Policy Proposal: Towards a New International Framework for the Post–Kyoto
Protocol Era

15 September 2011
Keidanren

1. Introduction
Climate change is a global-scale issue affecting the very foundations of human existence.
In Japan we have made efforts to reduce emissions of greenhouse gases (GHGs) and haveachieved steady results. But there is a limit to how much the efforts made by restricted
number of countries can achieve. While the Kyoto Protocol adopted in December 1997
was a significant step forward in terms of concrete action to stem climate change, it
assigned reduction commitments only to a limited number of countries, and global GHG
emissions have increased even after it came into effect.
Now is the time to create a single equitable international framework with all major
emitters participating, including every one of the developed nations as well as the fastgrowing developing and emerging economies, with a view to achieving a 50 percent
reduction of global emissions by 2050, the goal agreed to at the 2008 G8 Hokkaido
Toyako Summit.1 The Cancun Agreements adopted at the 16th Conference of the Parties
to the United Nations Framework Convention on Climate Change (COP16) are to beapplauded as an important foundation for such a framework.2
Divisions between countries have deepened, however, and with international negotiations
stalled since COP16, an agreement on a new international framework is nowhere in sight.
Responding to this situation, Keidanren has drawn up the following proposal, which we
submit in the hope of avoiding a post-2012 lapse in mitigation efforts.
2. The Type of International Framework That Should Be Adopted: A Single
Framework with All Major Emitters Participating

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At the July 2008 G8 Hokkaido Toyako Summit, the Group of Eight nations agreed that they would“seek to share with all Parties to the UNFCCC [United Nations Framework Convention on Climate
Change] the vision of, and together with them to consider and adopt in the UNFCCC negotiations,the goal of achieving at least 50 percent reduction of global emissions by 2050.”
2
The agreement adopted at COP16 (held in Cancun, Mexico, 29 November–10 December 2010),
based on the Copenhagen Accord that eluded adoption at COP15 the previous year, is acomprehensive and balanced decision capable of serving as the foundation for a legal internationalframework from 2013 onward. Among other things, COP took note of emission reduction targets
submitted by developing and developed countries and compiled as a UN document. The agreement
succeeded in advancing the negotiations towards the establishment of an equitable and effective
international framework with the participation of all major emitters, as Japan has been advocating.

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A bottom-up “pledge and review system” 3 based on the Cancun Agreements offers arealistic and valid approach to creating an equitable and truly effective internationalframework with all major emitters participating. Under this system, each country would
make an international commitment to achieve its own mitigation targets, while theinternational community would assess and verify each country’s progress towards thosetargets.
The total GHG emissions of all countries with reduction commitments under the firstcommitment period of the Kyoto Protocol (2008–12), including Japan and Europe,
amount to only 27 percent of aggregate global emissions, and that share is expected todrop to less than 20 percent by 2050. Simply to append a second commitment period andextend the Kyoto Protocol in its current form would lock this commitment group in place,leaving no mechanism to limit emissions by countries without reduction commitments.
This would be a step backward in the fight against climate change. Moreover, in today’s
global economy, imposing reduction commitments on one group of countries would only
lead to an overall increase in global emissions through “carbon leakage,” as businesses
shift production to countries that have no reduction commitments and are less effective incontrolling emissions. For all these reasons, it is essential that we replace the Kyoto
Protocol with a new framework.
In addition, given the current political and economic climate in the major emitting nations,
it would be exceedingly difficult to secure their unanimous agreement to a legal
framework that imposes reduction commitments from the top down, as the Kyoto
Protocol does, and penalises countries that fail to achieve them. In the end, pursuing sucha framework against all odds could lead to an extended lapse in national mitigation
efforts.
The Copenhagen Accord, whose provisions were adopted by COP in Cancun, has alreadysecured the participation of a group of countries accounting for more than 80 percent of
global emissions, including the United States and China. Many have submitted their own
mitigation targets and actions to the United Nations. A pledge and review system underwhich the international community reviews (assesses) each country’s efforts vis-à-vis its
pledge (mitigation targets and actions) is an eminently practical approach that promises
swift results in the fight against climate change.
In conjunction with such a framework, it will be necessary to establish and implement a
suitable measurement, reporting, and verification (MRV) system 4 to ensure thetransparency and efficacy of mitigation efforts by developed and developing countries.
3

