakeholders and corporate decision makers as early in the
process as possible. By engaging them at the design stage,
there is a much higher chance that they will get on board.”
Emissions under the Tokyo scheme have reduced by 22%
from base level, according to Kimura.
The leadership of the world’s most populous country has
indicated a strong intention to have a national emissions
trading scheme as a centrepiece of its next five year
economic plan, which starts next year.
Already, pilot programs are underway in seven of
the country’s most prosperous provinces, comprising
Shenzhen, Shanghai, Beijing, Guangdong, Tianjin, Hubei
Together, these provinces represent 27% of China’s
According to the World Bank, China now houses the
world’s second-largest carbon market, covering 1,115
MtCO2, after the European Union’s scheme with its cap of
around 2,000 MtCO2.
The schemes remain works in progress, with low average prices
between 3 and 6 EUROS – and problems with over-allocation.
However, China’s central leadership is pushing hard
towards carbon pricing and emissions reduction.
It has expressed a goal to lower emissions per unit of GDP
by 40 to 45% from 2005 levels by 2020. With rapid economic
growth, this still leaves room for growth. But China has also
said it hopes to reach peak emissions by 2030.
While its future remains unclear, China’s carbon pricing
may yet prove a triumph of sheer political determination
over geography and inherent complexity.
The world is littered with examples of different
approaches to carbon pricing, with varying results.
Where schemes have been successful in reducing
emissions, countries have generally set clear and
ambitious targets, consulted with industry and often
started small with city or regional schemes.
In all cases, schemes have benefited from clear political
leadership and communication with the public.
Proof that where there’s a will to take action on climate
change, there’s a way.
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acuity | JUNE 2015
is a Sydney-based economics journalist and author.
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