ICCF AP6 panel discussion at National Press Club, Washington D.C. February 13, 2007
Japan’s implementation plan of the Kyoto Protocol target and a proposal for the future international framework
Mitsutsune Yamaguchi Visiting Professor, University of Tokyo
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Part 1 Japan’s implementation plan for the Kyoto Protocol target
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Current situation (as of 2005)
• GHGs 1,364 MtCO2 +8.1% • Energy Origin CO2 1,206 MtCO2 +13.9%
< Details of Energy-Origin CO2 Emissions >
Emissions (MtCO2) 2005/1990 (%)
Industry Transport Commercial Household Energy Total
466 257 234 175 74.4 1206
-3.2 +18.1 +42.2 +37.4 +9.7 +13.9
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Japan’s initial plan (November 1997, before Kyoto)
To stabilize CO2 emissions at 1990 level (BAU +20%)
Compulsory measures (57.6 Mt-CO2) Voluntary action plan (41.5 Mt-CO2) Inducement to Improve energy efficiency (59.8 Mt-CO2) Indirect measures (24.6 Mt-CO2) Drastic change of life style (23.5 Mt-CO2) Total (207 Mt-CO2) (60.6 Mt-CO2) Industry Strengthening energy efficiency regulation (11.0 Mt-CO2) Keidanren Voluntary Action Plan (41.5 Mt-CO2) Measures to improve energy efficiency at SMEs etc. (8.1 Mt-CO2) Household/commercial Strengthening energy efficiency regulation (35.6 Mt-CO2) Transportation Strengthening energy efficiency regulation (11.0 Mt-CO2)
Efficiency improvement at houses & buildings etc. (46.6 Mt-CO2)
Diffusion of clean energy cars etc. (5.1 Mt-CO2)
Traffic control etc. (24.6 Mt-CO2) Adjusting temperature of Voluntary reduction air-conditioning of car ride etc. (18.4 Mt-CO2) (5.1 Mt-CO2) (100.6 Mt-CO2) (45.8 Mt-CO2)
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Revisions of the implementation plan
2nd Revision
(2005)
1st Revision
(2002)
Original Plan
(1998)
Energy Origin CO２ Methane, N2O, other CO2 Innovative Technology, Life Style HFC,PFC,SF6 Sink
+0.6% ‐1.2% ― +0.1% ‐3.9%
±0.0% ‐0.5% ‐2.0%注 ＋2.0% ‐3.9%
±0.0% ‐0.5% ‐2.0% ＋2.0% ‐3.7%
Kyoto Mechanisms
Total
‐1.6%
‐6.0%
‐1.6%
‐6.0%
‐1.8%
‐6.0%
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3rd revision is under way in view of emissions in 2005
Policies introduced
• Industry Voluntary Initiative 1997
http://www.keidanren.or.jp/english/policy/2005/086.pdf
• Top Runner Approach 1998 • Law concerning the promotion of the measures to cope with Global Warming 1998 • Re-strengthening of the energy efficiency regulations 2002
(Expansion of application to additional sectors and medium sized firms)
• • • •
Compulsory RPS rules on “new energy” 2002 The basic law on energy policy-making 2002 Compulsory reporting scheme of CO2 emissions 2005 Re-strengthening of the energy efficiency regulations 2005
(Expansion of application to transport sector etc.)
On going discussion on strengthening the regulations
• Revision of Top Runner Approach • Measures targeted at commercial and household sectors (refer to the next)
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Japanese Energy Consumption by sectors and corresponding policies
Top Runner
※
Medium sized Mfrs (4%)
※
※
Designated transportation service companies Designated factories and plants
（６０％）
Subject to Energy Saving Regulations (80%)
（３０％） Class 2 （８％） Class 1 （１２％）
50% of buses, 10% of taxis
25% of trucks
Cars, buses
Trucks
Commercial
Industry (200MKl)
※Require the reporting of energy saving (100 for building or renovating the building with 2000m2 or up
Tertiary(120Mkl)
Househol d
Passengers Trucks Transport [Crude oil eq. kll]
mmkl)
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Basic Principles of Implementation Plan
• Compatibility of economy and environment
Without compromising economic growth
• Promotion of Technological Innovation
To become world leader
• Shared Responsibility
All actors’ participation
• International Cooperation
Global participation
• Etc.
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What should Japan do, if --- ?
• To do our best. But if it’s not enough, two options left; 1) Compliance on paper (Purchase hotair from Russia) 2) Non-Compliance The latter is my choice, provided that energy efficiency in major industries should be the best in the world.
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•
Reason: Initial Allocation is unfair. Why our tax-payers have to bear so much burden?
Median projection cost of several models, t/CO2
Domestic measures only Japan U.S.A. US$ 90 US$ 49
Utilizing the Kyoto Protocol
US$ 19
EU
US$ 57
Source: IPCC Third Assessment Report
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Part 2 A proposal for the future international framework
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Pros and Cons of various frameworks
Outline
Quantitative approaches (cap and trade) Price approach (Internationally harmonized carbon tax）
Maintaining the Kyoto Protocol system. A country must comply with the absolute quantity of emissions fixed for each country, while being allowed to use emissions trading to reduce costs. A typical scheme to value results over efforts. To achieve targets based on the price signals rather than quantitative targets. Typical one is a carbon tax. Reduce emissions through market mechanisms by setting a universal carbon tax (or coordinated/harmonized carbon tax)
Advantages
・Ensure environmental effectiveness ・Attain a given target at the minimum cost (costeffectiveness) ・Domestic policies to the discretion of each country ・Initial target attainable at the minimum cost (costeffectiveness) ・Costs are predictable ・No cross-border fund transfer ・Avoid excessive cost burden ・No hot air
Disadvantages
・Difficult to ensure the equity and transparency in initial allocation ・Impossible to predict abatement costs ・Fund transferred from an allowance buyer to a seller ・Hot air inevitable ・Uncertainties in environmental effectiveness ・Difficult to agree on a single unified carbon tax ・Each nation has a barrier for introducing a tax ・Difficult to agree on an appropriate tax rate ・Differences in the national priorities of climate change measures
Hybrid policy (cap and trade with safety valve) Intensity Targets
Each country has an obligation to achieve quantitative reduction target, but, once the abatement cost equals the ceiling price, each country can issue unlimited emission allowances at the ceiling price. A method to set efficiency improvement targets for greenhouse gas emissions or energy use per GDP or production. Several alternatives such as benchmark method, efficiency improved over BAU, and others.