Pledge and review system: A system whereby each country voluntarily submits and commits itself toits own mitigation targets and action plan (pledge), and progress towards those targets is assessedinternationally (review).
4
MRV system: A system by which reductions in greenhouse gas emissions can be measured, reported
internationally, and then verified, thereby ensuring the transparency and accuracy of information
regarding countries’ emission reduction actions. Under the Cancun Agreements adopted at COP16,
developed countries would report progress towards emission reduction targets, etc., in accordancewith enhanced measurement and reporting guidelines and would be subject to an international2

3. Measures for Realising a Low Carbon Society of Global Scale(1) Disseminate Best Available Technologies (BATs), Develop and Deploy Innovative
Technologies
Technology holds the key to halving global emissions by 2050 while balancing
environmental concerns and economic growth. If we are to cut GHG emissions
dramatically even as the nations of the world pursue economic development, it isessential that we promote the widespread adoption of existing low-carbon technologies,
products, and services, while simultaneously developing and deploying the kind ofinnovative technologies that will enable more drastic reductions in GHG emissions.
It is vital above all that Japan and other developed countries work to make ongoing
improvements and to achieve maximum diffusion of best available technologies (BATs).
At the same time, we need to create an environment that facilitates the transfer of suchtechnologies to motivated developing countries.
Energy efficiency in Japan’s key industries is among the highest in the world. It has been
estimated that worldwide diffusions of Japanese BATs would yield a 6.3 billion ton cut inglobal emissions of carbon dioxide by 2020.5 Japan’s public and private sectors must
work together to realise this reduction potential. With an eye to enhancing energy
demand management, it is desirable that Japan’s unique energy conservation mechanisms,
such as the Energy Saving Labelling programme, the energy manager qualification
system, and the Top Runner programme, be introduced in developing countries,
alongside the transfer of Japanese companies’ proprietary low-carbon technologies.
From a long-term perspective, meanwhile, we need to persevere in our efforts to develop
new breakthrough technologies. Because of the long lead time and huge investment often
required for development of such technologies, from the basic research phase todevelopment and deployment, there is a limit to what any one country can accomplish on
its own. We recommend international joint research involving collaboration not only withother developed countries but with emerging economies as well. For this purpose, it isimportant to follow a shared international roadmap to the development of thefoundational technologies required to halve emissions by 2050 and to cooperate on the
promotion of research and development under the joint efforts of industry, government,
and academia.

assessment process to ensure that information provided is comparable and reliable. In the case ofdeveloping countries, mitigation actions taken without international support would undergo MRV
domestically in accordance with general guidelines (to be developed), then subject to international
consultation and analysis (ICA), while actions taken with international support would be subject tointernational MRV in accordance with guidelines (to be developed).
5
See Keigo Akimoto and Mitsutsune Yamaguchi, “Posuto Kyoto no wakugumi toshite no sekutoraru
apurochi—Gutaiteki naiyo to hyoka” (A Sectoral Approach as a Post-Kyoto Framework—SpecificContent and Assessment), Ministry of Economy, Trade, and Industry FY2007 research report Chikyu
ondanka boshi no tame no seisaku no koka ni kansuru chosa (A Study of the Efficacy of Policies toPrevent Global Warming) (March 2008), chapter 2, section 1.

