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Japan—Tokyo Metropolitan Cap and Trade System

In Tokyo, there is a successful cap and trade system that will help meet Japan’s INDC pledge to the Paris Agreement, which is to achieve a 26% reduction in GHG emissions by 2030 compared to emission levels in 2013. This is the first urban-type emission trading system in the world. It was enacted in 2010 and now targets over 1,300 companies that consume more than 1,500 kiloliters of energy (converting into crude oil). Each company is required to reduce CO2 emission up to a certain amount. To achieve each CO2 reduction target, companies participate in an energy saving trading system and trade their emission credits.

This system was made because metropolitan Tokyo seeks to be an environmentally friendly city with the smallest environmental pollution level in the world. To be such a city, it was necessary to raise the minimum level of GHG reductions from big companies and to reduce the total CO2 emission in the Tokyo metropolitan area.

Statistics show that the cap and trade system in Tokyo is successful. In five years (2010-2014), all participating companies achieved their given CO2 reduction targets, and about 1.4 million tons of CO2 was reduced as a whole. This represented a reduction of CO2 emissions by 25% compared with CO2 emission of companies in 2009.

The Tokyo Metropolitan cap and trade system is replicable and scalable because it is not a very complicated system and does not require any special technologies. If the system can be expanded to cover all of Japan, it could significantly increase the government’s ability to comply with its INDC pledge to the Paris Agreement.


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