Publication date: January 5, 2024

On December 5, a proposal was published by the Japan Climate Initiative (JCI) – a group representing over 180 major Japanese companies and organizations – calling on the government to introduce a #carbon pricing policy that is more stringent, more transparent, and more in line with international standards than current policy.

Currently, under its “growth-oriented carbon pricing scheme,” the Japanese government plans to start an emissions trading scheme under the GX League in 2026-2027 after a pilot phase from 2023-2026, and then impose a carbon levy from 2028-2029. From 2033-34 high-emitting #electric power companies will also be subject to carbon auctions to encourage a shift away from fossil fuels.

The JCI proposal warns that voluntary participation in the emission trading scheme and delays to the introduction of the schemes could risk the country missing its target of reducing #greenhouse gas (GHG) emissions by 46% from 2013 levels by 2030.

The JCI calls on the government to pay particular attention to six principles when designing the proposed carbon price mechanism:

1. Introduce an effective carbon pricing system by 2025 to achieve the 2030 reduction target.
2. Ensure fairness by making all companies that meet certain requirements uniformly subject to the system.
3. The future carbon price should be clearly stated when it is introduced. It should also be set at a level comparable to the rest of the world, at around USD130/tons-CO2 by 2030 – which the IEA indicated as an appropriate level.
4. The system should conform to international rules.
5. Government revenue from the scheme should be used to support the development of green technologies in hard-to-abate industries and to help small and medium-sized enterprises and others cope with the burden of the #energy transition. It should also be spent on accelerating #renewable energy development generally and improving energy efficiency.
6. Transparency should be ensured in the planning, evaluation, and updating of carbon pricing.

The JCI’s proposal was signed by 186 organizations. Of these, 140 are companies, nine are municipalities, and 37 are NGOs, religious organizations, and educational institutions.

The sheer number of organizations, as well as the prominence of some of the signatories (Tokyo Metropolitan Government, SoftBank, Sony, to name a few), means the government must take the proposal seriously.