Carbon Credits, Clean Energy, Cleantech venture capital, Climate Change, Emissions Reduction, Energy Efficiency, GHG, Japan, Legislation

Fukuda pledges $40 billion to combat climate change

January, 26, 2008 (Bloomberg) – Japanese Prime Minister Yasuo Fukuda vowed to cut carbon emissions and earmark funds to help developing nations cope with global warming, in a bid to take a leading role in combating climate change. Over the next five years, Japan will spend $30 billion on new environmental technology at home and provide another $10 billion for developing countries, Fukuda said in a speech today at the World Economic Forum in Davos, Switzerland. Fukuda also proposed a 30 percent improvement in energy efficiency globally by 2020.

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“As the chair of the Group of Eight Summit, I am resolved to take on the responsibility of working toward the establishment of a framework in which all major emitters participate, as well as setting fair and equitable emissions targets,” Fukuda said.

Fukuda, who will chair the July summit of the eight major industrialized nations in Japan, is trying to make the fight against global warming a centerpiece of his foreign policy. He is seeking to stem declining support for his ruling party, which is hampering his ability to pass legislation, by leading a new emissions goal after Kyoto Protocol expires in 2012.

“Fukuda lacked any defining characteristic for his diplomacy, so he decided to make it the environment,” Takao Toshikawa, chief editor of the political newsletter Tokyo Insideline, said in a telephone interview. “Whether he has the leadership to actually achieve any of these goals remains a question.”

July Defeat

Fukuda, 71, became prime minister in September after Shinzo Abe quit following the party’s July defeat in upper-house elections. The opposition-controlled upper house of parliament has since voted against legislation such as a bill to allow Japanese refueling ships to assist the U.S.-led war in Afghanistan.

Fukuda said a more efficient use of energy was needed to halve greenhouse-gas emissions by 2050. By contrast, the European Union has pledged a 20 percent cut in greenhouse-gas emissions by 2020.

Fukuda said improved efficiency allowed Japan’s economy to double in size in the past three decades without increasing energy consumption by industry. His shift of focus from emission cuts to improving energy efficiency is not welcomed by all.

“Japan’s handling of climate change has been totally insufficient,” Mie Asaoka, head of the Kyoto-based environmental group Kiko Network, said in a telephone interview. “How can Fukuda play a leadership role by acting passively?”

`Lax Risk Management’

Separately in today’s speech, Fukuda called for international cooperation to mitigate the effect of the U.S. subprime mortgage collapse and rising crude-oil prices on global economic growth.

“Overly lax risk management” has spread financial risks through new techniques, Fukuda said. Japan has learned from its non-performing loan crisis that a “swift response” to avert credit crunches is important, he said.

Japan’s economy, the world’s second largest, is now healthy and has recovered from the financial crisis, Fukuda said. He pledged to spur growth by reforming investment and trade rules, and financial markets. He said he wouldn’t follow the U.S. in seeking to boost the economy by cutting taxes or increasing spending.

Countries must also band together to prevent stock-market losses from undermining the world economy, he said.

“Right now we are in the process of re-evaluating risks,” said Fukuda. “We do need to have a sense of urgency as we engage in coordinated actions.”

Nikkei’s Decline

Japan’s Nikkei 225 Stock Average has fallen 17.4 percent since Fukuda took office Sept. 26.

On Jan. 24, lawmakers from Fukuda’s Liberal Democratic Party called on the government to abolish capital-gain taxes and set up a fund to manage the country’s foreign reserves to help shore up stock-market losses. Fukuda said later on that day he didn’t see a need for such a plan.

“I don’t think Mr. Fukuda has specific policies in hand when he calls for international cooperation,” said Jun Yamamoto, senior economist at Mizuho Research Institute in Tokyo. “What Japan can do for cooperation is very limited.”

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