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From these standpoints, the Technology Mechanism adopted by the Cancun Agreements(comprising a Technology Executive Committee and a Climate Technology Centre andNetwork) 6 is a measure designed to accelerate the development and transfer oftechnologies for mitigation and adaptation, and we hope it will be put into action without
delay.
(2) Provide Bilateral and Multilateral Cooperation in the Areas of Financing andTechnology[1] Promotion of a Bilateral Offset Mechanism to Complement the Clean
Development Mechanism (CDM)
As it exists now, the Kyoto Protocol’s Clean Development Mechanism (CDM) raises avariety of obstacles to providing developing countries with the support they most needfor climate-change mitigation efforts and related measures. The difficulty of receiving
CDM approval for projects involving the kind of energy-efficient technology thedeveloping countries seek, along with an excessively lengthy approval process, hasprevented the transfer of technology from developed to developing countries fromprogressing as hoped under the CDM.
An effective complement to the CDM would be a bilateral offset mechanism, whereby
Japan, through bilateral consultations with a developing country, could develop an
energy-efficient/low-carbon project tailored to that country’s needs and have a portion of
the emission reductions achieved by technology transfer applied as Japan’s contribution
to our total reduction commitment. Efficacy would be further enhanced if this mechanism
were implemented as part of a package including enhancement of policies and systemdesign—such as the establishment of energy-efficiency standards in the recipient
country—together with financing from such institutions as the Japan International
Cooperation Agency (JICA) and Japan Bank for International Cooperation (JBIC).
Japan has been making steady progress conducting feasibility studies and bilateralnegotiations for such projects, with the focus on other Asian countries. Building on theoutcomes of the Climate Change Programme Loan it extended to Indonesia, 7 theJapanese government should continue promoting the transfer of Japanese corporate
technology and expertise through Two Step Loans8 and other forms of support tailored to
the needs of local businesses.
[2] Effective Financial Support
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The Technology Executive Committee will recommend measures to accelerate the development andtransfer of technologies to mitigate climate change and identify barriers to the same; the Climate
Technology Centre and Network will support developing countries and facilitate networking
between national and international organisations.
7
Climate Change Programme Loan: An ODA loan to the government of Indonesia to support its
climate-change mitigation measures under Indonesia’s National Action Plan Addressing Climate
Change.
8
Two Step Loan: A two-stage loan that goes through the recipient country’s development-related
financial institutions.

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a. Japan previously announced a plan to provide US$15 billion in public and private
short-term financing to support the efforts of developing countries and others that are
working actively to mitigate climate change, and it has already provided US$9.7 billion
under this programme (as of the end of March 2011). The public and private sector must
continue working together to provide as much assistance as possible, both to support
developing countries working on emissions reductions and other measures to mitigate
climate change and to aid those most vulnerable to the impact of climate change.
In offering such support, however, the government needs to provide the public with aclear explanation of the importance and efficacy of development aid programmes geared
to mitigating climate change, mindful of the oft-repeated criticisms—particularly
regarding aid provided through multilateral channels—that Japan’s contribution too often
goes unrecognised and that the government is not accountable to taxpayers.
b. In terms of a multilateral framework for financial support, the Cancun Agreements callfor the establishment of a Green Climate Fund (GCF), 9 the design of which is currently
being deliberated. In the future, the GCF is expected to play an important role in the
securing of needed funding by developing countries implementing emission-reduction
initiatives and by developing countries most vulnerable to the impact of climate change.
In designing the GCF, it will be important to include provisions for objective assessmentof the environmental benefits brought by GCF funding in the recipient countries. In
addition, the GCF must be designed so as to act as a catalyst for mobilising investment
and financing from the developed nations. For this reason the GCF’s Transitional
Committee should solicit the views of the business community, which possesses thenecessary technology, on a mechanism for linking the GCF to an MRV system thatquantifies reductions in GHG emissions and ensures transparency.
(3) Promote Capacity Building
Capacity building in developing countries is a vital key to ensuring the efficacy of thekinds of technical and financial cooperation outlined above. This means enhancing
policies and systems aimed at mitigating climate change, developing skills and humanresources, and providing social and economic infrastructure.
Japan has supported capacity building in various forms and contributed to sustainable
development in developing nations, especially those in Asia, by drawing on its own
wealth of experience and technical expertise. Now it is vital that we extend these efforts
from Asia to other regions, to support and promote ownership of these challenges indeveloping nations around the world.
Keidanren intends to fully leverage the technology, know-how, and human resources of
the Japanese business community to support the efforts of developing nations. Moreparticularly, we will be taking active steps in concert with the Japanese government and9Green Climate Fund (GCF): A financial mechanism adopted under the Cancun Agreements. The
Transitional Committee for the design of the GCF is currently deliberating such operational mattersas governance, institutional framework, and options for mobilising private-sector funds.

