Motivating stakeholders to deliver change: Tokyo's Cap-and-Trade Program

Abstract In April 2010 the Tokyo Metropolitan Government launched the Tokyo Cap-and-Trade Program to reduce energy consumption-related CO2 emissions at the city level. This is the world's first cap-and-trade programme to cover buildings in the commercial, industrial and public sectors. Its main aim is to reduce CO2 emissions from energy consumption in existing buildings in urban areas; therefore, it is called an 'urban cap-and-trade programme'. The appropriateness and effectiveness of this demand-side mechanism are examined, as well as the key policy and strategy components for introducing this new mechanism. Crucial factors for the successful introduction of this programme include the implementation of a mandatory reporting programme prior to the cap-and-trade programme and a consultation process involving open discussions among stakeholders for creating a consensus. Actual outcomes of the programme will take several years to assess; however, given the significant impact of growing carbon emissions from existing urban buildings, an urban cap-and-trade mechanism can be a worthwhile action at the level of local governance. Based on these lessons, other cities can consider this urban cap-and-trade scheme as a viable policy instrument. En avril 2010, l'Administration Métropolitaine de Tokyo a lancé le Programme de Plafonnement et d'Echange de Droits d'Emission de Tokyo afin de réduire les émissions de CO2 liées à la consommation d'énergie au niveau de la ville. Il s'agit là du premier programme au monde de plafonnement et d'échange de droits d'émission de gaz à effet de serre à couvrir les bâtiments des secteurs commercial, industriel et public. Son principal but est de réduire les émissions de CO2 dues à la consommation d'énergie dans les immeubles existants des zones urbaines ; il est par conséquent considéré comme un « programme urbain de plafonnement et d'échanges de droits d'émission ». L'opportunité et l'efficacité de ce mécanisme axé sur la demande sont examinées, ainsi que les éléments clés politiques et stratégiques permettant d'introduire ce nouveau mécanisme. Les facteurs cruciaux pour une introduction réussie de ce programme comprennent la mise en œuvre d'un programme de reporting obligatoire préalablement au programme de plafonnement et d'échange de droits d'émission et un processus de consultation impliquant un débat ouvert entre les parties prenantes afin de créer un consensus. L'évaluation des résultats concrets de ce programme prendra plusieurs années ; cependant, étant donné l'impact significatif de l'augmentation des émissions de carbone provenant des bâtiments urbains existants, un mécanisme urbain de plafonnement et d'échange des droits d'émission peut être une mesure utile au niveau de la gouvernance locale. Sur la base de ces enseignements, d'autres grandes villes peuvent considérer ce système urbain de plafonnement et d'échange des droits d'émission comme étant un instrument viable de politique. Mots clés: bâtiments, plafonnement et échange de droits d'émission, villes, changement climatique, émissions de CO2, demande énergétique, gouvernance, formulation d'une politique, motivation des parties prenantes Keywords: buildingscap-and-tradecitiesclimate changeCO2 emissionsenergy demandgovernancepolicy formationstakeholder motivation Notes Tokyo's population is 13 million (2010 FY (fiscal year) ) and its gross domestic product accounts for US899 billion (2008 FY, US1 = JP¥100). Tokyo ranked top in urban agglomeration gross domestic product rankings by PricewaterhouseCoopers (2009). The final energy consumption in Tokyo is 762 PJ (2007 FY). CO2 emissions in Tokyo have fluctuated yearly since 2002 because of the unstable emission factor of electricity, which is mainly caused by the troubled operation of nuclear power plants. Based on GHG inventory data (total CO2 equivalent emissions of Annex I countries without land use, land-use change and forestry) by the United Nations Framework Convention on Climate Change (UNFCCC), Tokyo's GHG is just between those of Sweden and Norway (see http: //unfccc. int/ghgdata/items/3800. php/). The higher figure includes manufacturing, which is not as significant in Tokyo. Reduction obligation rates are set to the three categories of facilities: (1) Category I-1: Office buildings, public buildings, commercial facilities, educational facilities, hospitals, hotels, etc. ; district heating and cooling plants; reduction obligation = 8%; (2) Category I-2: User of district heating and cooling system (among those categorized in I-1, facilities that use district heating and cooling system for over 20% of total energy) ; reduction obligation = 6%; and (3) Category II: Other facilities (factories) ; reduction obligation = 6%. There are calls for governmental intervention in the cap-and-trade market to maintain the price of carbon assets at a level sufficient to incentivize industry to reduce emissions (New York Times, 2009 New York Times. 2009. Should Europe intervene to support the price of carbon? . The New York Times Environment, 28 December (available at: http: //green. blogs. nytimes. com/2009/12/28/should-europe-intervene-to-support-the-price-of-carbon/? scp=1 Financial Times MPs urge higher carbon price, February 7 2010 Google Scholar). The first trading case in Tokyo scheme was reported (Reuters, 2010 Reuters. 2010. First Tokyo Carbon Credits Trade for 142/tonne, Reuters, 24 August (available at: http: //www. reuters. com/article/idUSTRE67N3M520100824) Google Scholar; Bloomberg, 2010 Bloomberg. 2010. Tokyo Carbon Trading Market Likely to Become National Model, Bloomberg, 1 October (available at: http: //www. bloomberg. com/news/2010-10-01/tokyo-carbon-trading-market-likely-to-become-national-model-broker-says. html) Google Scholar). Consumption data of electricity and gas are provided by energy-providing companies. The initial opinion paper by the TCCI claimed the unfairness of introducing mandatory reduction regulation only to large emitters, and requesting the TMG to 'lead as many entities to get involved in climate change programs' (TCCI Opinion Paper at the 2nd Stake Holder Meetings, 25 October 2007). In a later Opinion Paper responding to the public comment requested by the TMG Environmental Advisory Committee, the TCCI still insisted on keeping voluntary programmes to all sectors and entities not to introduce mandatory regulations to only large emitters; however, they add the request to support smaller businesses to reduce emissions (TCCI, 25 January 2008). The TCCI's member survey on environmental issues, which coincided with the TCCI's support to the TMG programme, showed that only 4. 4% opposed introducing the cap-and-trade scheme. In the same survey, 90% admitted that climate change measures were important and 58. 2% recognized the cost for climate change measures were the necessary cost for business. In particular, for the second and the third meeting, the TMG distributed materials prior to the meetings to explain the Tokyo cap-and-trade scheme and most stakeholders submitted opinion papers with their responses beforehand. At the meetings, (1) opinion papers from stakeholders, (2) a TMG position paper that responded point by point to the opinion papers as well as the questionnaire, and (3) documents elaborating on major debate points (TMG, 2007a Tokyo Metropolitan Government (TMG). 2007a. The Second Stakeholder Meeting: Seven Points of Argument – Regarding Reduction Obligation and Emission Trading, Tokyo: TMG. 25 October Google Scholar, 2008 Tokyo Metropolitan Government (TMG). 2008. The Third Stakeholder Meeting: New Seven Points of Argument – Regarding CO2 Emission Reduction Obligation, Tokyo: TMG. 18 January Google Scholar) were distributed, in addition to the programme proposition materials. These materials helped the audience and the media to understand the debating points by showing the evidence, in particular the potential for reductions, and the result of the previous programmes.