TOKYO - Japan postponed plans for a national emissions trading scheme on Tuesday, bowing to powerful business groups that warned of job losses as they compete against overseas rivals facing fewer emissions regulations.
The indefinite delay by Japan is a blow to the European Union's hopes that other top producers of greenhouse gases would introduce emissions trading schemes and follows setbacks to similar efforts in the United States and Australia.
A UN meeting in Cancun, Mexico, this month failed to clear uncertainty over a global climate framework beyond 2012, meaning that rival companies would likely retain an advantage from lax emissions management.
Japan's National Strategy Minister Koichiro Gemba said after a cabinet meeting that the trading scheme needed further careful study, indicating that it had effectively been shelved, although he stressed that it had not been scrapped entirely.
"We've decided to make careful consideration," he told a news conference.
"But we haven't given up plans to introduce an emissions trading scheme," said Gemba, who has been appointed to review with other ministers the government's core green policy steps.
Tokyo is expected to seek other ways to bind companies to emissions goals so the country can meet an ambitious pledge to cut greenhouse gas emissions by 25 percent by 2020 from 1990 levels.
Japan, the world's fifth-biggest greenhouse gas emitter, had been expected to launch a trading scheme that would curb companies' emissions from as early as 2013, after principles for the plan had been discussed within the government.
Earlier this month, however, the ruling Democratic Party said an emissions trading scheme could hamper investments in key industries.
Japan's emissions reduction target, one of the toughest among major emitters, would be virtually impossible to meet without deeper emission cuts by manufacturers, offices and commercial facilities, and energy suppliers, which together account for 60 percent of emissions.
Tokyo remains, however, committed to levying a new tax on CO2 emissions from fuel burning in October next year and to expand a pilot plan floated last year for increased renewable sources of electricity.
The government has submitted a climate bill to parliament that includes a one-year deadline to design a national trading scheme, but after Tuesday's decision that bill is expected to be revised in the next parliamentary session that begins in January.
The government's top priority is to have budget-related bills passed by the end of the current fiscal year to March 31.