Earlier this week the government of Japan shared plans to include all industrial companies that emit over 100,000 tons of CO2 per annum, to be enrolled in the country’s emissions trading scheme (ETS).
This threshold would mean that approximately 400 companies would become part of the ETS at the start of the 2026 fiscal year.
Companies from steel and chemicals as well as power generation are expected to be among the list, covering around 60% of the country’s total CO2 emissions.
Similar to ETS systems in neighbouring China and the EU, here the government will allocate a fixed quota of emissions to companies, requiring those exceeding them to pay a fee. Should companies remain below their quotes, then the excess will be available to be traded or carried forward.
The announcement signals the end of the trial period for the system which was started in 2023 via the Green Transformation (GX) League with a limited number of companies taking part.
For comparison, the system in China covers about 40% of the country’s emissions and has a threshold of 26,000 ton/per year with over 2,000 companies covered.
One of the differences between the Japanese ETS systems and those developed elsewhere is that it plans to directly adopt carbon removal credits into the scheme. The EU and the UK are also considering adding carbon removal to their systems.
Read more: Japan To Accept Durable Carbon Removals In Its Emissions Trading Scheme
