The Tokyo Stock Exchange announced that it will begin trading carbon credits on October 11, launching Japan's first exchange-based carbon market as the world's fifth-largest carbon dioxide emitter moves to address climate change.
Japan started introducing a carbon pricing scheme in stages from April of this year to encourage companies and cities to reduce emissions and achieve its target of carbon neutrality by 2050.
The government's plan aims to accelerate decarbonization to tackle climate change. Japan lags behind other major economies that have already implemented similar policies.
Through the new market, registered members can trade the existing carbon credit, known as J-Credit, on Tokyo Stock Exchange, a unit of Japan Exchange Group Inc.
Under the J-Credit system, the Japanese government certifies as "credit" the amount of greenhouse gas emissions, reduced or removed through efforts to introduce energy-saving devices and manage forests.
The credit has been traded individually between companies and other organizations, but it was challenging for them to find buyers or sellers on their own.
According to an official from Tokyo Stock Exchange, the new carbon market will make it easier for companies to buy and sell credits and provide transparency in carbon pricing.
The Tokyo Stock Exchange began accepting application for registration from July, and as of September 19, a total of 188 entities had registered as participants.