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Trading Carbon : November 2011
But, it noted, such approaches "may allow the exploration and testing of new tailor-made designs on a manageable scale. Later integration in the UN framework may be considered if these activities are carried out in the context of internationally recognised pilot schemes". For that to happen, there would need to be some changes to the bilateral proposals as they presently stand, said CP Asiatica's Hatano. "The current process selects only projects undertaken by Japanese companies, using Japanese technologies. At the moment, the programme is nothing but a sales promotion effort for Japanese technologies with a climate change coating," he said. Not surprisingly people working on bilateral mechanisms disagree. "We envisage the (bilateral offset mechanism) must be developed so that both Japan and host countries, as well as the global environment can benefit," said MoE's Mizuno. "After the earthquake and tsunami, Japan has very limited options for reducing global GHG emissions," said 21st Century Public Policy's Sawa. "Under these circumstances, (bilateral offsetting) will be the most effective and efficient way for Japan to contribute to mitigation by its competitive green technology transfer," he said. Japan is already one of the most 15 COVER STORY November 2011 Table 2: Location of project types under consideration for bilateral offset crediting mechanism (October 9, 2011)* Country Number of potential projects Indonesia 19 Vietnam 15 India 13 Thailand 9 China 6 Malaysia 6 Laos 4 Mexico 3 Brazil, Maldives, Mongolia South Africa and Sri Lanka 2 Angola, Bangladesh, Cambodia, Colombia, Myanmar, Peru, Philippines, Poland and Russia 1 *Note that some feasibility studies apply to more than one country and one applies to Asia Source: METI, Ministry of Environment Japan and New Energy and Industrial Technology Development Organization Akihiro Sawa energy efficient developed countries in the world, according to the Energy Information Administration, the statistical arm of the US Department of Energy. And the future of nuclear power, which provides about one-third of the country's electricity, is under closer scr utiny following the disaster at the Fukushima plant in March. Both of which add to Japan's desire to look for emission reductions abroad. But questions remain over the potential of bilateral projects. NGOs, in particular, while welcoming Japan's efforts to explore new mechanisms, have several concerns. Naoyuki Yamagishi, leader of the climate change programme at WWF Japan, has three main worries. They are: l can additionality be ensured -- whether or not a project needs the funds generated by the sale of carbon credits to go ahead; l unsustainable technologies, such as nuclear and large hydro, are being promoted; and l bilateral mechanisms may lead to a more fragmented and less transparent approach to addressing climate change than the current international approach. "Japanese government and industry have been critical of the concept of additionality (in the CDM), because they believe it hinders projects happening. It is likely (bilateral offsetting) would seek a less stringent system to check additionality (than the CDM), which could lead to 'fake' reductions by the projects," he said. Yamagishi is also concerned that promoting bilateral mechanisms doesn't actually lead to emissions reductions. "By nature, it is still an offset. Hence it is not correct to assume that the mechanism contributes additional GHG reduction benefits," he said. Proponents of bilateral offset crediting argue that such concerns should be addressed through UNFCCC channels. "It is already accepted as an important input on the UN negotiation table for consideration of new market mechanisms," said 21st Century Public Policy's Sawa. "How to ensure environmental integrity or the comparability issue should be discussed in the UN process." But, given that concerns over the way the UN r ules worked for CDM projects was one of the main reason for Japan proposing bilateral offset crediting mechanisms, could the UN process sort out the above concerns. "Japan hopes that bilateral crediting will be accepted as one of the approaches for the post-Kyoto period," said CP Asiatica's Hatano. "The specific projects that have been selected to date: Japan does not expect there will be formal approval of them. Its position is that the impossibility of such formal approval is the very reason for the need for the bilateral crediting scheme," he said. l * www.carbonneutral.com/knowledge-centre/company-blog/ japan-the-rising-sun-for-carbon-markets-part-i/ After the earthquake and tsunami, Japan has limited options for reducing GHGs Akihiro Sawa, 21st Century Public Policy Institute
December - January 2011