Cogeneration Users and Japanese Government Dispute over Calculation of Emissions Reductions

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Before the Japanese government can decide on a carbon trading scheme, it has to figure out ‘who’s got it right’ on emissions calculations.

Firms using cogeneration systems blame the government for miscalculating the carbon cuts they have realized. These firms, along with gas companies that sell cogeneration generators, believe the government’s formula for estimating emissions isn’t appropriate. The amount of emissions reduced can vary depending on the type of power plant used to generate electricity.  Thermal power plants release more carbon dioxide than atomic or hydroelectric plants.

Firms shifting to cogeneration systems now buy less electricity from electric companies; hence, they may also reduce their emissions if they buy energy from more environment friendly sources. The government estimates carbon emissions using an average figure of all types of power plants. On the other hand, firms using cogeneration want the government to assume that the electricity they have saved was being generated at thermal plants.

This difference in calculation can become a hot issue if an emissions trading scheme is introduced. The gap in the two calculations can mean hundreds of millions of yen to some large companies like Bridgestone Corporation and Yokohama Rubber Co.

The Japan Gas Association agrees with the viewpoint of cogeneration users whereas the Federation of Electric Power Companies of Japan (FEPC) supports the government’s calculations.