Hatoyama has vowed to take an aggressive global stand on climate change, but is already facing resistance from the industry over the new goal.
The premier-in-waiting, who is due to take office on September 16, is planning to detail his plan, dubbed the "Hatoyama Initiative", at a UN meeting on climate change in New York later this month.
"This is a political pledge made in our manifesto," he said. "We must meet it by taking all possible measures."
Hatoyama's party has said that a tough 2020 target is needed for Japan to play a bigger role in UN-backed climate talks in Copenhagen in December.
"A highly ambitious accord with participation by all major countries is a prerequisite to our country's promise to the international community"
Yukio Hatoyama, Japan's incoming prime minister
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.
To reduce emissions, the DPJ plans to create a domestic emissions trading market with compulsory volume caps on emitters and introduce a "feed-in" tariff 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.
At the same time Hatoyama cautioned that Japan will require similar tough measures from other major emitters, saying that "climate change cannot be stopped if only our country sets a reduction target".
"A highly ambitious accord with participation by all major countries is a prerequisite to our country's promise to the international community," he added.
Japan is the world's number two economy and the fifth largest emitter of greenhouse gases blamed for raising global temperatures, melting the earth's ice caps and glaciers, and changing weather patterns.