Tokyo's metropolitan assembly approved plans to force 1,300 major businesses to cut emissions blamed for global warming by 25 percent by 2020 compared with 2000 levels.

The requirements will take effect in 2010 followed the next year by a carbon market -- which gives businesses an incentive to go green by letting them buy and trade emission credits.

The action by Tokyo -- which is the world's largest city when including the metropolitan area -- comes as Japan struggles to meet its commitments to cut emissions under the Kyoto Protocol.

"This carries meaning not just for Tokyo but for all of Japan," Tokyo Governor Shintaro Ishihara told reporters after the assembly passed his plan.

"I hope this will be a trigger for broader action," he said.

So-called "cap-and-trade" systems on curbing emissions have come into growing use in the European Union, which is pushing for new binding commitments on global warming after those under the Kyoto Protocol expire in 2012.

But some Japanese business leaders have lobbied against setting up a cap-and-trade system, saying it would set back Japan's fragile economic recovery.

Japanese Prime Minister Yasuo Fukuda, vowing to show leadership before hosting the Group of Eight summit of rich nations in July, earlier this month unveiled plans for an experimental carbon trading system later this year.

He said Japan would slash greenhouse gas emissions by up to 80 percent by 2050 but did not give a mid-term target, drawing criticism from environmentalists.

Ishihara, who is best known overseas for his nationalist remarks berating other Asian nations and the West, has won wide popularity in Tokyo for championing action on the environment.

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