Japan Enacts Bill to Promote Green Transformation

Jiji Press

11:31 JST, May 13, 2023

Tokyo, May 12 (Jiji Press)—The Diet, Japan’s parliament, on Friday enacted a bill to promote so-called green transformation to drive a transition to a carbon-neutral society.

Under the new law, the government aims to realize over ¥150 trillion in public-private investments. To this end, the government will issue ¥20 trillion in green transformation bonds over the 10 years from fiscal 2023.

The law includes wording added during parliamentary debates that stresses the significance of a “fair transition” for a smooth labor shift for decarbonization.

The bill was approved by the House of Councillors, the upper chamber of the Diet, on April 28 and sent to the House of Representatives, which passed it into law Friday.

Funds to be raised through the bonds will be used to support large-scale investments that would be difficult for the private sector alone.

The securities will be issued as transition bonds, not environmental bonds whose use is limited primarily to the renewable energy field.

Projects eligible to receive the funds include those for thermal power generation through mixed combustion of hydrogen and ammonia, which emit no carbon dioxide when burned, and those to develop and build next-generation nuclear reactors.

The government will redeem green transformation bonds by fiscal 2050 with funds procured through a carbon-pricing scheme requiring businesses to pay for their CO2 emissions. Under the scheme, it will collect fees from fossil fuel importers from fiscal 2028 and make power suppliers buy CO2 emission quotas from fiscal 2033.