Japan weakens climate bill after industry pressure

Japan watered down legislation to fight climate change on Thursday after weeks of wrangling within the government over plans for an emissions trading system that has met stiff opposition from industry.                                           

The climate bill, set to be enacted by parliament by mid-June, said the government would consider using emission caps per unit of production in the planned trading scheme, which would allow rises in emissions when output grows.                                           

Environmental groups had called for the government to stick to an earlier pledge to set caps on absolute emission volumes, but companies have worried that volume caps would restrict growth.                                            

The bill, to be sent to parliament after being approved by the cabinet on Friday, also called for the government to spend the next year drafting separate legislation to design the trading scheme, environment minister Sakihito Ozawa told reporters.                 

A national scheme that sets targets on greenhouse gas emissions could be a major boost for the carbon market, depending on the design.                                           

The climate bill also includes Japan's goal to cut greenhouse gas emissions by 25% by 2020 from 1990 levels on condition a global climate deal is reached, along with its plan to consider imposing an environment tax from 2011.