Tokyo, March 31 (TASR) - Japan, the world's fifth-largest emitter of carbon dioxide (CO2), will begin gradually introducing a carbon pricing system from April to encourage companies to cut emissions and reach its goal of carbon neutrality by 2050. The country is the latest in Asia to draw up plans to establish a carbon pricing mechanism and emissions trading system.

WHAT DOES JAPAN WANT TO ACHIEVE WITH THIS SYSTEM?
The plan aims to accelerate decarbonization to tackle climate change, but Japan lags behind other major economies that have already implemented similar policies. Still, Japan believes the system, which combines emissions trading and a tax on emissions, will help the world’s third-largest economy become greener while maintaining the global competitiveness of its industries, including big emitters such as steelmakers. Because the private sector cannot commit to green investments on its own due to high costs and risks, Europe and the United States have developed government support instruments, said Shigeki Ohnuki, director of the environmental policy division at the Ministry of Economy, Trade and Industry (METI).
WHAT ARE JAPAN'S FIRST STEPS IN EMISSIONS TRADING?
The system, which is based on METI’s proposals and approved by the cabinet this year, consists of emissions trading and a carbon tax. As a first step, Japan’s version of the emissions trading system (ETS), created by a “green transition” forum called the “GX League,” will start in fiscal year 2023/24 on a voluntary basis, followed by full operation from around 2026/27. Participants – about 680 companies as of the end of January, representing more than 40 trillion tons of emissions in Japan – will be required to commit to and publish emission reduction targets. If they fail to meet the target, emissions will be traded through the market. Trading is likely to take place on the Tokyo Stock Exchange, which conducted a trial run from September last year to January.