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Draft legislation for a new Japanese climate bill omits mention of a limit on emissions by industry, a sign Prime Minister Yukio Hatoyama’s government may retreat from an earlier promise to start a cap-and-trade system.

Japan should start an emissions-trading program at an unspecified time to help cut emissions by 25 percent in the medium term, according to the draft, released by the Environment Ministry Feb. 26. The document doesn’t propose a mandatory cap on emissions, and while it includes a possible carbon tax from 2011, it doesn’t say which industries would be subject to it.

Hatoyama’s Democratic Party of Japan pledged to start a cap-and-trade system and consider a carbon tax in a policy paper published July 23, a month before the party won government in a landslide. The DPJ’s popularity has since plunged, and the party may put debate over mandatory emissions caps, which the nation’s business lobby opposes, on hold while it prepares to fight Upper House elections slated for July, said Satoshi Hashimoto, a senior climate researcher at Mitsubishi Research Institute Inc.

“Hatoyama’s government is putting off this big debate on whether or not Japan will go with or without a cap-and-trade,” Hashimoto said by phone from Tokyo. “The election is just around the corner, and Hatoyama may be ruling out any potential factors that could further hurt the party’s popularity.”

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