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Yomiuri Shimbun file photo Nippon Steel Corp.’s Nagoya plant in Tokai, Aichi Prefecture
The Yomiuri Shimbun
15:28 JST, November 20, 2024
The Economy, Trade and Industry Ministry plans to mandate companies that emit 100,000 tons or more of carbon dioxide per year in Japan to be a part of an emissions trading system, which will be fully introduced in fiscal 2026, in a bid to reduce the amount of CO2 emitted by corporations.
The emissions trading system will target 300 to 400 major companies in such industries as steel and automobiles. The system will not only encourage investment in the decarbonization of factories and products but will also strengthen industrial competitiveness.
The ministry is expected to present a draft outline of the system at a meeting of experts on Friday and aims to revise relevant laws in an ordinary Diet session to be convened next year.
The emissions trading system is one form of carbon pricing that makes companies bear the cost of CO2 emissions by giving them monetary value.
CO2 emissions of 100,000 tons per year is the same level set by the European Union and South Korea, which have already introduced the system. The CO2 emissions from the 300 to 400 companies to be targeted by the system account for nearly 60% of Japan’s greenhouse gas emissions.
Under the system, the government will annually allocate emission quotas to each company for free. If a company’s emissions exceed its quota, it will have to purchase additional quotas on the quota market. Companies that fail to secure the necessary amount will be required to pay a commensurate fee. If a company has surplus quotas, it can sell them on the market. A company’s actual emissions will be certified by a third-party organization.
The government has set a target of achieving carbon neutrality by 2050. In addition to introducing a system in fiscal 2028 to collect levies from companies that import fossil fuels, the government also plans to introduce another system in fiscal 2033 to allocate CO2 emission quotas to power companies for a fee and collect levies from them.
