Study of Emissions Cap-and-Trade Scheme for Tokyo Bay Watershed - December 2003

Study of Emissions Cap-and-Trade Scheme for Tokyo Bay Watershed - December 2003
December 2003

The Ministry of Land, Infrastructure, Transport and Tourism (MLIT) is studying the introduction of a pollution load discharge quota trading system for advanced sewage treatment in the Tokyo Bay watershed. In 2002, the Japan Sewage Works Association (JSWA) established a "Committee to Study a Quota Trading System for Sewerage Projects" and conducted model calculations for the Tokyo Bay watershed.

In an interim report released in March 2003, simulations were conducted for 77 sewage treatment plants in the Tokyo Bay watershed area, and it was estimated that the introduction of an emissions cap-and-trade system could reduce costs by up to 10% compared to ongoing plans. Based on this report, Ise Bay will be added as a new case study in the future, and the design of a system more suited to the actual situation will be discussed.

In the United Kingdom, a trading system for waste landfill permits will be launched in 2004. Under this system, each local government is allocated a quota of landfill permits, which can be traded among local governments. A landfill tax has already been in place since 1996, but the amount of landfill waste has been increasing at a rate of about 2% per year, and this is expected to be a new reduction measure. Both Japan's sewerage projects and the United Kingdom's landfill disposal regulations aim at both reducing environmental impact and achieving economic benefits through the use of an emissions quota trading framework.

Although quantitative understanding of the expected benefits will be an issue in the design of Japan's system in the future, the significant economic benefits are likely to make it a system that will attract much attention if it is introduced.