Japan’s parliament on Wednesday enacted a law obliging 300 to 400 major firms to participate in a carbon emissions trading system that will be introduced in the fiscal year starting April 2026.
The revised law, designed to advance the country’s green transformation and decarbonization, targets companies producing 100,000 tons of carbon dioxide or more a year across a broad range of industries including the production of steel and cars.
The government estimates that the companies account for nearly 60 percent of domestic greenhouse gas emissions.
Under the trading system, the companies will be allotted a maximum emission allowance. Carbon credits will have to be purchased on market for any emissions above that threshold from companies that amassed a surplus by not reaching their threshold.
The ability to sell surplus credits creates an incentive for companies to reduce emissions.
While the system is designed to lower emissions, companies may pass on the costs of decarbonization efforts to consumers in the form of price hikes.
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AloJapan.com