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in close dialogue with developing countries to (1) support the establishment of countryby-country plans and strategies for low-carbon development and (2) match thetechnological needs of developing countries with the technological “seeds” Japanesebusinesses can supply.
(4) Advance the 3Ls: Lighting Africa, Linking Africa, and Lifting Africa
At the Tokyo International Conference on African Development (TICAD) Ministerial
Follow-up Meeting held in May 2011, the Japanese government unveiled an initiative fora “Low-Carbon Growth and Sustainable Development Strategy in Africa.”10 Now it iscalling for positive action on a wide range of African aid projects (including geothermaland solar energy, electrification of regions without access to electricity,
telecommunications, infrastructure, food, and water) built on the concept of the 3Ls:
“lighting, linking, and lifting” Africa.
Specific cooperation programmes eyed for adoption include (1) development ofgeothermal resources in East Africa and use of related cutting-edge technology, (2)promotion of a green power supply through use of solar energy, (3) reduction of CO2
emissions and electrification in areas without access to electricity, (4) support for
improved energy efficiency in the steel industry, and (5) promotion of green investmentin the cement industry. These are highly significant initiatives from the standpoint ofalleviating poverty and pursuing sustainable development in Africa, and they need to be
steadily translated into action.
The Japanese business community intends to cooperate in these 3L projects in every way
possible.
(5) Transfer Low-Carbon Technologies Via a Platform for Environment-Friendly
Technologies (WIPO Green)
To make maximum use of private sector vitality in promoting the development andglobal diffusion of low-carbon technologies, we need to foster an environment toaccelerate the “intellectual creation cycle,” that is, creation, protection, and utilisation of
intellectual property.
To this end, the Japanese business community has developed WIPO Green,11 an initiative
for creating a database of environmental technologies that can be transferred todeveloping countries, which we have submitted to the international community. With the
10

The Third TICAD Ministerial Follow-up Meeting was held in Dakar, Senegal, on 1-2 May 2011. It
was attended by approximately 500 participants representing 68 countries, 42 regional andinternational organisations, and 16 NGOs, as well as the private sector. Representing the Japanesebusiness community was Keidanren’s Akio Dobashi, chairman of the Committee on Sub-SaharanAfrica. In a joint communiqué, the participants acknowledged the value of building a sharedmedium- and long-term vision to promote sustainable and low-carbon growth in Africa and theyagreed to commence work to prepare a “Low-Carbon Growth and Sustainable Development Strategy
in Africa.”
11
Japan Intellectual Property Association and the World Intellectual Property Organization (WIPO)
are currently floating this proposal at the international level.

