Rethinking Renewable Procurement: How GHG Protocol Reforms May Reshape Japan’s Corporate Market

Corporate decarbonization reporting is about to change. The next revision of the GHG Protocol will reshape how organizations measure and verify their Scope 2 electricity emissions. In Japan, a growing number of companies, particularly those with global operations, are required to align their climate-related disclosures with the GHG Protocol to meet the demands of global investors. They will be directly impacted by the new GHG Protocol reporting standards, which will be difficult to meet under Japan’s current system for non-fossil certificates (NFCs), which lacks the granularity the new framework is expected to require. With full publication expected by the end of 2027, companies will have about two years to prepare or to rethink how they source and account for renewable electricity.

The key points of the proposed amendments to Scope 2 accounting rules and their implications for the Japanese market are:

Hourly matching – Companies will be required to match electricity generation and consumption on an hour-by-hour basis under both “location-based” and “market-based” accounting methods.

What does this mean? Under the current rules in Japan, environmental certificates allow companies to virtually use renewable energy generated during the daytime to offset nighttime electricity use. Therefore, achieving real-time matching between supply and consumption will require a major redesign of Japan’s existing tracking framework for NFCs.

Regional deliverability limits – Renewable Energy Certificates (RECs) can only be used within regions where the electricity can be physically delivered.

What does this mean? Currently in Japan, environmental certificates allow companies to virtually apply renewable energy regardless of the location. For example, renewable energy generated in Kyushu can offset electricity consumption in Okinawa, even though transmission lines do not physically connect the two regions. The proposed revision will require procurement within physically deliverable boundaries, although there will be an exemption for cross-regional use in areas with minimal grid constraints.

Restrictions on publicly supported power sources – Power generated from government-supported schemes such as the Feed-in Tariff (FIT) and Feed-in Premium (FIP) can only be claimed up to the average share of such power in the grid for that specific hour.

What does this mean? For example, if the share of FIT power in the Tokyo area is 10% at a given hour, companies will only be able to claim up to 10% of their consumption from FIT sources. Moreover, companies will no longer be able to claim 100% renewable status simply by purchasing FIT NFCs, which may encourage promotion of corporate PPAs instead.

These revisions mean that companies will need to adopt more granular, digital approaches to prove the credibility of their renewable power claims. In Japan, it could also redefine the NFC market (particularly FIT NFCs), or we could see a shift in how corporate buyers structure renewable procurement, with a preference for PPAs that deliver both power and renewable attributes. Ultimately, these revisions could accelerate Japan’s shift toward more transparent and technology-driven renewable procurement, providing opportunities for new solutions and investment models that strengthen the credibility of corporate decarbonization claims.

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