With greenhouse gas levels on the rise in Japan and a new energy liberalization policy to come into effect in 2016, the phrase “kuki wo yomeru” (reading the air) is taking on new meaning.

By Kyle Mullin

Beijing’s infamous smog has no doubt given Tokyo environmental officials a long-standing sense of superiority. But that dynamic may be shifting dramatically, according to one top Japanese ecologist, who has his doubts about recent rhetoric from the government about pollution curbing, and wants his country to improve its environmental standing on the world stage.

“When the environment minister said Japan is considering emissions trading, it happened a day after China announced its emission trading scheme,” says Naoyuki Yamagishi, leader of the climate and energy group in WWF Japan, of Minister Yoshio Mochizuki‘s comments about anti-pollution measures earlier this fall. In Yamagishi’s view, the minister may have only been attempting to save face in the wake of China’s major pollution fighting pact with the US. “A reporter asked him (Mochizuki) about it and he had to respond, but that doesn’t mean it has materialized with any political backing.”

Yamagishi’s skepticism is understandable, especially given Japan’s history of emissions trading. The country came close to establishing such a smog curbing scheme in 2010, in which a limit on harmful CO2 emissions would be established, and major polluters like power plants could buy or sell permission to emit a certain amount of toxic exhaust. Theoretically, the cost restrictions should prompt those facilities to embrace greener practices. However, Hatoyama government scrapped their plans to enact such policies in the face of industry opposition. Yamagishi says major Japanese power companies will be even more staunchly opposed to the plan today.

“After the Fukushima disaster, many nuclear plants stopped generating power, which led to more importing of natural gas, which was very expensive and increased power prices dramatically … Because of that, industry [leaders] say that the prices are rising, and they say ‘We have to keep [costs] low; we need to use more coal.’ That’s the logic they’re using.”

And while coal is, of course, one of the absolute cheapest fuel sources for power plants, it is also the filthiest. The temptation to indulge in such affordable power sources is considerable, given Japan’s stuttering economy and public opposition to nuclear plants after the Fukushima meltdown. The result: Japan’s smog levels reaching their second-highest levels on record this past spring, according to a Reuters report.

These factors have added up to a troubling status quo, according to Kimiko Hirata, international director of the environmental NGO Kiko Network. Hirata adds: “Unfortunately, the government doesn’t consider emission trading or any other compatible alternatives. It still expects the industry to act voluntarily. However, as [the use of] coal power plants increases and there are no strong incentives to reduce CO2, some government sections also think Japan needs to do something to reduce CO2 further. But there is no official plan yet.”

However, Yamagishi hasn’t given up hope. She says international pressure may prompt Japanese officials and power providers to adopt emissions trading plans, especially as neighboring rival nations like China and South Korea begin doing so.

In fact, some of this change may not need to come from abroad, but instead from deep within. The internal dynamics of Japan’s own power industry will shift drastically in the spring of 2016, as Japanese energy industry liberalization polices are put in place that will allow new and smaller players – from banks and gas companies that often invest heavily in renewable resources to firms best known for mobile phones and internet, like SoftBank – to sell electricity as well, in effect breaking the dominant hold that Japan’s current major power providers have long enjoyed. Yamagishi says: “It will be more difficult for current federal regulations to cover all these new companies that are joining in, so an emissions cap and trade system could be the fairest way to keep everyone to standard.”

Hirata says such a sea change in the energy industry is necessary, and would be hugely beneficial, but she cautioned that such a system must be “developed properly” with a fair share of limits and restrictions amongst emitters. Yamagishi agrees that there’s plenty of room for such measures to go awry, pointing to the emissions trading scheme in the European Union as an example.

“You have national inventories for emissions trading, which are easy to calculate. But it’s hard to calculate company based emissions … some factories are too small to be covered by the monitoring system,” Yamagishi points out, and it is this oversight that resulted in several European companies being accidentally allotted overly generous margins, which led to no reduction in their pollution.

Japan will face similar challenges as smaller firms jump into the energy fray after next year’s liberalization. But for Yamagishi, and many other environmentalists, the potential issues that could develop still mark an improvement over Japan’s current smoggy status quo. “Liberalization could lead to a real breakthrough. I’m generally pessimistic about environmental policy, but in this case I’m trying to stay optimistic.