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help of WIPO Green, we are determined to foster a business-based approach to thetransfer of low-carbon and other environmental technologies while protecting intellectual
property rights.
Meanwhile, however, a large number of developing countries have endorsed proposals
for the compulsory licensing or buyout of intellectual property rights in order toaccelerate the spread of low-carbon technologies around the world. We believe thatmaintaining appropriate protections for intellectual property rights is vital to promoting
the development of low-carbon technologies and facilitating their transfer. For this reason
we oppose any compulsory licensing or buyout of intellectual property rights.
(6) Pursue the Sectoral Approach
In implementing the kinds of initiatives discussed above, it will be important to makemany concrete, sector-specific proposals and recommendations.
The Japanese business community, particularly sectors such as steel, electric power, andcement, have voluntarily transferred technology and expertise and carried out training
programmes in developing countries and emerging nations in close cooperation withthese countries’ public and private sectors through the Asia-Pacific Partnership on Clean
Development and Climate (APP).12
In September this year, the APP was absorbed into the Global Superior Energy
Performance Partnership (GSEP), which expands the regional scope of those programmes
to outside the Asia-Pacific.13 The Japanese business community will continue to take anactive part in bottom-up sectoral efforts through GSEP.
4. Japan’s Medium-Term Emission Reduction Targets
Japan is drastically revising its energy policy in the wake of the disaster triggered by the
March earthquake and tsunami. This will naturally mean rethinking the nation’s mediumterm targets for reduction of GHG emissions.
Before adopting new medium-term targets, we need to conduct an open and transparent
national debate and deliberate the issue with an eye to ensuring international equity,
feasibility, and a reasonable public burden. From the standpoint of international equity,
we will need scientific and objective comparisons and verification methods, including the12

Asia-Pacific Partnership on Clean Development and Climate: A regional partnership launched inJuly 2005, comprising seven nations (Japan, Australia, Canada, China, India, South Korea, and theUnited States) that together account for more than half of the world's energy-related CO2 emissions.
Through eight public-private sectoral task forces, the APP has undertaken a variety of cooperative
initiatives oriented to the development, diffusion, and transfer of clean and efficient technology for
effective reduction of GHG emissions.
13
Global Superior Energy Performance Partnership: GSEP was formed at the initiative of Japan andthe United States to succeed the APP as a framework for public-private partnership. Among its goals
is the development of international certification programmes for energy management in commercial
buildings and industrial facilities, which account for about 60 percent of the world's energy
consumption.

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identification of appropriate indicators. From the standpoint of feasibility, we will need tosubject each mitigation action to dispassionate cost-benefit analyses, add economicallyand socially feasible measures one at a time, and verify cost and benefit as we implementthem.
The key condition for the revision of our energy policy and medium-term targets isensuring compatibility with our growth strategy and the energy demand needed toachieve that strategy.
5. In Conclusion
Keidanren will continue to uphold its Commitment to a Low Carbon Society, building on
the world-leading low-carbon technologies Japan has developed over the years andsetting the goal of having Japanese industry play a pivotal role, through this technology,
in the drive to halve global GHG emissions by the year 2050.
Under this Commitment, participating industries have pledged to contribute proactively
and independently to the creation of a low carbon society of global scale through (1)maximum use of best available technologies (BATs) in business operations, (2)development and deployment of world-leading products and services for consumers, (3)transfer of technology and expertise overseas, and (4) development of innovativetechnologies.

8Reference 1. Comparison of Top-Down and Bottom-Up Target Setting

Debate/Negotiation over Next International Framework
Top-down target setting + strong penalties

Kyoto Protocol

Copenhagen Accord→ adopted by COP
Bottom‐up target setting + voluntary
efforts and third‐party monitoring● Efficacy in Mitigating Climate Change
Compulsory: fewer countries participate

Voluntary: more countries participate● Actual Economic Benefits• Potential to minimise impact on international
competitiveness through sectoral approach, etc.
• Short‐ & long‐term financial commitment by
developed countries• Bilateral offset & other new mechanisms possible• Financial support for “adaptation” possible• Compatibility with emissions trading• CDM & other offset mechanisms• Existing fund = limited resources

United States
Japan, Russia, Canada, Australia, New Zealand
Least developed countries, small island states

EU
Developing & emerging countries
Source: Materials compiled by Akihiro Sawa, Executive Senior Fellow,
21st Century Public Policy Institute

