Climate change action in cities: Tokyo's carbon market policy


Four years ago, Tokyo implemented a cutting-edge policy focused primarily on emissions from 1,400 of the most energy-hungry of those office buildings. By and large, it’s worked: Building owners targeted by the program have slashed power consumption and reduced their emissions by 23 percent below a baseline level. Some of that outcome is due to the March 2011 Fukushima nuclear crisis, which damaged utilities’ power supplies and triggered legal curbs on electricity consumption.

Tokyo’s strategy is what’s known as a “cap and trade” system for carbon emissions. While such systems have been used in Europe, the United States, Canada and a few other countries, Tokyo was the world’s first city to try such a scheme at the municipal level. The idea is to create a market mechanism for reducing CO2. Tokyo’s government set an emissions limit for commercial buildings —  that’s the “cap.” Building owners who slash emissions more than the required amount earn credits. They can sell those credits to building owners who for whatever reason have a harder time reducing emissions —  that’s the “trade.” City officials are declaring the system a success —  but not for reasons that have much to do with carbon trading. According to city records, only 22 such transactions had taken place as of December.

Tokyo’s cap-and-trade system was originally considered to be a precursor to a nationwide emissions trading scheme in Japan. But since the Fukushima disaster, work by the central government to introduce such a system has stalled. Tokyo, however, continues to push an ambitious climate agenda. With a population of 13 million people, Tokyo consumes about as much energy as the entire country of Norway. To do its part to mitigate the impacts of global warming, Tokyo set a goal of slashing CO2 and other heat-trapping gas emissions by 25 percent compared with 2000 levels by 2020. The carbon-trading scheme was devised to satisfy a part of that goal.

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