But Yukio Hatoyama added that the target, more ambitious than the outgoing government's, was premised on a deal on ambitious goals being agreed by major nations.
"We can't stop climate change just with our country setting an emissions target," Hatoyama, who will take office on Sept. 16 after a vote by parliament, said in a speech to a symposium on climate change.
"We will also aim to create a fair and effective international framework by all major countries in the world."
The Democratic Party has said a tough 2020 target is needed for Japan to play a bigger role in U.N.-backed climate talks in Copenhagen in December.
The talks will try to work out a new agreement on reducing emissions to succeed the current Kyoto Protocol, the first phase of which ends in 2012.
But a government report issued earlier this year showed that pursuing a 25 percent cut from 1990 levels could hurt industries ranging from power generation, steel and cement firms to car and appliance makers, threatening jobs.
The outgoing government's 2020 target, announced in June, is equivalent to a cut of 8 percent below 1990 levels, and was chosen after lengthy consultations with the public and industry.
The Democratic Party's point person on climate change policies, Katsuya Okada, declined on Friday to say what Japan would do about its targets if an international deal including countries such as China and India were not on board.
"We are trying to reach an agreement, so we are not discussing what to do if there is none," Okada told Reuters in an interview."
OPPORTUNITY, NOT THREAT
Japan's top business group, Keidanren, is expected to lobby against the Democrats' emissions target. The auto industry lobby has said it is also worried about the feasibility of the target.
But Hatoyama said fighting global warming presented an opportunity, not a threat, for businesses.
"Tackling climate change aggressively will open a new frontier for the Japanese economy and create jobs in areas such as electric cars and clean energy technology, including solar power," he said.
"There are cautious people who worry that it will hurt the economy and livelihoods, but I think it will change things for the better."
Japan is under pressure for tougher climate policies after its emissions rose 2.3 percent to a record in the year to March 2008, putting the country 16 percent above its Kyoto Protocol target.
The U.N. climate chief said Hatoyama's new commitment was "laudable" and would spur change in Japan's economy.
"With such a target, Japan will take on the leadership role that industrialised countries have agreed to take in climate change abatement," Yvo de Boer, head of the U.N. Climate Change Secretariat, told the symposium.
Industrialised nations are planning average cuts in greenhouse gas emissions of between 10 and 14 percent below 1990 levels by 2020 as part of the new U.N. climate pact, according to a compilation of national data. This is far below the 25-40 percent reduction by 2020 recommended by the U.N. climate panel.
Hatoyama said industrialised countries should provide financial and technological support to developing nations working proactively to reduce emissions, adding that his new government would discuss steps soon after taking power.
He also wanted to present his stance on climate policy in more depth at a U.N. climate change meeting among world leaders later this month, he said.
To reduce emissions, Hatoyama's party has pledged to create a domestic emissions trading market with compulsory volume caps on emitters and introduce a "feed-in" tariff, or financial reward, for renewable energy to help expand capacity for clean energy sources.
It is also considering a new carbon tax, but other campaign pledges such as a plan to eliminate highway tolls and to end a decades-old surcharge on gasoline have drawn concern from green groups.
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