・Reduce cost burden by the issuance of additional emission permits ・Maintain the advantages of price approach
・Presumed the introduction of emissions trading in each member country as its national policy ・Conflict with the sovereign right of each nation. ・Difficult to set a universal ceiling price ・Theoretical drawbacks if initial allocation is set at the volume larger than the optimal volume. ・Uncertainties in environmental effectiveness ・Lack of efficiency ・Difficult to agree on targets or setting of indexes
・A framework to value efforts ・Allow potentials for economic growth ・No hot air ・To enable to invite developing countries’ participation ・Higher feasibility ・Each country can adopt policies conforming to the national situation ・Precedents such as GATT
Policies and measures
Each country promises to introduce own policies and measures for climate change mitigation. Possible to harmonize policies through international negotiation. A method to value actions
・Uncertainties in environmental effectiveness ・Lack of efficiency ・Cannot be a main stream in climate change measures ・Needs an international monitoring system
Yamaguchi M.and Sekine Y. (2006), “A proposal for the Post-Kyoto framework”, Keio Economic Studies, Vol. 12 43-1, http://m-yamaguchi.jp/
My proposal (1)
• Pledge (with review) and review • Pledge only for developing countries Criteria: Global Participations
Environmental effectiveness is the same for a) global reduction of 7.7% from BAU and b) 30% reduction from BAU in EU and Japan, In this case, issue of competitiveness matters
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My Proposal (2)
• Sector based benchmarking • International technology cooperation
• Example; AP6 and technology cooperation/diffusion
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Outlook of CO2 Emissions in AP6
16000
CO2 emissions from fossil fuel
14000
combustions (MtC/yr)
AP6
12000 10000 8000 AP6 in 2050: 54% 6000 4000
Annex I in 2000: 59% US Annex I in 2050: 39%
Non-annex I
Annex I
Annex I excluding US
2000 0 2000
2010
2020 Year
2030
2040
2050
Source: CO2 emissions from the results for the reference case (Business as Usual case) by using the DNE21+ model developed by RITE; Based on a presentation for the 6th committee meeting of Special Committee for the Future Frameworks in the Industrial Structure Council, Environmental Committee, Global Environment Subcommittee (June, 2004)
Example Analyses by Dr. K. Akimoto (RITE)
Case Targets
The targets between 2008 and 2012 for all the Annex I countries continue until 2030 (No emission trading; US still non-cooperative)
Top-down type target Kyoto Case
550ppmv stb. Case
550ppmv stb. (the emission path by IPCC WGI)
Bottom-up type target（Only AP6 (Japan, US, Australia, Korea, China & India)）
Power: the averaged CO2 emission intensity target of fossil fuel powers achieves below 80% of the current level in Japan.
Carbon intensity case A
Iron & steel: the energy intensity of crude steel productions by BF/BOF and EAF in 2030 achieves below 90%* and 100% of the current level in Japan, respectively. Cement: the energy intensity of cement productions in 2030 achieves below 120% of the current level in Japan.* Power: the averaged CO2 emission intensity target of all the power plants achieves below 80% of the current level in Japan.
Carbon intensity case B
Iron & steel: the energy intensity of crude steel productions in 2030 achieves below the current level in Japan.* Cement: the energy intensity of cement productions in 2030 achieves below 120% of the level in Japan.*
* Improvements of the energy intensity of 0.5% p.a. are assumed for countries those have already achieved the level.
CO2 Emissions Reduction in AP6
Carbon intensity case A
2500
2500
Carbon intensity case B
CO2 emission reductions (MtC/year)
CO2 emission reductions (MtC/year)
India
2000
2000
China
1500
1500
Korea
1000
1000
Australia US Japan
2005 2010 2015 2020 2025 2030 Year
500
500
0 2005 2010 2015 2020 2025 2030 Year -500
0
-500
Source: Dr. K. Akimoto (RITE)
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Note: The CO2 emission reductions are shown relative to those in Reference Case (BAU).
Global CO2 Emission Reductions
5000 Kyoto case
CO2 emission reductions (MtC/year)
550 ppmv stb. case 4000 Carbon intens. std. A Carbon intens. std. B 3000
2000
1000
0 2000
2005
2010
2015 Year
2020
2025
2030
Note: The CO2 emission reduction are shown relative to those in Reference Case (BAU).
The assumed targets for the 3 sectors in the 6 APP participating countries will have emission reduction effects almost same as KP. 18
Source: Dr. K. Akimoto (RITE)
Total CO2 Emission Reduction Costs
0.2
Increase in energy system costs (trillion $)
Kyoto case
0.15
550 ppmv stb. case Carbon intensity standard B
0.1
0.05
0 2000 -0.05
2005
2010
2015 Year
2020
2025
2030
Note: The increases in energy system costs are shown relative to those in Reference Case (BAU).
AP6 way is much more cost effective to attain same reduction.
Source: Dr. Keigo Akimoto (RITE) 19
Thank you for your attention!
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