TOKYO, May 1 (Reuters) – Japan's move to double the national highway toll ceiling from June, despite government vows for free highways, may set the stage for further hikes in line with the nation's ambitious greenhouse gas reduction goals.

Though the rise to 2,000 yen ($21.50) may not dent auto fuel demand, already on the wane due to more use of fuel-efficient cars, it reflects the dilemma Japan faces in balancing pressures to cut one of the world's costliest highway tolls with the commitment to reduce car traffic.

Premier Yukio Hatoyama has asserted his aim to pursue free highways, in line with the Democratic Party's campaign pledge, but analysts warned it could upset the nation's target to cut carbon dioxide emissions by a quarter by 2020 from 1990 levels.

A study by the Institute of Energy Economics, Japan (IEEJ), showed free highways would raise annual gasoline demand in the world's third-biggest oil consumer by 7.2 percent, or 4.1 million kiloliters (71,000 barrels daily).

It would also emit 9.6 million tonnes of CO2 to the air, nearly 1 percent of the nation's total.

''Under the 25 percent cut road map, the Environment Ministry aims to reduce auto passenger traffic by 10 percent,'' said Shigeru Suehiro, senior economist at IEEJ.
 
'If (the highway) does become free, lots of people will switch to cars from railroads. From the point of view of the environment and funding issues, it may be appropriate to gradually raise tolls with careful consideration of the economic recovery.''

Tetsuo Yai, science and engineering professor at Tokyo Institute of Technology, said the hike would ''more or less'' be useful in curbing highway usage, but the reduction of CO2 emissions could be limited if ordinary roads become congested.

''The bottom line is that consistent policies that look ahead beyond 2020 would be necessary,'' said Yai, who served in the government CO2 advisory task force.

Japan implemented a highway toll discount system in March 2009, capping the rate at 1,000 yen irrespective of the mileage for passenger cars and is only valid during weekends, in a move ostensibly to stoke the flagging economy.