Reference 2. Long-Term Projected Change in Contribution to Global GHG
Emissions by Country
Other Non
Annex I
7%
Africa5%
Latin
America
7%

1990

Other Non
Annex I
8%

UnitedStates19%

UnitedStates15%

2020

Annex I exc. US: 22%

Af rica
6%
EU15
9%

Latin
America7%

Other Asia
6%
EU15
13%

India
5%
China
12%

Annex I: 58%

Other
Annex I
18%
Other Non
Annex I7%
Af rica6%

Other Asia
9%

Other
Annex I
8%

India
8%

EU27(+12)
4%

UnitedStates
18%

Japan
3%

reduction commitments(the US withdrew in
2001)

China
25%

Japan
4%

2005

* Annex I countries of theEU27(+12) Kyoto Protocol:
Developed countries with2%

Annex I exc.
US: 27%

Annex I exc. US: 18%

Other Non
Annex I8%2050

UnitedStates12%EU15
7%EU27(+12)3%

Af rica9%

Latin
America
8%
EU15
11%

Other Asia
9%
India
6%
China
19%

Other
Annex I
10%

EU27(+12)
2%
Japan
4%

Japan
1%

Latin
America8%

OtherAnnex I
7%

Other Asia
10%
India
11%

Source: Research Institute of Innovative Technology for the Earth (RITE) materials, 21 July 2011

9

China
24%

Energy‐related CO2 Emissions & Reductions[GtCO2/yr]

Reference 3. Baseline CO2 Emissions and Reductions Required to Halve Global
Emissions, by Region
60
Baseline emissions:
57 GtCO2/yr

Other non‐OECD

50

30%

40

6%
10%

30

24%

Other OME

US and non-Annex I
countries play an
extremely significant partin reduction of global
emissions.

India
China

17%

20

Other OECD
13%

Emissions for halving
global emissions: 13 GtCO2/yr

10

USA
CO2 emissions

0
2000

2010

2020

2030

2040

2050

Year

Source: Research Institute of Innovative Technology
for the Earth (RITE) estimates (excludes international
maritime and air transport).

Source: International Energy Agency, Energy Technology Perspectives 2010.

Reference 4. GHG Emissions Reduction Potential, 2020, by Marginal Abatement
Cost
Potential Emissions Reductions in 2020, Assuming Frozen Technology (emissions levels in the hypotheticalcase that efficacy of mitigation actions is completely unchanged between 2005 and 2020)

40000< $0/tCO2$0- $20/tCO2

30000$20- $50/tCO2$50- $100/tCO2

20000$100/tCO2
1990 emissions

Non-Annex I
countries

Annex I
countries

India

China

Russia

EU27

0

US

10000

Japan

GHG emissions and possible reduction volume

50000

Source: Research Institute of Innovative Technology for the Earth (RITE) materials, July 21, 2011.

10

In general, developing
countries have more
opportunities for negative
or low net reduction costs.

Marginal abatement costs [$/tCO2eq]

Reference 5. Marginal Abatement Costs among Developed Countries under Kyoto
Protocol100

Marginal Abatement Costs as of 2010
EU: ▲8%
Norway：＋1%
Iceland： ＋10%
Japan：–6%

90
80
70
60
50

(Kyoto Protocol Target Achievement Plan:–0.6%, without government credits: –2.2%)

40

Australia：＋8%
Russia： ±0%
Ukraine： ±0%

30
20
10
0

Japan alone has madestrenuous reduction
efforts.


For Japan, marginal abatement cost of the Kyoto Protocol Target Achievement Plan isapproximately US$50/tCO2 eq.; without the use of government carbon credits, it would
rise to about US$80/tCO2 eq.
The EU-27 is able to achieve its target at a marginal cost of about US$0/tCO2 eq. (owing
to large potential for reduction in former communist bloc countries).
Source: Research Institute of Innovative Technology for the Earth (RITE) materials, 21 July 2011.

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