Japan Buying a Lot of Hot Air

Downtown Tokyo at night. Tokyo, unlike the rest of Japan, will not accept fake offsets.
Downtown Tokyo at night. Tokyo, unlike the rest of Japan, will not accept fake offsets.
Ian Muttoo
According to Reuters, the Japanese government on Thursday announced that it has bought 95.8 of the 100 million tonnes of carbon offsets it plans to use during the 2008-2012 period to help the country meet its binding reduction target under the Kyoto Protocol. Japan's government and companies are the biggest buyers, outside of Europe, of Kyoto offsets (which include CERs from the controversial Clean Development Mechanism or the CDM, and AAUs from industrialized countries with excess emissions credits).

Besides being the largest carbon credit buyer outside of Europe, Japan's Mitsubishi Corporation is ranked fourth among all CDM credit buyers, with 100 projects in the CDM pipeline. It follows closely behind Carbon Asset Management (Sweden) and EDF Trading (UK). Ecosecurities (UK) has the most projects–287. (Numbers from the UNEP Risoe spreadsheet, March 2010).

Unfortunately for Japan, and the climate, most of its CDM offsets come from non-additional Chinese hydropower projects (China is the largest offsets seller to Japan). This means that many of the offsets that Japan plans to use to meet its emissions reductions targets are just hot air. For instance, the CDM executive board recently rejected two non-additional emissions-cutting projects in China that were originally counted in the 95.8 million tonnes purchased by Japan.

Construction at La Esperanza in 2006.
Construction at La Esperanza in 2006.
www.finnfund.fi
Not all CDM projects with Japanese involvement are in China. The La Esperanza project in Honduras, for example, is a registered 12.7 MW "containment run-of-river" hydropower facility that had unconvincing additionality claims, unaccounted reservoir emissions, and questionable compliance with the most legitimate dam-building standard, the World Commission on Dams. The Japanese companies Idemitsu Kosan, Okinawa Electric Power, Nippon Oil, and Fujifilm were all credit buyers of this project.

Because of the increasingly high rejection and review rate of CDM hydropower projects, the Japanese government may be planning to buy more CERs to cover projects that it counted on but were rejected. A better way forward is to mandate emissions cuts among Japanese polluters without the offsets loophole. In the same Reuters article, we hear that the Tokyo Metropolitan Government has bound the city's 1,400 top emitters to compulsory CO2 limits. Tokyo's plan does not include Kyoto credits to offset surplus emissions, and yet many expect it to increase clean energy investment and to lower greenhouse gas emission. The rest of Japan, and other industrialized countries, should take note.