Carbon Pricing Proposal by Japan Climate Initiative (JCI) Members: Toward Simultaneous Achievement of 2030 GHG Emission Reduction Targets and Enhanced International Competitiveness
5 December 2023
Improving the current plan of carbon pricing so that it can achieve emission reductions equivalent to the international level in Japan.
Japan Climate Initiative (JCI) today released the proposal, “Carbon Pricing Proposal by Japan Climate Initiative (JCI) Members: Toward Simultaneous Achievement of 2030 GHG Emission Reduction Targets and Enhanced International Competitiveness” (Annex 1). It is endorsed by 186 organizations (140 companies, 9 local governments, 37 organizations and NGOs, etc.) (Annex 2).
This proposal aims to introduce carbon pricing able to halve greenhouse gas emissions by 2030 in Japan, paving the way for its internationally competitive economy. To this end, this proposal calls for six principles including the following that should be fulfilled in the future design of the system, improving the current government proposal.
・Bringing the schedule of the introduction forward to around 2025
・Aiming sufficient carbon price in 2030 such as USD 130 / t-CO2 indicated by IEA
・Rebuild the system into a cap-and-trade type emissions trading system on a par with global standard by setting a limitation as a cap on total emissions in targeted sectors and obligating the companies to participate in the system and reduce emissions, rather than leaving it up to companies’ own initiatives.
Widely endorsed by 61 Tokyo Stock Exchange prime companies and other large corporations, local governments, consumer and religious organizations, NGOs, etc.
While the year 2030, a critical milestone to achieve the 1.5 ℃ goal of the Paris Agreement, has been approaching, it is the first time in Japan that Japanese multi-sectors such as companies, local governments, and organizations present a specific form of carbon pricing under the banner of their individual organization names.
The list of endorsing companies includes many leading Japanese companies, together with 61 Tokyo Stock Exchange prime-listed companies, in a wide range of fields such as IT, materials, machinery, electric/electronic equipment, pharmaceuticals, telecommunications, food, retail, construction, and finance and insurance. The Japan Climate Leaders’ Partnership, a corporate group actively promoting climate action, also endorsed the proposal.
Among local governments, Omihachiman City, Kawasaki City, Kyoto City, Sapporo City, Setagaya Ward, Tokyo Metropolitan Government, Toyonaka City, Hamamatsu City, and Musashino City have endorsed. In addition, various non-state actors such as CONSUMERS.JAPAN, Soka Gakkai, universities and research institutes, NGO/NPOs, and youth groups have also expressed their endorsement.
A strong sense of crisis and urgency has brought the efforts of non-state actors to a new phase of “advocacy”.
The active involvement in the study process of this proposal and the growing circle of the endorsement for it are symbol for a new phase in the decarbonization efforts of non-state actors, such as companies, extending to advocacy for concrete policy changes in government. At the same time, these facts strongly show that so many non-state actors share a sense of crisis and urgency about the current status of carbon pricing and emission reductions in Japan.
The Japanese government should sincerely listen to these non-state actors. At this very moment, COP28, is being held from 30 November 2023. There, as an outcome of the Global Stocktake, the progress evaluation system of the Paris Agreement, a political message is expected to be sent to the Parties urging them to further strengthen their emission reductions targets and policies. It is now obvious to everyone in the international community that much more acceleration of climate actions is needed all over the world. As its inevitable part, JCI calls on the Japanese government to introduce a carbon pricing system in Japan that satisfy the six principles in the proposal without missing the right moment.
Annex1: JCI’s proposal PDF
Annex2: List of endorsing organizations PDF
Reference: 303 Non-State Actors Joined the JCI Message: Overcoming Two Crises with Renewable Energy and Carbon Pricing
Comments from the endorsing members
Carbon Pricing Proposal by Japan Climate Initiative (JCI) Members: Toward Simultaneous Achievement of 2030 GHG Emission Reduction Targets and Enhanced International Competitiveness
The government is aiming to achieve Green Transformation (GX) in order to simultaneously achieve its greenhouse gas emission reduction targets for 2050 and 2030, affordable and stable energy supply, and economic growth. As part of this effort, a “Growth-Oriented Carbon Pricing Scheme” has been launched, consisting of investment support through GX Economic Transition Bonds, a fossil fuel levy, and the GX-ETS.
