Japan stimulus may not help cut emissions

Risa Maeda, Reuters 9 Apr 09;

TOKYO (Reuters) - Japan's latest burst of economic stimulus spending is aimed at promoting energy-efficient products made by recession-hit exporters, but analysts say it is unlikely to help the world's fifth-biggest polluter cut greenhouse gas emissions.

Japan aims to cuts annual greenhouse gas emissions by 13 percent by March 2013 under the Kyoto Protocol from a record level hit in fiscal 2007/08, when emissions rose by 2.3 percent, helped by growth in exports to developing countries.

Japan is to announce on Friday details of a huge stimulus, equivalent to 3.1 percent of GDP, which is expected to include measures to promote the use of solar panels, fuel-efficient cars and energy-efficient TVs, air conditioners and refrigerators.

The world's fifth-biggest emitter had lagged behind China, the United States and other countries which recently announced plans to stimulate the economy in a way to promote a shift to a low carbon economy.

Unlike some other governments investing massively on rail, grids and other infrastructure, Japan's is focused on saving energy and fuel use at houses and offices, whose emissions take a lesser share than factories among polluting sectors in Japan.

In addition, the spending would do little to make energy low carbon as an expected increase of solar power is negligible and nuclear plant operation is unlikely to jump in the near future even though one of the units at the world's biggest nuclear plant is ready to resume operations after a halt since a 2007 quake.

"I don't think the economic stimulus would reduce emissions. If not, it would only help offset a fall in emissions," said Itsuho Haruta, an executive officer at Natsource Japan, referring to an expected decline in emissions in line with falling factory activity due to Japan's deepest recession since World War Two.

CATCHING UP

Japan's spending had been far less green than other countries in their recently announced economic stimulus packages.

"One thing I'm worries is the stimulus is so huge that it would for sure worsen the already huge government deficit," said Hideo Kumano, chief economist at Dai-Ichi Research institute.

"It seems they try to cover up the weak point by highlighting the environment as one of the key spending areas," he said, adding that subsidies on consumers to buy energy-saving home appliances looks similar to those in China.

As of March 31, Japan allocated only 2.6 percent of its fiscal spending to climate change investment, compared with 12 percent in the United States, 34 percent in China, 14 percent in Germany, a recent report by HSBC showed.

The report examining stimulus packages and budgets in over 30 countries across the world also showed the bulk of the spending allocated to such themes are targeted at green infrastructure options -- notably buildings, grids, rail and water.

But the focus here is on houses and offices as the Japanese government is responsible to their emission reductions, while industry sectors have their own voluntary emission cut targets to meet during the Kyoto period.

If almost all of households and offices introduce solar panels, next-generation cars and energy-conservation housing devices, that would cut each sector's emissions by 47 percent and 25 percent, respectively, by 2020 from the 1990 levels, according to an estimate by the National Institute for Environmental Studies (NIES).

The estimate is a part of a scenario by NIES on how low carbon Japan's economy can be by 2020, describing what each emitting sector should do to cut greenhouse gas emissions.

But the two sectors account to a combined 30 percent of total emissions and given that far less households or offices are likely to get so green as in the estimate, the latest spending would help Japan to cut emissions by about 2 percent at maximum, a government official said.

The impact on emissions from the measures to make infrastructure environment-friendly is yet to be known, the official added.