Policy status:In Force
Date Effective:2005
Date Ended:April 2009
Policy Type:Voluntary Approaches>Negotiated Agreements (Public-private sector), Regulatory Instruments>Monitoring, Economic Instruments>Market-based instruments>White certificates, Economic Instruments>Market-based instruments
Policy Target:Industry
Agency:Ministry of Environment, Global Environment Division
Penalty:In case of non-compliance subsidies received must be refunded; names of firms in non-compliance made public

Adopted in 2005 along with the Kyoto Target Achievement Plan, Japans voluntary emissions trading scheme (J-VETS) aims to cut aggregate emissions of 34 larger industrial installations by 21%. Targets under J-VETS are voluntary, and are absolute targets (rather than intensity-based) binding with penalties once a firm has agreed to participate. In case of non-compliance, firms have to refund any subsidies received, and names of firms that fail to meet their targets are made public. Banking is allowed under the scheme, while borrowing is not. Firms receive subsidies from the Ministry of Environment (MoE) up to one-third the cost of installing emissions-reduction technologies. However, subsidies will no longer be avaliable after April 2009. CDM credits, known as j-CERs under the scheme, can also be used without limit, but not as the primary means of achieving the pledged targets. Target participants under the scheme are factories and offices which make voluntary agreements with the MoE to reduce CO2 emissions. They receive an initial allocation based on emissions over the past few years for operation. Target participants are allocated japanese Emission Allowances (JPAs), which can be bought from other participants along with j-CERs. The scheme also has trading participants, which are financial intermediaries and brokers. They have no targets and do not receive allocations, but rather hold accounts and transfer credits within the registry established by the MoE. In 2007 the MoE developed guidelines for monitoring, reporting and verification (MRV). Participants monitor emissions and other relevant data such as inputs or outputs, and submit annual reports for review by the verification body and approval by the competent authority. Reporting follows ISO 14064/14065 guidelines. The J-VETS has completed three phases, between April 2005 and April 2008, and is currently in its final phase. Phase I comprised 31 target participants and 7 trading participants. The total emissions reduction target was of 0.27 Mt of CO2, and achieved reductions were 0.37Mt of CO2. The average cost of emissions reductions was JPY 2000-4000/tCO2 (USD20-40/tCO2). Phase III comprised 61 target participants and 12 trading participants. The total emissions reduction target was of 0.21 Mt of CO2, and achieved reductions were 0.28Mt of CO2. The average cost of emissions reductions was JPY 1080/tCO2 (USD 10/tCO2). Phase IV comprised 61 target participants and 25 trading participants. The total emissions reduction target was of 0.23 Mt of CO2, while achieved reductions are not yet known. The average cost of emissions reductions was JPY 1766/tCO2 (USD 17/tCO2). Phase V comprises 73 target participants, while the number of trading participants is yet to be determined. There are currently over 200 participants in the scheme. The total emissions reduction target is 0.32Mt of CO2, and the estimated cost of emissions reductions (without subsidy) is of JPY 758/tCO2 (USD 7/tCO2). The most energy intensive sectors such as power companies and steel producers have not participated in the scheme, but rather in the Keidanren Voluntary Action Plan which has intensity-based targets.

This record supersedes:Planned Voluntary Emissions Trading Scheme

Last modified: Thu, 14 Mar 2013 19:20:30 CET