Carbon Tax for Climate Change Mitigation:
The tax corresponds to the amount of CO2 emission for all fossil fuels. The tax was enforced in October of 2010 and is expected to increase gradually over the next 3.5 years. The revenues will be allocated to curbing energy-related CO2 emissions.
Sources: Ministry of the Environment of Japan, Consideration of Emissions Trading Scheme in Japan, April 2012; Ministry of the Environment of Japan, Carbon Tax
Japan’s Voluntary Emissions Trading Scheme (JVETS)
Launched in 2005 to support businesses in meeting their emission reduction targets, the participants of the JVETS are part of the experimental Integrated ETS.
Domestic Emissions Trading Scheme in Japan
Amendments to the Basic Act on Global Warming passes and introduces a cap and trade system to satisfy the following objectives:
1. Set emissions allowance to achieve target reduction
2. Allow flexible fulfillment of reduction obligations
3. Promote cost-effective emission reduction
The Tokyo Emissions Trading Scheme
Launched in April 2010, it requires mandatory reduction of absolute CO2 emissions in urban emitters, such as office building and factories. Over 30 local governments have started their own schemes/programs that require businesses to draft their GHG reduction plans.
Saitama Pref. - Target-Setting Emission Trading Program
The prefecture set reduction targets of covered facilities and allows them to trade allowances. The program was established in April 2011.
Sources: Ministry of the Environment of Japan, Consideration of Emissions Trading Scheme in Japan, April 2012; Ministry of the Environment of Japan, Recent Development in Cap and Trade in Japan, June 15, 2010
Offset and/or Other Emission Reduction Crediting Programs
Verify emission reduction by SME, agriculture and forestry and other domestic projects as reliable credits for market transactions
Bilateral Offset Credit Mechanism (BOCM)/ Joint Crediting Mechanism (JCM)
The objective of the JCM is to complement the CDM by diffusing leading low carbon technologies and products to facilitating the implementation of mitigation actions in developing countries. Through a sophisticated MRV system, the GHG reduction in the host countries will be monitored and credits will be used to achieve Japan’s emission reduction targets.
Source: Ministry of the Environment of Japan, Consideration of Emissions Trading Scheme in Japan, April 2012
Other Climate Financing Instruments
Japan has pledged $15 billion to provide developing countries with financial assistance to reduce emissions in a measurable and verifiable manner.
Source: The Institute of Energy Economics, Japan Energy Brief, September 2009