Tokyo - City Cap-and-Trade Program

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Challenges

As Japan’s largest economic centre, Tokyo accounts for 62 million tons of greenhouse gas (GHG) emissions per year. Energy-related CO2 emissions account for about 95 percent of Tokyo’s GHG emissions. CO2 emissions in the commercial building sector account for approximately 40 percent in FY2010.

Actions

In 2006, Tokyo announced its aim to cut emissions by 25 percent from 2000 levels by 2020. Since announcing its Tokyo Climate Change Strategy in June 2007, the Tokyo Metropolitan Government examined ways to bolster the fight against global warming. Based on a year-long intensive study, the Governor of Tokyo submitted a bill, which was passed by Tokyo Metropolitan Assembly, introducing mandatory targets for GHG reductions for large-scale emitters as part of an emissions trading program. Launched on April 1, 2010, the Tokyo cap-and-trade program is the world’s first urban cap-and-trade program, requiring CO2 reductions from large commercial, government and industrial buildings through on-site energy efficiency measures or participation in the emissions trading scheme.

Projected Outcomes

Under this program, Tokyo set the cap at 6 percent for the first compliance period (FY2010-FY2014), and 15 percent for the second compliance period (FY2015-FY2019). In its first year, the participating 1,159 facilities reduced emissions by 13 percent in total. Reports submitted at the end of November 2012 bring the second-year total to an overall 23 percent emission reduction below the base-year emissions. 93 percent of required facilities have now met the first compliance factor, more than 70 percent of which met the 2019 target.

The success of Tokyo’s cap and trade program provides a compelling example for other cities to follow. Tokyo now sees energy efficiency efforts taken jointly by tenants and building owners. This joint cooperation has led to an increased public awareness of climate change issues. Through the market mechanism the program provides, buildings are more readily able to reduce emissions, with the ability to sell reductions credits to buildings with sharp increase of energy consumption that are more costly to retrofit – driving greater emissions reductions at a reduced cost by all participants.