Building Cap-and-Trade System 'An Ingenious Approach'

The world’s first cap and trade system just for buildings could prove a model for other municipalities seeking to cut emissions, according to a forthcoming journal article.

Tokyo’s emissions trading program, launched in April 2010, demonstrates that effective regulation of building emissions is possible, according to the article by Yuko Nishida and Ying Hua. The piece will appear in the August 10 issue of the peer-reviewed journal Building Research and Information.

The authors say that the building sector has proved difficult to regulate in many jurisdictions, but say the Tokyo Cap-and-Trade Program (TCTP) offers an "ingenious" approach that addresses the diverse, complex and fragmented value chain in the building sector.

Among the lessons they say can be drawn from the program:

• TCTP has managed to bring together disparate stakeholders from developers, owners and tenants and have them work together to cut CO2 emissions in buildings
• The program shows how a significant consultation process delivered flexibility to ensure that stakeholders see the program as fair. This is critical for buy-in from a broad range of stakeholders
• TCTP allows participants to pick their own range of years as a baseline for reductions - which does not penalize buildings that are already energy efficient.
• Mandatory reporting of emissions data is an important prerequisite. Only once the municipal government has some idea of the city’s emissions and the profiles on individual buildings can it work on developing a programme to address rising emissions
• Simplicity is also important. While there are many aspects to the efficiency of a building and its emissions, TCTP is based on energy consumption, which allows different types of buildings, and their emissions, to be assessed on a like for like basis.

Tokyo’s program caps the 1,300 buildings with the highest emissions. Even though the highest energy-consuming facilities account for only around 0.2 percent of some 700,000 industrial and commercial institutions in Tokyo, their carbon dioxide emissions in 2007 stood at roughly 20 percent of total metropolitan emissions.

Under the plan, large-scale facilities must cut their emissions from base year levels between 2010 and 2014. Office buildings face an 8 percent target and factories are subject to a 6 percent goal. The cap for the second period (2015–2019) is currently set as a 17 percent reduction, although this cap is not yet finalized.