Nippon Steel Corp. led Japanese industry in calling on Prime Minister Taro Aso to urge China and India to share the cost of fighting climate change after he pledged to cut emissions and the economy shrank at a record pace.

Aso’s promise of a 15 percent reduction in carbon emissions by 2020 from 2005 levels is “extremely tough to achieve,” and puts Japan’s exporters on an unequal footing with rivals in developing countries, Nippon Steel President Shoji Muneoka said in a statement released in Tokyo.

Neither China nor India signed the 1997 Kyoto Protocol on climate change, and both nations have said industrialized countries must set ambitious targets for cutting emissions before they will set their own goals. Japan, the world’s second- largest steelmaker and fourth-biggest polluter, saw its economy shrink by a record 14.2 percent annual pace in the first quarter as exports plunged by 26 percent, the Cabinet Office said today.

“A tougher target is clearly a burden for steelmakers and pulp producers,” Futoshi Usui, a Tokyo-based analyst at Credit Suisse said. “But a post-Kyoto accord will lead to business opportunities in the long run for manufacturers producing clean- technologies and products installed with energy-saving tools.”

Fujio Mitarai, the head of Keidanren, Japan’s biggest business lobby, said the government must ensure that industry doesn’t bear the full brunt of Japan’s commitment to fight climate change.

“It’s vital that the government act to expand the use of new energy-conservation products in households and the transport sectors,” said Mitarai, who is also chairman of Canon Inc.

‘Rational Goal’

Keidanren last month suggested Japan target a 4 percent increase in emissions from 1990 levels, calling it the “most rational goal.”

Aso’s target is equivalent to an 8 percent cut from 1990 levels, short of the 20 percent planned by the European Union but in line with the 14 percent to 17 percent cut from 2005 being negotiated in the U.S.

The goal was slammed by environmentalists attending U.N. sponsored climate talks in Bonn yesterday, who said Japan should set an example to other rich countries by promising deeper cuts.

Aso defended his target, claiming that Japan’s goal is more ambitious than either the E.U. or the U.S. because its economy is already more energy efficient than other developed countries, he told the Financial Times newspaper. He also argued that Japan, unlike the E.U., will meet its target by introducing more clean technology rather than buying carbon credits to offset pollution.

Japan emits less carbon dioxide than the U.S., China and Russia.

To contact the reporters on this story: Shigeru Sato in Tokyo at ssato10@bloomberg.net; Yuji Okada in Tokyo at yokada6@bloomberg.net.