The fact that a path has been paved for the introduction of carbon pricing, which has been discussed for many years, is a welcome step forward. It is hoped that further improvements will provide a strong impetus for emission reductions on the scale required internationally.
While the government is currently working on the specifics of the scheme, we believe that particular attention should be paid to the following three aspects.
- Ensuring achievement of national GHG emission reduction targets, especially 2030 targets: There is concern that the voluntary schemes currently proposed will have limited impact on emission reductions, and that the 2030 reduction targets will be missed due to slow implementation. A system is needed to ensure that Japan can achieve the targets it has pledged to the world, and to meet the international trend toward more ambitious emission reductions.
- A fair system that does not disadvantage companies that are committed to emission reductions: Voluntary participation in the scheme could put companies that are willing to bear the cost of emission reductions at a competitive disadvantage to those that do not participate. A fair system in which all companies that meet certain requirements are required to participate is needed.
- A system that contributes to strengthening the competitiveness of the Japanese economy: An inadequate carbon price could result in Japanese companies being subject to the Carbon Border Adjustment Mechanism (CBAM) or being excluded from international supply chains and investments. A system is needed that will allow emission reductions at the international level and the introduction of renewable energy sources to progress, thereby improving Japan’s attractiveness as a business location.
There is little time left until 2030. To achieve effective carbon pricing, we must make the best use of the experiences gained from the widespread implementation of carbon taxes and emissions trading systems worldwide and improve the fossil fuel levy and GX-ETS. Specifically, we strongly demand that the following six principles be met to appropriately guide future system designs:
(1) An effective carbon pricing system should be introduced by 2025 to achieve the 2030 reduction target.
To achieve the 1.5-degree target set in the Paris Agreement, the IPCC has indicated that a 60% GHG global emission reduction (compared to 2019) by 2035 is necessary. Based on such science findings, the current schedule should be accelerated, and a highly effective carbon pricing system should be introduced by 2025 to ensure that Japan’s 2030 reduction target is achieved.
In addition, in order to ensure that emission reductions necessary to achieve the target, the GX-ETS should have a cap on total emissions from the targeted sectors, similar to the emissions trading schemes that are leading the world and should be gradually enhanced in line with the timeline for achieving the 1.5-degree target.
(2) Fairness should be ensured by making all companies that meet certain requirements uniformly subject to the system.
To ensure fairness, all companies that meet certain requirements, such as emissions and energy use, should be subject to the emissions trading system uniformly. In addition, along with the fossil fuel levy, measures should be introduced to ensure performance, including the disclosure of company names.
The introduction of both systems should be designed in such a way as to avoid double burdens and limit administrative burdens. The advantages and disadvantages of each system should complement each other to design a fairer and more effective system in which a wide range of companies are involved in reduction efforts.
(3) Future carbon price should be clearly stated at a level comparable to the world.
In a way that helps companies make investment decisions, the carbon price should be clearly stated at the time of introduction, aiming for a carbon price comparable to international levels, such as the $130/t-CO2 in 2030 indicated by the IEA.
After its introduction, the price should be reviewed in a timely manner in line with future scientific findings and international discussions. It is also desirable for Japan, as a developed country, to aim for an even more ambitious carbon price.
On the other hand, the GX Promotion Act sets a ceiling on the unit price of the fossil fuel levy. While consideration should be given to ensure that the burden on energy is not excessive, the cap should be eliminated if it hinders the conformity of the carbon price to international standards.
(4) The system should conform to international rules.
