GHGs (greenhouse effect gases) emission reduction target for Japan was set at 6% below the 1990’s level at COP3 held in Kyoto, Japan in 1997. This is a very ambitious target to meet during the first phase, 2008-2012, because the Japanese economy is now one of the most energy efficient in the world. This paper looks at the costs of reducing CO2 gas emissions to achieve this target for Japan by looking at a range of options from the traditional command and control method, to the alternative and more efficient method of emission trading (domestic and/or international). The welfare gains/losses from these different methods will be estimated and compared to give policy makers an estimate of the various degrees of desirability of using these methods for achieving the Kyoto target. This study uses the GTAP-E model, a multi-sectoral and multi-regional trade and energy model, which is well suited for the study of emission control and trading among various sectors of an economy, as well as between different regions of the world.