The Japanese government has purchased 4 million carbon credits in the year ending 31 March, according to a trade ministry official. These UN-backed Assigned Amount Units (AAUs) were acquired from Poland, marking a significant move in Japan's carbon trading efforts.
View from below of bamboo forest in Japan. Ai generated picture.
Despite not buying Certified Emissions Reductions (CERs) from clean-energy projects in developing countries, Japan's commitment to carbon trading remains strong. The Tokyo Stock Exchange and various startups have launched marketplaces to facilitate the trade of these credits.
Carbon credits, certified by governments or independent bodies, represent emission reductions and allow entities to offset their own emissions. As Japan awaits advancements in climate technology, these credits play a crucial role in its carbon-heavy industries transitioning to greener practices.
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Kohei Nishiwada, head of the Tokyo-based startup Asuene, emphasised Japan's need to accelerate its carbon credit platforms. Asuene's Carbon EX platform, launched in partnership with SBI Holdings, aims to become a major international marketplace, benefiting Japanese firms globally.
Comparatively, Japan's carbon credit market lags behind Singapore, which saw significant trading volumes shortly after its launch. Limited to J-Credits, the Tokyo Stock Exchange's market has yet to experience substantial activity.
Meanwhile, initiatives like the GX League encourage Japanese companies to set voluntary emission reduction goals, allowing the use of J-Credits. As more companies engage in carbon credit trading, the market is expected to expand.
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Amid criticisms of the effectiveness of some carbon credits, Japan aims to ensure the credibility of its carbon trading platforms. Increasing transparency and stricter certification rules will help eliminate questionable credits from the market.
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