According to Polaris PV website information: recently, The Japanese Ministry of Economy, Trade, and Industry proposed to launch the national demonstration carbon credit trading market in the fiscal year 2022-2023, but it and the Japanese Ministry of Environment on how to take the carbon pricing have always been different. There is a general consensus that Japan has yet to figure out the best way to achieve massive emissions cuts without imposing additional financial burdens on companies.
It is scheduled to start in 2022-2023.
Japan’s Ministry of Economy, Trade, and Industry said that as part of its goal of achieving carbon neutrality by 2050, it plans to launch a national demonstration carbon credit trading market between April 2022 and March 2023 in a major push to monetize carbon emissions and encourage more local companies to reduce their own emissions, while also opening it up to multinational companies. Between 400 and 500 companies are expected to participate.
The market for carbon credits will also be open to ASEAN countries, as well as companies from other countries such as Europe and the US. Participants can buy carbon credits to reduce their emissions, and they can also sell unused credits. Participating companies, however, must disclose their emissions and allow the government to review them annually.
Under the framework of the carbon credit trading market, Japan plans to design a carbon credit trading system and develop a carbon footprint monitoring infrastructure to better manage and process carbon credit trading.
Fumihiro Kajikawa, director of the environment economy office at the Ministry of Economy, Trade, and Industry says further discussions are needed to clarify the overall structure and implementation details of the carbon credit market, which may involve carbon-neutral products. “We will introduce carbon-neutral products on a voluntary basis, such as carbon-neutral LNG, which is becoming increasingly popular.” “However, it will take several stages of discussion to reach a conclusion,” he said.
Argus, the energy consultancy, said the market was conceived in Japan as a way to reduce greenhouse gas emissions through an appropriate domestic carbon pricing mechanism and to promote Japan as one of Asia’s leading carbon trading centers.
Several Japanese companies have already tested carbon prices on their own
It is widely believed that Japan will have to start with companies, especially those that are carbon-intensive or high emitters, to meet its emissions targets. In fact, a growing number of Japanese companies are implementing internal carbon pricing or introducing carbon-neutral products, underpinning the establishment of a national market for trading carbon credits.
Japan’s Kyodo News agency recently reported that an increasing number of Japanese companies are introducing internal carbon pricing as part of their decarbonization efforts, which is a measure to convert their own costs for carbon dioxide emissions generated by their business activities. It is also becoming more common for Japanese companies to use this measure to judge their investment criteria, laying the foundation for the full rollout of Japan’s carbon mechanism.
Teijin Co., the world’s second-largest carbon fiber producer, introduced internal carbon pricing earlier this year. Shuichi Ozaki, head of corporate social responsibility planning at Teijin Co., said: “We set a price of 6,000 yen ($54) per ton of carbon dioxide emissions as a reference for investment decisions. Even if the initial investment is small, if the carbon dioxide emissions are large, the cost will increase exponentially in the future, thus affecting investment.”
Japanese chemicals conglomerate Keloli Corp. plans to introduce internal carbon pricing in March. The Carbon Disclosure Project, an international non-profit organization, surveyed more than 300 major Japanese companies and found that 31 percent had already introduced internal carbon pricing, with 33 percent planning to do so within two years.
Obstacles to implementation
S&p global platts points out that the Japanese brewing national carbon credits trading market model, need most is trading and liquidity, said although the country will be taken from the existing carbon tax and carbon pricing, such as carbon trading mechanism for experience, given the Japanese run the results of such mechanism has not been perfect, promote carbon credits trading market still faces many obstacles.
It is understood that the Japanese repeated several times in the carbon pricing mechanism, currently implemented nationwide carbon tax measures, and a variety of institutions at the national level experiments led by carbon trading and carbon offset program system, but the effect is uneven, including voluntary carbon emissions trading system JVETS, carbon emissions letter with a combined system of J – Credit, Credit mechanism, etc.
Among them, JVETS was born in 2005. Based on the principle of cap-and-trade, the system covers all direct emissions of carbon dioxide and indirect emissions from power enterprises. Due to low participation, the number and frequency of transactions are low, and the transaction price also decreases year by year, finally ending its operation in 2012.
Notable is, Keidanren, Japan association of oil and other industry groups, a common question the validity of the mechanism of carbon, they will ease emissions trading or carbon tax as a single tool, said both based on the polluter pays principle, the pollution costs to polluters, increased the enterprise burden, indirect down Japan’s manufacturing industry’s global competitiveness.
In addition, Japan imposed a carbon tax on the oil and gas industry in 2012, including 2,800 yen ($25) per ton for crude oil and petroleum products and 1,370 yen ($12) per ton for liquefied natural gas and LPG. Japanese tax and energy experts say the country needs to significantly increase carbon pricing to meet its medium-term emissions-reduction targets, and that the carbon tax alone needs to be at least 30-fold higher.
