Japan's new climate bill draft will consider cap-per-unit of production to allow emissions to rise with increasing output.
The bill had earlier been vague on the mode of emission limits to be adopted by the government and has since been watered down bending to industries' concerns over restrictions on growth, according to Reuters.
Japan had initially favoured caps on absolute emission volumes and environmental groups were urging the government to hold on to the pledge.
The bill – to be enacted in June 2010 – also suggests the government draft a separate legislation to design its trading scheme.
By setting targets on greenhouse gas emissions, the bill will boost the carbon market depending on the design.