Credit report

Japan: Update on Japanese Government Study Group’s Carbon Credit Report

In short

Several means exist to reduce greenhouse gas (GHG) emissions in order to achieve carbon neutrality by 2050, including the development of new technologies, the transition to renewable energies and voluntary energy savings. In addition to these efforts, there is a growing interest in offsetting residual emissions that are inevitably emitted despite reduction efforts through the use of carbon credits.

Although a growing number of companies are interested in using carbon credits, the following problems have emerged:

a) The treatment of carbon credits in domestic and foreign legal systems is unclear, and their use cases and significance are not fully understood; and

(b) Many types of carbon credits exist in Japan: J credits, non-fossil certificates, green electricity certificates, joint credit mechanism (JCM) and voluntary carbon credits which are actively traded overseas . It is therefore difficult for companies to determine which credits they should apply for and how to use them.

In this context, companies have not been able to fully estimate the demand for carbon credits, thus limiting their ability to increase the supply of carbon credits based on new carbon removal and carbon sequestration technologies. by natural methods. Moreover, carbon credits are mainly distributed via bilateral transactions, which leads to a lack of clarity on the status and pricing of these transactions.

Click on here to access the full alert.