The Japanese government, specifically the industry ministry, is gearing up to enforce a carbon emissions trading system on corporations that release more than 100,000 tons of carbon dioxide into the atmosphere each year. This initiative, set to launch in fiscal 2026, aims to involve between 300 to 400 companies across various sectors such as steel, electricity, aviation, logistics, and food manufacturing. The system will hold each company accountable by assigning them emissions quotas and instituting penalties if these limits are surpassed.
Emissions trading, commonly known as a form of "carbon pricing," is a global strategy adopted to combat climate change by compelling companies to pay in accordance with their carbon dioxide emissions. While Japan has been testing this concept through the Green Transformation (GX) League since fiscal 2023, the program was previously voluntary and led by a small number of participating companies. However, the forthcoming government bill, expected to be submitted during the upcoming regular Diet session, will mandate companies with an average emissions level exceeding 100,000 tons annually to partake in the carbon trading system starting in fiscal 2026. The formal trading phase is scheduled to launch in fiscal 2027.