Japan curbed its greenhouse gas emissions by 1.3 percent last year thanks to a warm winter, the government said on Monday, but the world's fifth-biggest producer is still way behind its Kyoto Protocol target.  Progress by Japan is critical to the success of the protocol, which is under strain from Canada's admission that it will not meet its target to reduce greenhouse gas emissions and from European countries lagging on their commitments.

Japan also faces an uphill battle to meet its commitments, with last year's emissions still 13 percent above the average level it must meet over the next five years, starting in 2008.

A government official said new measures were being considered to address the shortfall while analysts warned Japan needed more than its current voluntary targets for industry. "It's getting unfair if lazier ones take advantage of the consistent, such as steel makers and electric power firms, which have announced plans to buy credits to help offset any excess above their voluntary targets," said Hisaya Ishii, associate general manager at Mizuho Information & Research Institute.

Of the top five producers of greenhouse gases, only Japan is under pressure to meet its Kyoto target. The United States refused to ratify the protocol, Russia is on track to meet its goal and the pact set no targets for China and India. In the year ended in March, Japan's emissions totaled 1.34 billion tonnes of carbon dioxide (CO2) equivalent, the environment ministry said, matching earlier figures leaked in a newspaper.

BOOMING FACTORIES
More than one-third of emissions in Japan, the only Asian country with a Kyoto target, come from manufacturers. After earlier trimming output, factories increased emissions last year -- posing a challenge to a government that relies heavily on booming manufacturing exports to keep its economy growing. Service firms are the worst performing sector, with emissions 42 percent above where they were in the protocol's base year of 1990, while households have boosted emissions by nearly a third -- helping ensure overall output of greenhouse gases has risen in Japan, rather than fallen.

With the 2008-2012 measurement period for the protocol just around the corner, Japan's government is under pressure to go beyond voluntary targets. So far, it has encouraged industries to agree to emissions cuts, buy CO2 credits on the international market or claim credits by funding projects that cut emissions elsewhere. Its own environment ministry has recommended a carbon tax, so far without success, while the government has also opposed a mandatory cap-and-trade system, which punishes companies that don't cut emissions.

NOT GIVING UP
Vice Environment Minister Yoshio Tamura said the government would not abandon its commitments. "We've never thought of giving up, and are now working to write down extra measures, to be drafted by December and finalized by March, to enable us to meet the goal," Tamura told Reuters. Japan is already among the world's most energy efficient countries so funding projects to cut emissions in the developing world, under Kyoto's Clean Development Mechanism (CDM), was probably the only way Japan would get back on track, some analysts said.

Japan currently aims to reduce some 20 million tonnes a year of emissions in CO2 equivalent under the CDM scheme. The government put 12 billion yen ($105 million) in its budget this year to fund such projects and is seeking to more than double spending to 32 billion yen next year -- enough to buy some 11 million credits based on current emissions prices in London.

The trade ministry has renewed its effort in recent months to convince the biggest industries to take on board voluntary cuts, winning promises from 21 industries -- from chemical makers to electronics to paper manufacturers -- to reduce a total of about 20 million tonnes more CO2 equivalent than previously planned. But companies such as Nippon Steel Corp and Tokyo Electric Power Co have held off upgrading their targets.

(By Risa Maeda, Chikafumi Hodo and Osamu Tsukimori, Reuters, 05/11/2007)