up of well-informed individuals invited by Prime Minister Fukuda, domestic emissions trading system and environmental tax were the agenda items discussed.

## (3) Future of the World’s Emission Trading Markets

Worldwide, momentum is gathering for the establishment of an international emissions trading market. The EU-ETS is strengthening its ties with emissions trading systems in other countries and regions. Within Phase II, it formed an emissions trading market in conjunction with Norway, Iceland, and Liechtenstein, which are not inside the EU zone. In October 2007, the EU, ten US states, two Canadian provinces, New Zealand, and Norway gathered and launched the International Carbon Action Partnership (ICAP), which adopted a Political Declaration to review establishment of an international market for emissions trading. As more countries and regions are expected to adopt emissions trading systems in the future, we shall keep an eye on their development.

## 4 Expansion of the Carbon Offset Market

## (1) Evolution of the Carbon Offset Market

In recent years, voluntary carbon offset activities are on the rise worldwide. Carbon offset refers to initiatives taken by various actors of the society, including citizens, businesses, NGOs/NPOs, local governments, and the national government, to find out the amounts of their own emissions and to take voluntary actions to reduce them. For emissions that are difficult to reduce, the actors may purchase credits of GHG emissions reduction/absorbed amounts realized at other locations or implement projects or activities to reduce/absorb emissions at other locations to compensate for all or part of their emissions that could not be reduced. Carbon offset activities are popular in the EU, including the U.K., the United States and Australia. Such activities have also made inroads into the private sector in Japan.

Besides credits used by the Kyoto Mechanism, carbon offset also has its own credit, known as Verified Emission Reduction (VER). According to a World Bank survey, the VER market has seen tremendous growth from 2006 to 2007. Compared to the previous year, the world's trading volume has reached 42 million tons (carbon dioxide equivalent) and the amount of trading about 270 million dollars.

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# Examples of Carbon Offset

In recent years, goods and services utilizing the carbon offset system have been widely available in Japan, and the number of companies strategically commercializing the system is increasing.

The following are examples of such goods and services: a package delivery service for which the user bears part of the cost for CDM credit when purchasing products from specified mail-order companies; travel packages that absorb the cost to offset the $ CO_{2} $ emitted during the tours through the use of the Green Power

Family enjoying the “CO $ _{2} $ Emission-Free Tour” (Photo: courtesy of JTB Kanto Corp.)

Certification System; Carbon Offset New Year’s Greeting Cards that donated five yen from the sales price (55 yen) per card to support greenhouse gas reduction, such as through the purchase of CDM credit; leasing services with $ CO_{2} $ credit for machine tools and vehicles; magazine subscriptions with $ CO_{2} $ emission rights; and services that enable a company to offset the $ CO_{2} $ emitted from its offices. With the rise in consumer awareness, the number of these types of goods and services is rapidly increasing.

“Green Card” issued with the use of “The Hikyaku Express with CO₂ Emissions Credit”

(Photo: courtesy of Sagawa Express Co., Ltd.)