Japan on Tuesday postponed the creation of a greenhouse gas emission trading system by a year until after April 2014 in the face of strong resistance from the business lobby, news reports said.
The centre-left government of Prime Minister Naoto Kan had planned to launch the system -- in which companies would essentially buy and sell 'licences to pollute' -- in the fiscal year starting in April 2013.
But his environment and other ministers decided to postpone the plan, saying the country will first "carefully consider it," Jiji Press and Kyodo News reported. Immediate confirmation was not available.
A carbon-trading system sets a cap on the pollutants companies can emit and then forces heavy polluters to buy credits from companies that pollute less -- creating financial incentives to cut emissions.
Japan has long championed the Kyoto Protocol on reducing greenhouse gas emissions, named after its ancient capital.
But Japan opposed its proposed extension at a UN meeting in Mexico this month, calling it unfair because it does not include 70 percent of the world's emissions, with top polluters China and the United States absent.
China, the world's largest emitter, has no obligations under the Kyoto Protocol as it is considered a developing country. The United States, alone among rich nations, has rejected the treaty.
Most scientists say the world is far off track on meeting a goal, codified at the UN climate talks in Mexico, of keeping temperatures from rising more than two degrees Celsius (3.6 Fahrenheit) above pre-industrial levels.