Japan's parliament has passed a new law requiring hundreds of major corporations to participate in a mandatory carbon emissions trading scheme starting from the fiscal year April 2026. This initiative aims to accelerate the country's efforts toward achieving carbon neutrality by 2050.
The revised legislation targets companies emitting 100,000 tonnes or more of carbon dioxide annually. These businesses primarily include sectors such as electricity generation, steel manufacturing, chemical production, cement, and paper industries. Together, they represent approximately 60% of Japan's greenhouse gas emissions.
An official from the Ministry of Industry explained that this carbon trading system, similar to the European Union's established market, is designed to incentivize emission reductions and technological innovation among companies. Under the system, each participating firm will receive an annual emissions allowance. Companies exceeding this limit will be required to purchase additional carbon credits from those with emissions below their allotted caps.
Japan, the world's fourth-largest economy, has committed to reducing its greenhouse gas emissions by 46% from 2013 levels by 2030 and to achieving full carbon neutrality by 2050. The introduction of this mandatory carbon trading scheme represents a significant step toward these environmental targets.
