Japan's new government led by Prime Minister Yukio Hatoyama plans to introduce a mandatory cap-and-trade greenhouse gas emissions system as early as 2011, a report said Sunday.
A cabinet committee is likely to discuss the issue Sunday in an effort to reach Hatoyama's stated goal of reducing emissions by 25 percent from 1990 levels by 2020, the business daily Nikkei reported, without naming its sources.
Japan has been building a trial carbon trading system since October 2008, but participation is optional and companies can set their own quotas.
Under the expected cap-and-trade regime, the government would set the total level of domestic emissions allowable and then allocate quotas to companies.
Firms that emit less than their quota would be allowed to sell their surplus allocation to others that exceed theirs.
The new target of a 25 percent cut is far more ambitious than the eight-percent reduction pledged by the former government under the business-friendly Liberal Democratic Party (LDP).
Hatoyama's untested centre-left Democratic Party of Japan (DPJ) has vowed to increase the use of clean energy such as solar power and promote the use of energy-efficient vehicles and home appliances.
But faced with concerns by Japanese businesses over their competitiveness, the government has stressed that Japan's new goal will only apply if other large polluters such as the United States and China also cut emissions.
Japan, the world's second largest economy, will formally present its goal at international talks in Copenhagen in December aimed at agreeing a follow-up treaty to the Kyoto Protocol, which expires in 2012.
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