Toward a Blue Bay Future: Japan's Evolving Emissions Cap-and-Trade

Toward a Blue Bay Future: Japan's Evolving Emissions Cap-and-Trade

Current Status of the Emissions Quota Trading Scheme in the 2020s

Japan's carbon neutrality is accelerating, and the introduction and expansion of carbon pricing is underway.

Tokyo Metropolitan Government's Cap & Trade System: A Future Opened Up by the City
The Tokyo Metropolitan Government introduced a cap-and-trade system in 2010 to reduce greenhouse gas emissions by 33% from the base level to 11.11 million tons in FY2021. Promoting sustainable development in urban areas through the trading of emission allowances among companies

GX League and Voluntary Emissions Trading Scheme (GX-ETS): Harmonizing Economy and Environment
The GX League, led by the Ministry of Economy, Trade and Industry, was established in FY2023, and the GX-ETS (GX League Emissions Trading Scheme), under which participating companies voluntarily trade emission allowances, was introduced on a trial basis. The aim is to promote economic growth while reducing environmental burdens by increasing incentives for emission reductions among companies.

3. development of a nationwide emissions trading system: birth of a carbon credit market
The Japanese government is preparing to introduce a nationwide emissions trading system with a view to full-scale operation in FY2026. In 2023, a "carbon credit market" will be established on the Tokyo Stock Exchange to enable companies to trade emission credits. A new economic model is being created in which funds are returned to environmental measures through the trading of emission credits.

This system, which will affect the future of the city of Tokyo Bay, the environmental strategies of corporations, and the sustainability of the economy, is about to usher in a new era.

---The system is about to usher in a new era...

Related Information

Tokyo Metropolitan Government's cap-and-trade system
Introduced in 2010 Achieved 33% reduction from base emissions in FY2021

2. pilot introduction of GX League and GX-ETS
To be established by METI in FY2023 and to be fully operational in FY2026

3. develop a nationwide emissions trading system
Establishment of a carbon credit market on the Tokyo Stock Exchange in 2023 and start of trading

Future Prospects
Full-scale introduction of a Japan-wide emissions cap and trade system is scheduled for 2026, and companies are expected to accelerate their move toward carbon neutrality.

This trend is having a significant impact not only on environmental conservation, but also on structural reform of the economy.