Japan’s emissions trading system to start in April 2026. BigMint lowdown

Japan Metal Daily: Japan’s Ministry of Economy, Trade and Industry (METI) convened the Emissions Trading System Subcommittee of the Industrial Structure Council (an advisory body to the Minister of Economy, Trade and Industry) on 2 April 2025 and began designing an emissions trading system that will start in April 2026.

First, the framework of the system will be solidified through discussions in the subcommittee, and the working group established under the committee will decide how to set the emission allowances to be granted to companies.

The working group is scheduled to be launched in August. The benchmark calculation method based mainly on the setting of emission allowances will be examined.

The details will be examined by two working groups: the Manufacturing Benchmark Working Group, which covers industries such as steel, oil refining, chemicals, pulp and paper, cement, and lime production, and the Power Generation Benchmarking Working Group, which covers the power generation sector.

In terms of steel, the benchmarks will be set in three divisions: blast furnaces and converters, special steel electric arc furnaces, and ordinary steel electric arc furnaces. Rules that do not invite carbon leakage or impede research and development toward decarbonisation are required.

At the subcommittee meeting, members expressed the opinion that it was necessary to have a system that balances ”economic growth and the environment” and that it would be difficult to design such a system.