Publication date: May 3, 2024
Japan’s GX League Updates Guidance on Private-Sector Carbon Credits
The Minister of Economy, Trade and Industry (METI) has updated its guidance to include more voluntary carbon credits under the GX-ETS (currently in a trial phase until FY2025). These will be in addition to the JCM and J-credits that have been traded since the scheme launched in October 2023. JCM and J-credits must be generated from projects within Japan or in one of the 29 countries with which it has bilateral agreements. The new credit types will allow GX League participants to sell credits generated from projects in the US, South Korea, Australia, and China.
Criteria for Credit Validation
The qualifying voluntary credits all involve Carbon Dioxide Removal (CDR) project types, including coastal blue carbon, Carbon Capture with Utilization (CCU), Bioenergy with Carbon Capture and Storage (BECCS), and Direct Air Capture and Carbon Storage (DACCS). Projects in these sectors that meet certain quality standards,demonstrate additionality, permanence, and adhere to governance principles can generate new credits. If projects exist both domestically and internationally, priority will be given to the domestic ones.
The quality of the credits will be validated by ensuring alignment with international standards, such as those set by the International Civil Aviation Organization‘s CORSIA scheme – under CORSIA, airlines are required to monitor, report, and verify their emissions, and offset any emissions that exceed permitted levels through the purchase of carbon credits from approved projects. Any decision on eligibility will be made by the GX League’s secretariat and the Eligible Carbon Credit Working Group.
It will probably take some time for these new credits to receive accreditation under CORSIA given that the scheme is also in its trial phase.
This revision to the GX-ETS guidelines at such an early stage may indicate an increased sense of urgency from METI as it attempts to encourage companies to enhance their efforts in advancing GX, and incentivize other companies to join the GX League.
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