The growth of carbon markets in Japan
Demand for carbon credits in Japan is lower than in other G7 countries, but the market has seen rapid growth in recent years.
Government action is likely to drive significant growth in demand for the supply of carbon credits in the coming years.
As Japanese businesses explore carbon credit usage as a means of achieving mandatory or voluntary emissions reduction targets, they should turn to ratings as a tool to navigate and manage risk.
Contents
Introduction
Japanese business have been less active in the VCM than those in other G7 countries
But combined retirements from VCM and J-credit projects have risen considerably in recent years
Japan is the global leader in bilateral partnerships under Article 6.2 of the Paris Agreement
The JCM's project pipeline is expected to yield significant emissions reductions which will contribute to Japan's NDC
Japan's national emissions trading scheme, the GX-ETS, will allow the use of carbon credits
The second phase of the GX-ETS should catalyse a significant rise in demand for carbon credits in Japan
Japanese business are conscious of carbon credit risk, and should use ratings as a tool to manage this risk
Conclusion