As part of its strategy to combat climate change and achieve carbon neutrality by 2050, Japan’s Tokyo Stock Exchange (TSE) has commenced trading in carbon credits. With Japan being the fifth-largest emitter of carbon dioxide (CO2) globally, this move is a significant step toward achieving its climate goals.
Following in the footsteps of other major economies, Japan implemented a carbon pricing scheme earlier this year, gradually introducing it to incentivize companies and cities to reduce their carbon emissions. By integrating carbon credit trading into its financial market, the TSE aims to further encourage companies to invest in renewable energy and low-carbon technologies.
Under the new market rules, registered members will be able to trade the existing carbon credit, known as J-Credit, on the Tokyo Stock Exchange. This trading system is based on a government certification of greenhouse gas emissions reduced or removed through renewable energy mechanisms, energy-saving equipment implementation, and forest management.
By quantifying these efforts, the government creates a credit that can be bought and sold. Previously, these credits were traded individually between companies and other organizations, but they faced challenges in finding interested parties. The new market aims to efficiently connect buyers and sellers, creating a more dynamic and convenient marketplace for carbon credits.
As of September 19th, a total of 188 entities have already registered as participants, and this number is expected to continue growing. The market hours for trading are divided into two sessions, from 9:00-11:29 a.m. and 12:30-2:59 p.m., allowing for ample time for transactions to take place. Transaction prices are determined twice a day and are published after trading hours.
According to a Tokyo Stock Exchange official, this market will provide an accessible and transparent platform for entities to participate in carbon credit trading.