REFILE-ANALYSIS-Japan's economic stimulus a pale shade of green

(Corrects para 9 to show that emissions rose to a record in the year through March 2008) (For related story, factbox, click; [ID:nT325185][ID:nT279193])

* Japan's "green" stimulus draws dubious response

* Environmental spending focuses on housing, offices

* Govt official sees just 2 pct carbon cut

TOKYO, April 9 - Japan's effort to pitch its record $154 billion stimulus as a green drive for a lower-carbon economy drew a doubting response on Thursday for its focus on personal carbon emissions that miss the industrial scale of the problem.

While top carbon polluters the United States and China receive relatively high marks for taking advantage of the surge in government spending to drive toward a low-carbon economy as they attempt to revive growth, Japan is still depending mostly on pre-existing voluntary measures to meet its Kyoto target.

Tokyo touts the plan, due to BE finalised on Friday, as promoting the use of solar panels, fuel-efficient cars and energy-efficient products made by recession-hit exporters.

But unlike other governments investing massively in rail, power grids and other infrastructure, Japan is focused on saving energy and fuel use at houses and offices, whose emissions are far smaller than those of major factories and power generators.

To be sure, the potential for carbon savings is huge: a recent study found households could halve emissions by 2020 if almost all installed solar panels, bought fuel-efficient cars and put in insulation and took other energy-conservation measures.

But the reality is likely to be far more modest.

"Based on that estimate, while taking into account a combined emission share of houses and offices at 30 percent and discounting those who do not do so in reality, the package's contribution to Japan's emission cuts would be roughly 2 percent," a government source told Reuters by telephone, declining to be named as the package is not yet official.

The impact on emissions from the measures to make social infrastructure environment-friendly has yet to be known, the official added.

FAR CRY

Considering Japan's emissions rose 2.3 percent to a record in the year ended March 2008, putting them 16 percent above the Kyoto Protocol target it needs to reach by March 2013, the new measures will barely make a dent.

Some fear that if the latest burst of stimulus does what it should and restores growth, increased demand for carbon-fuelled electricity could actually negate any environmental progress.

"I don't think the stimulus will make any notable contribution to Japan's emission cuts. It would only help cushion a fall in emissions," said Itsuho Haruta, an executive officer at Natsource Japan, referring to the expected decline in emissions due to Japan's deepest recession since World War Two.

Analysts say the likely increase in solar power is negligible and nuclear plant operations are unlikely to jump in the near future even though the world's biggest nuclear plant is ready to resume operations after a halt since a 2007 quake.

The Japanese government, which by March almost finished its planned buying of 100 million tonnes of carbon offsets from abroad, or about 10 percent of the surplus to a Kyoto target, has already come in for criticism over the lagging "greenness" of its previously announced stimulus packages.

The remaining 90 percent should be addressed domestically by voluntary reduction efforts by factories, houses, offices and transport as well as forest conservation.

Prior to this week's package, Japan had allocated only 2.6 percent of its fiscal spending to climate change investment, compared with 12 percent in the United States, 34 percent in China, 13 percent in Germany, a recent report by HSBC showed.

The report showed that the bulk of the spending allocated to such themes was targeted at green infrastructure options -- notably buildings, grids, rail and water.

Tokyo's focus instead is on houses and offices as the government is responsible for their emission reductions, while industry sectors have their own voluntary emissions cut targets.

"It seems they try to cover up the potentially huge burden on the already huge government deficit by highlighting the environment as one of the key spending areas," said Hideo Kumano, chief economist at Dai-Ichi Research institute.