Publication date: Sept 20, 2024
Government Working Group Kicks off Plans for New Emissions Trading System
Japan’s Cabinet Secretariat held the first meeting of the Carbon Pricing Expert Working Group (WG) on September 3, 2024. This WG was established to finalize the detailed design of the emissions trading system (ETS) in preparation for its full-scale launch in FY2026.
Emissions trading began on a trial basis last fiscal year with the GX League, a group of companies in the steel and chemical industries, as well as in electricity, gas, and heat supply, committed to Green Transformation (GX), and currently accounting for more than 50% of Japan’s greenhouse gas emissions.
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The main points of discussion in the WG are:
- Scope of companies subject to the ETS: Should companies with emissions below a certain threshold be included in the system, and what criteria should be used to determine the scope?
- Companies’ goal setting: What elements should be considered in setting targets, taking into account the characteristics of each industry and the efforts of companies?
- Reinforcing measures for the companies to achieve their goals: How should reinforcing measures be implemented taking into account international context (e.g. CBAM)?
- Establishing rules for the ETS: What are the rules to be implemented for the efficient function of the ETS (ex. scope of trading participants)?
- Potential measures to ensure investment predictability: One point already agreed is that upper and lower limit prices will be set, and prices will be guided within these limits.
The expert working group will meet several times in the coming months to hold hearings with industry and environmental groups and will finalize its discussion points in December this year. The group plans to submit a bill to amend the GX Promotion Law to the ordinary Diet session next year to include an emissions trading system.
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