Tokyo Stock Exchange (TSE) [TPX:IND] has announced plans to launch a Carbon Credit Market, with trading expected to begin in October, as reported by Reuters on June 9. The TSE will start accepting applications for registration as a Carbon Credit Market Participant from July 2023. The market will initially focus on trading J-credits, which are designed to certify the amount of greenhouse gas (GHG) emissions reduced and removed within Japan. The TSE conducted a trial trading period for the Carbon Credit Market, which started in September 2022 and concluded in January 2023. During this pilot phase, 183 companies participated in the J-credits market, resulting in a total transaction volume of 148,933 tons of CO2. Most of the carbon credits traded were generated by using renewable energy and saving energy.

The Carbon Credit Market is part of Japan’s planned carbon pricing tools. In April 2023, the Japanese government officially launched the GX League, a climate club consisting of 679 Japanese companies that collectively account for over 40% of national emissions. Participants in the GX League are required to set emission reduction targets from 2023 to 2025, although the achievement of these targets is not mandatory. After 2026, the government will increase the participation and enforceability of the scheme. Participating companies can work towards their emission reduction targets through direct emission reductions and by purchasing eligible allowances and credits, including J-credits and credits from the Joint Crediting Mechanism (JCM). The JCM certifies and offers credits for leading decarbonizing technologies implemented in partner countries, such as carbon capture and storage (CCS). Moreover, the government intends to introduce carbon taxes on fossil fuel importers starting in 2028.

Sources:

https://www.reuters.com/article/japan-energy-carbon/tokyo-stock-exchange-to-start-carbon-credits-trading-around-october-idUSL1N3810MY

https://www.marketsmedia.com/tokyo-stock-exchange-completes-carbon-credit-market-pilot/

https://www.jpx.co.jp/english/news/2040/20230609-01.html

https://icapcarbonaction.com/en/ets/japan

https://www.japantimes.co.jp/news/2022/10/04/business/tokyo-stock-exchange-carbon-trading/