On April 19, 2013, the Japanese Cabinet approved the revision of its fluorocarbon regulations that will fundamentally change the way high global warming fluorocarbons are produced, used and disposed in Japan. It also will lead to a phase-down of the "super" greenhouse gases hydrofluorocarbons (HFCs), which are hundreds and thousands of times more damaging to the global climate than carbon dioxide.
Among other requirements, the "Act for Partial Revision of the Act on Ensuring the Implementation of Recovery and Destruction of Fluorocarbons concerning Designated Products," requires that entities manufacturing and importing air conditioning and refrigeration units transition to either fluorocarbon-free refrigerants or low global warming fluorocarbons by certain target years. Although Japan has been a consistent supporter of a global phase-down of the HFCs at the Montreal Protocol, with this revision of its fluorocarbon regulations, Japan has joined the European Union and Australia in reducing the use of these potent gases domestically.
This progressive step from Japan is a great news for the global climate. However, all the good it does, could be undone if Japan allows offset credits in its domestic carbon market based upon the capture and destruction of HFC-23 by companies in developing countries. HFC-23, a byproduct in the manufacture of the refrigerant hydrochlorofluorocarbon-22 (HCFC-22), is a powerful greenhouse gas with a global warming potential that is 14,800 times that of CO2. HFC-23 destruction credits were allowed under the Clean Development Mechanism (CDM) of the Climate Treaty (UNFCCC). However, since the cost of destruction was a tiny fraction of the value of the credits, HFC-23 destruction led to billions of dollars in profits for a handful of plants mostly concentrated in China and India. Additionally, HFC-23 credits resulted in gaming and fraud in the production of HCFC-22 and diverted almost half of the CDM funds from renewable energy and conservation to bogus destruction of HFC-23. Destruction of HFC-23 paid on a CO2 equivalent tonne basis does not represent real emissions reductions.
Due to concerns on "non-additionality, environmental merit, cost-effectiveness and competitive distortions of HFC-23 credits" the European Union agreed to ban the use of HFC-23 credits from the European Emissions Trading Scheme (ETS) starting in 2013. Led by the Danish Government, most E.U. member states have also voluntarily extended the ban to their national carbon credit registries for non-traded sectors. CERs from HFC-23 destruction projects have been banned in the Australian and the New Zealand carbon markets as well.
"Japan is the only major carbon market to remain silent on the use of HFC-23 offset credits and the only place that has the potential to recapitalize these 'toxic' credits, this discredited industry and this failed mechanism for climate mitigation" saysMark W. Roberts , International Policy Advisor for the Environmental Investigation Agency (EIA).
The Environmental Investigation Agency, has sent a letter to the Japanese Prime Minister, urging him to ensure that Japan's new carbon trading scheme, the Bilateral Offset Credit Mechanism (BOCM) does not use HFC-23 credits.
"If Japan needs additional offset credits due to its decisions concerning nuclear power or to otherwise meet its promised mitigation targets, it should use the money to jumpstart the phase-out of all HFCs including HFC-23 for incremental costs.Japan must not continue the perverse incentives that the world has worked so hard to eliminate" said Avipsa Mahapatra, Climate Policy Analyst for the EIA.