Japan is emerging as a frontrunner in the carbon credit markets, capitalizing on the increasing global demand for sustainable solutions. Through substantial investments, bilateral agreements, and innovative strategies, Japan is solidifying its position as a leader in decarbonization. The country’s proactive approach, from fostering international partnerships to promoting nature-based solutions, aligns with its ambitious goal of achieving net-zero emissions by 2050.
The Japan Carbon Credit Exchange, known as Carbon EX, stands as a pivotal platform driving the nation’s carbon credit initiatives. Established to establish a transparent and efficient market, Carbon EX enables businesses and governments to trade verified carbon credits. It not only encourages companies to offset emissions but also promotes the adoption of low-carbon technologies. By connecting developers, sellers, traders, and buyers to credits associated with Japanese and global forests, renewable energy, carbon capture, and energy conservation technologies, Carbon EX facilitates trading in Voluntary Carbon Credits, J-Credits, and Non-Fossil Fuel Certificates.
Moreover, Carbon EX offers comprehensive support beyond trading, providing advisory services for carbon credit development and procurement. The platform integrates with tools like ASUENE’s carbon accounting platform to ensure seamless management and external reporting of carbon offset initiatives. Backed by SBI Group and ASUENE, Carbon EX prioritizes reliability, with credits undergoing thorough assessments internally and in collaboration with external organizations to ensure quality and transparency. This exchange has become an indispensable tool for Japan in managing its carbon footprint and advancing towards its net-zero goals.
At the COP28 Climate Summit, Prime Minister Kishida reiterated Japan’s firm commitment to achieving net-zero emissions by 2050. Recognizing the global challenge of meeting the 1.5-degree climate target, Kishida emphasized the critical importance of actions taken by 2030 in steering the global trajectory. Japan aims to reduce greenhouse gas emissions by 46% by 2030, with current efforts already contributing to a 20% reduction. The country is striving for a 50% reduction, aligning with the G7 Hiroshima Summit’s call for nations to pursue net-zero goals while balancing economic growth with energy security.
Japan’s Green Growth Strategy, spanning 14 high-potential fields, combines economic growth with environmental protection. It focuses on decarbonizing electricity through renewable energy, nuclear power, and hydrogen, while also promoting electrification in industry, transport, and consumer sectors. The strategy includes budgetary, tax, and regulatory reforms, with projections suggesting it could generate annual growth of JPY290 trillion ($2.6 billion) by 2050.
Japan is advancing its growth-oriented carbon pricing strategy under the GX Promotion Act and plans to issue the world’s first nationally certified transition bond next year to further accelerate the GX initiative. Collaborating actively with countries in Asia through the Asia Zero Emission Community (AZEC), Japan aims to enhance decarbonization efforts. The nation’s energy strategy emphasizes maximizing clean energy deployment, expanding solar power, and supporting the tripling of renewable energy capacity globally. Japan is committed to sustainable energy supply chains and intends to halt the construction of unabated coal plants domestically. With significant investments in climate finance amounting to up to US$70 billion, Japan continues to lead global endeavors to combat climate change.
One of Japan’s innovative strategies involves nature-based carbon removal credits, exemplified by the partnership between Marubeni Corporation and Mitsui O.S.K. Lines, Ltd., forming Marubeni MOL Forests. This venture focuses on creating, trading, and retiring nature-based credits through afforestation and carbon capture projects. Their initial project aims to establish 10,000 hectares of new forests in India, with carbon credits expected to be available by 2028. Beyond emissions reduction, these projects contribute to biodiversity conservation, soil enhancement, and water resource management, aligning climate action with environmental preservation.
Marubeni outlined its climate change vision in March 2021, emphasizing renewable energy, hydrogen projects, and sustainable forest management in Indonesia and Australia. The company engages in carbon credit trading with various partners. MOL Group, on the other hand, aims to achieve net-zero greenhouse gas emissions by 2050 through its Environmental Vision 2.2 plan, targeting the removal of 2.2 million tons of CO2 by 2030 using high-quality nature-based solutions. By combining their strengths, both companies are actively contributing to climate change mitigation through forest conservation.
Japan and Indonesia signed a groundbreaking Mutual Recognition Agreement (MRA) at COP29 to facilitate bilateral carbon trading, underscoring Japan’s commitment to international collaboration to fulfill its Paris Agreement commitments. Indonesia’s IDXCarbon platform, launched in 2023, plays a crucial role in this partnership, with over 1 million tons of CO₂ traded and 100 registered users by 2024. Through this agreement, Japan gains access to affordable carbon credits while supporting Indonesia’s sustainability initiatives, including renewables and reforestation projects.
Japan’s proactive stance in carbon markets sets a precedent for other nations, showcasing a comprehensive approach to climate action through domestic efforts and international partnerships. Collaborations like the one with Indonesia highlight how partnerships can address supply chain vulnerabilities and expedite the global energy transition. Initiatives such as Marubeni MOL Forests underscore the potential of nature-based solutions to harmonize environmental and economic priorities, aligning with the broader objective of fostering a sustainable global economy. As more countries adopt similar strategies, the collective impact could significantly propel the fight against climate change. Japan’s strategic emphasis on carbon credits underscores its unwavering dedication to combatting climate change, positioning the nation as a leader in sustainable development.