Japan Economic Foundation

Chairman's Article
(excerpts from JEF's Magazine "Japan Spotlight")

35 . How Should We Break Impasse to Reduce GHG?


The Great East Japan Earthquake reminded us of the importance of the safety of nuclear generation plants. On the other hand, enthusiasm to fight global warming seems to be tapering off in the world recently, due to the possible unavailability of nuclear electricity plants that do not emit CO2. I personally think that Japan, which has caused these nuclear plant accidents, should take the initiative to create an international program to reduce greenhouse gases (GHG) based on the following three words starting with "L."

The first L is Leadership. Especially, the joint leadership of G7 is critical. The members of a program have to be united and determined to take joint actions to reduce GHG, quantitatively. Especially, if a country is going to take disciplinary measures against a country that declines to be a member, joint action is essential.

The second L is Logic. Measures that go against logic will fail in the end.

For example, a simple extension of the Kyoto Protocol would be illogical, because the No. 1 and No. 2 CO2-emitting countries are not included in the Kyoto Protocol.

Furthermore, most developing countries have been arguing that they should not be included in an international treaty that requires them to reduce GHG emissions in quantity, citing the common but "differentiated" responsibilities between developed and developing countries incorporated in the Rio Declaration on Environment and Development in 1992.This is illogical as well. If in a program developed countries are required to reduce GHG with numerical targets while developing countries are not, such a program cannot be described as fulfilling a "common" responsibility between developed and developing countries.

The G8 leaders in Heiligendamm, Germany, agreed in 2007 to halve global GHG emissions at least by 2050. There are many methods to achieve this goal, including the development of new technologies to save energy or dispense with CO2 emissions, the deployment of such technologies that have already been developed to developing countries from Japan, for example, and the introduction of a carbon tax. However, we cannot measure how much GHG we can reduce through these measures for sure.

Therefore, we have to adopt a measure to have every country participate in an international program to reduce the GHG emissions within the numerical allowance (cap) given to each country. The allowance is tradable. Generally speaking this program is called the "cap and trade" system. I think the cap and trade system is the most logical system to achieve the goal of reducing GHG for sure.

The goal agreed on in Heiligendamm is a long-term global goal. The next logical step would be to establish a mid-term "global" target, rather than a "national" target. However, the EU has been working hard to ask the main countries to establish their mid-term national targets. In this context the EU announced its own mid-term target to reduce the emissions of GHG by 20% from the level of 1990 by 2020. The US did the same with a reducing rate of 17%, and Japan with 25%. In these cases, however, these national mid-term targets do not have any criteria to assess their appropriateness. Therefore, what we need to do first is establish a mid-term global target.

After establishing a mid-term "global" target, that amount should be distributed to every country as an allowance for each country to emit GHG, based on a common, equitable and transparent formula. One of the examples of this formula would be to base it on a figure consisting of 50% of each country's population and its GDP's share of the world's total. The share of the area of a country may be another element to be taken into consideration in developing the formula, in addition to population and GDP share.

The third L is leverage. If there is a country that declines to become a member of the post-Kyoto Program, which requires a member country to establish a GHG reduction plan within a range of emission allowance, and to implement it, those countries that have decided to join the Program should be able to retaliate against the declining country as a leverage to persuade the country to change its policy.

Thus far, my assumption is that the secretarial work for the above-mentioned program or system would be conducted by an organization for climate change in the UN. But if we cannot reach a consensus in the UN to do so, we will have to establish a group of like-minded countries to do the work outside the UN.

What would be the specific content of such leverage?

It would be for the joining countries to prohibit their companies from investing in the declining countries. Of course, the GHG reduction rate of developing countries will not be as high as that of developed countries. However, what is important here is for developing countries to commit to reducing GHG emissions, within the range of each country's allowance.

Noboru Hatakeyama is chairman/CEO, Japan Economic Foundation. Before then he was chairman/CEO, JETRO. A former senior trade official, he was involved in many trade issues, including the Uruguay round of GATT talks. He is known as a pioneer of debate on FTAs involving Japan.