Emissions Trading Worldwide

The Tokyo Cap-and-Trade Program
New Measures for the Second Compliance Period
and Lessons Learned
Masahiro Kimura, Tokyo Metropolitan Government
The Tokyo Cap-and-Trade Program is a unique, pioneering citybased
Emissions Trading System that is designed to fit the emissions
profile and scope of the Tokyo Metropolitan Area. Typical
of any major metropolitan city, Tokyo’s emissions stem from the
consumption rather than the production of energy. The point of
regulation is therefore downstream, with compliance entities
consisting of commercial and industrial energy users. Energy suppliers,
such as large power plants located outside of the Tokyo
Metropolitan Government’s (TMG) jurisdiction, are not directly regulated.
In order to meet the challenges of a city-scale system, the
Tokyo Cap-and-Trade Program has a range of design features that
target both the owners and the tenants of compliance facilities to
promote energy efficiency and achieve ambitious targets.
After nearly five years of operation, the Tokyo Cap-and-
Trade Program has now entered the second compliance period
(FY2015 – 2019). Here at TMG, we would like to share some of the
unique measures now being implemented, and reflect on our
lessons learned so far.
Update on the Tokyo Cap-and-Trade Program
On 19 February 2015, the TMG announced that the Tokyo Cap-and-
Trade Program achieved a 23% reduction in emissions after the
fourth year of the first compliance period (FY2013) compared to
base-year emissions. In 2015, the Tokyo Cap-and-Trade Program
transitioned to the second compliance period (FY2015 – 2019).
One of the biggest changes from the first compliance period
(FY2010 – 2014) is the increase in the compliance factor for each category
(commercial buildings from 8% to 17%, and industrial facilities
from 6% to 15%). At the same time, we have introduced several
new measures designed to support facilities in reaching the new
targets, and to incentivize low-carbon energy suppliers outside of
the program.
carbon reduction plan
for tenants
Results for GHGs emitted
by the tenant
Max score: 30 points
S
AAA
AA
A
B
C
+
total: 100 points
check list
for tenants
Use or non-use of energy
saving measures
Max score: 70 points
Excellent Total points: over 90
Better Total points: over 80
Good Total points: over 70
Average Total points: over 60
More can be expected Total points: over 40
Much more can be expected Total points: less than 40
Figure 1: Appraisal and publication system for tenants, Tokyo Metropolitan Government (2015)
1. A new mechanism to encourage compliance facilities to use
low-carbon energy suppliers
In order to calculate their emissions from energy use (specifically
electricity and heat), compliance facilities use standard conversion
factors 1 that do not distinguish between suppliers. However,
a new mechanism is being introduced that enables facilities to
identify low-carbon energy suppliers, and encourages their use.
Under the new mechanism, energy suppliers certified by TMG will
receive an individual conversion factor reflecting their improved
emissions performance. Therefore, if a facility decides to use a
low-carbon energy supplier, the improved conversion factor can
be applied to their accounting, effectively resulting in a reduction
in their annual emissions. This represents a unique and innovative
demand-side approach, aimed at increasing the supply of lowcarbon
energy by encouraging low-carbon consumption.
“After the Tokyo Cap-and-Trade Program
was established, it was the promotion
system that ensured its successful implementation
… fostering a cooperative
relationship between owners and tenants
is vital.”
2. Appraisal and publication system for tenants
In order to meet the increased compliance factors of the second
period, facility owners will need to cooperate more closely with
their tenants, who will also need to take a greater role in achieving
reductions. Furthermore, some tenants lack the know-how and
capacity to undertake energy saving measures. To address these
factors, we have started a system to evaluate and publicly disclose
tenants’ carbon reduction measures. The main effects of this system
are 1) social appraisal, 2) comparison between tenants, and
3) motivation for further reduction effort. There are six evaluation
categories with tenants ranked from the bottom category (C) to
the top category (S).
3. Certification system for energy efficient data centers
Data processing is an energy-intensive commercial activity on the
rise in cities such as Tokyo. The combined server floor area of data
centers in Tokyo makes up around half of the national total. To
address emissions from data centers, TMG reached an agreement
with the Japanese Data Center Council and has started the certification
system for energy efficient data centers. The criteria for
1 Standard conversion factors are calculated for (a) electricity: the average carbon intensity of
electric companies that supply Tokyo (average of FY2011 and FY2012); and (b) heat: the average
carbon intensity of heat suppliers in Tokyo (average of FY2012).
20