Japan Firms Warn on Emissions

By YOSHIO TAKAHASHI and KAZUHIRO SHIMAMURA
TOKYO -- As Japan's incoming government takes shape, its bold plans for stringent cuts in greenhouse-gas emissions are stoking concern among some of the country's leading industrial companies.
Bloomberg News
Democratic Party of Japan leader Yukio Hatoyama reiterated on Monday a pledge to make cuts in the country's greenhouse-gas emissions.
Democratic Party of Japan leader Yukio Hatoyama reiterated a campaign pledge Monday to cut emissions by 25% from 1990 levels by 2020. Prominent business leaders, who have largely remained on the sidelines during Japan's political shift, Tuesday politely but firmly began to warn that Mr. Hatoyama's targets may be unworkable.
Honda Motor Co. President Takanobu Ito said the auto maker, second in sales in Japan to industry giant Toyota Motor Corp., faces a potentially daunting task.
"It goes without saying such a target would be difficult to reach," Mr. Ito said Tuesday. He said Honda would have to undertake extra projects to meet the requirements, despite its recent focus on more environmentally friendly electric-gasoline hybrid vehicles.
Toyota's recently installed president, Akio Toyoda, took a similar line. "I think it would be hard to meet the DPJ's midterm target for a cut in greenhouse-gas emissions," he said.
The targets laid out by Mr. Hatoyama, who is set to become prime minister next week after 50 years of nearly unbroken rule by the outgoing Liberal Democratic Party, are much more aggressive than the previous administration's goal of cutting emissions by about 8% in the period.

By comparison, the international Kyoto Protocol global-warming pact requires the industrialized nations that ratified it to cut emissions by a collective 5% below 1990 levels by 2012. A number of countries -- including Japan -- are struggling to meet that target. From 1990 to 2006, Japan's overall emissions rose 5.8%, according to the United Nations Framework Convention on Climate Change.
The U.S. never ratified the 1997 Kyoto accord, but in June the House of Representatives passed an energy bill that set a goal of reducing overall U.S. greenhouse-gas emissions by 17% from 2005 levels by the year 2020; the European Union has promised to cut emissions by 20% from 1990 by 2020.
Japan's emissions-cut push is one of several initiatives making businesses uneasy about the new administration. The DPJ also pledged to enact a higher minimum wage and ban the hiring of temporary workers by manufacturers. Businesses traditionally supported the LDP, though analysts note the new ruling party has many former LDP members in its ranks and could soften its stance on some business issues. The Hatoyama administration also faces pressure to water down some measures as companies grapple with Japan's weak economic outlook.
It isn't clear how quickly Japan under the Hatoyama administration will be able to move on climate change, if at all. DPJ officials are tying their climate-change proposals to global efforts to cut emissions. The party's policy statement specifically mentions working with nations such as India and China, which have become major emitters but have resisted global efforts to reduce emission levels. Their lack of participation has been one stumbling block to attempts to hammer out a successor agreement to the Kyoto Protocol, which expires in 2012.

Executives from major Japanese manufacturers say they are handicapped by already having some of the cleanest and most efficient factories in the industrialized world, and that efforts to slow global warming are best coordinated at the international level, rather than by Japan pushing unilateral targets. Business groups say the Japanese administration could get better results by targeting consumers and the transportation sector, emphasizing greater efficiency in driving and air-conditioning.
Mr. Hatoyama's greenhouse-gas initiative comes at a delicate time for the auto industry. Like all other major players, Honda and Toyota are only now beginning to show signs of emerging from a prolonged slowdown in global demand.
Meanwhile, Japan's steelmakers are preparing to make their own case for favorable treatment on green targets from the incoming administration. The Japan Iron and Steel Federation says its industry cut emissions by 1.8% from 1990 to 2007, despite a 9% increase in crude steel output. By comparison, Japan's carbon-dioxide emissions from energy consumption rose 15.1% over the period, according to Japan's environment ministry.
"There is very little room left to reduce emissions by improving production methods," said SMBC Friend Research Center analyst Satoru Takaoki, adding that companies have already been making efforts to become highly energy-efficient.—Juro Osawa and Kenneth Maxwell contributed to this article.
Write to Yoshio Takahashi at yoshio.takahashi@dowjones.com and Kazuhiro Shimamura at kazuhiro.shimamura@dowjones.com