July 26, 2012 12:00 am

Eastern premises

There are two crucial questions for a cap-and-trade project: does it work and can it be copied?

Tokyo scores on both counts. There is compelling evidence of the success of its first mandatory emissions trading programme – introduced in April 2010 after three years of consultation – although an occasional visitor to the neon-lit bars of Ikebukuro may struggle to see signs of reduced power consumption.

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IN Urban Ingenuity

Every owner of an energy-hungry office building in the area covered by the Tokyo Metropolitan Government (TMG) was asked to do three things: study its utilities bills, pick a three-year period between 2002 and 2007, then, by 2014, shave at least 8 per cent off the average electricity and gas consumption during that period (factories must cut 6 per cent or more). After the second phase, from 2015-19, consumption must be cut by 17 per cent from that base.

How owners reduce consumption is their decision. Some have replaced overhead strip lights with less energy-intensive, desk-based lighting. Others have retuned old air-conditioning units, removed fans from underground carparks, and asked tenants to make small sacrifices. Many bathrooms, for example, now lack the luxuries of hot water in summer and heated toilet seats in winter.

Preliminary figures suggest that in the programme’s first full year of implementation, to April 2011, total emissions were down by 13 per cent from the base year, significantly higher than the equivalent fall of roughly 7 per cent across Japan. More than a quarter of facilities that had submitted reports by March 2012, moreover, had already exceeded their targets for 2019.

“Many people criticised the targets as being too aggressive,” says Toru Morotomi, a professor in economics at Kyoto University. “In reality, it turned out that the targets were not so ambitious.”

For many, conserving energy is becoming second nature. After the earthquake in March last year knocked out two nuclear reactors operated by Tokyo Electric Power (Tepco), triggering fears of electricity shortages in the nerve-centre of the world’s third-largest economy, the central government ordered that big users of power in Tepco’s service area cut consumption by 15 per cent during weekdays, beginning July 1 last year.

“Consumption of power in the entire area was down 18 per cent, and it was not rare to find some users cutting by as much as 30 per cent,” says Teruyuki Ohno, director-general of the TMG’s Bureau of Environment.

In the end, the government lifted its restrictions nearly two weeks earlier than planned.

Tokyo is home to more people and more Fortune 500 companies than any city, but it is very light on heavy industry. Just two small steel mills lie within the TMG’s jurisdiction. “They are struggling to meet their reduction targets,” admits Ohno. “They have not been rendered inoperable, though. We are providing them with advice and consultation.”

The TMG faced stern opposition from Keidanren, the nationwide business federation, and from Tepco itself. To appease the city’s Chamber of Commerce, the TMG will provide poorer landlords with ¥2.5bn (£20m) of subsidies to ease compliance. If property developers build new buildings to the highest energy-efficiency standards, they have less tough reduction targets.

So far, excess credits have simply been banked until the first reckoning in 2014.

“The primary aim is to cap emissions; trading is just an additional benefit,” says Yasushi Ninomiya, group director at the Institute for Global Environmental Strategies, a central-government-funded research group.

The Tokyo model is beginning to spread. Saitama, a neighbouring prefecture, has something similar in the works and 35 other prefectures have adopted compulsory emissions reporting. Five cities and two provinces in China have shown an interest in adapting Tokyo’s template.

Since the Democratic Party abandoned a proposed national emissions trading scheme in December 2010, politicians have not touched it. They would do well to try again, says Ninomiya.

“Tokyo has done as much as it can,” he says. “Now it’s over to the Ministry of Environment.”

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