The fossil fuel levy and emissions trading system should be compatible with international rules to avoid double administrative burdens and competitive disadvantages for companies due to differences in domestic and international rules. In addition, in order to avoid being subject to the EU’s Carbon Border Adjustment Measure (CBAM), it is necessary to design the basic system, including uniformity and breadth of the system’s coverage, measures to ensure performance, and the pace of carbon price increases, aiming for the same level and quality of carbon prices as those in other countries and regions.
In designing the system, lessons learned in other countries and regions should be fully taken into account. In particular, the use of credits should be carefully considered in light of international trends.
(5) Government revenues should support reductions by companies that have difficulty reducing emissions under fair evaluation.
Revenues from the carbon pricing system should be used to support the development and diffusion of new technologies in industries where emission reductions are difficult to achieve with existing technologies, to help small and medium-sized enterprises and others cope with the burden of energy conversion, and to accelerate efforts to expand the introduction of renewable energy and energy-saving technologies. In doing so, it is necessary to narrow the scope of support under certain conditions, such as not supporting technologies that are inconsistent with the 1.5°C target (e.g., ammonia co-firing in coal-fired power generation).
In addition, the amount and timing of emission reductions expected from each support program should be clearly defined and distributed in a balanced manner. Furthermore, such support should be transitional not to distort the overall system design.
(6) Transparency should be ensured in the planning, evaluation, and updating of carbon pricing.
A forum should be established on a regular basis for a wide range of actors in society who have a stake in carbon pricing to share and discuss their expertise, domestic and international trends, awareness of the crisis, and the relationship with other areas such as biodiversity and resource recycling. Its composition should not be biased toward companies in specific industries, but should include a wide range of non-state actors.
In addition, given the small amount of time remaining until 2030, discussions on the introduction of the system must be swift and efficient.
Japan Climate Initiative (JCI), 5 April 2023
List of endorsing organizations (alphabetical order)
(Total 186: including 140 companies, 9 local governments and 37 organizations/NGOs)
Companies (Total 140)
|Machi Mirai Seisakusyo Co., Ltd.
|AEON MALL Co., Ltd.
|Maeda Road Construction Co., Ltd
|AESC Japan Ltd.
|Matsuya Co., Ltd.
|Meiji Holdings Co., Ltd.
|Amundi Japan Ltd.
|Mitsubishi Jisho Investment Advisors, Inc.
|Miyagi hygienic environment public corporation Co., Ltd.
|ARAKAWA CHEMICAL INDUSTRIES, LTD.
|Morinaga Milk Industry Co., Ltd.
|Architects Regional Planners & Associates・Kyoto
|ASAHI GROUP HOLDINGS, LTD
|Asian Gateway Corporation
|Nishimatsu Construction Co., Ltd.
|NISSIN FOODS HOLDINGS CO., LTD.
|NITTO KOGYO CORPORATION
|asueku Co., Ltd.
|Nomura Real Estate Asset Management Co., Ltd.
|NTT DATA Group Corporation
|booost technologies, Inc.
|office 3.11, Inc.
|Business Brain Showa-Ota Inc.
|ORIX Asset Management Corporation
|CHUGAI PHARMACEUTICAL CO., LTD.
|Panasonic Holdings Corporation
|Citizen Watch Co., Ltd.
|POLA ORBIS HOLDINGS INC.
|Codo Advisory, Inc.
|Recruit Holdings Co., Ltd.
|CONSUMERS CO-OPERATIVE SOCIETY KAGOSHIMA
|Crossfor Co., Ltd.
|Renewable Japan Co., Ltd.
|CSR Design Green Investment Advisory, Co., Ltd.
|Rengo Co., Ltd.
|DAI-DAN CO., LTD.
|RICOH COMPANY, LTD.
|Dai-ichi Life Holdings, Inc.
|Rinkai Nissan Construction Co., Ltd.
|Daitec Co., Ltd.
|ROHM Co., Ltd.
|Daiwa House Asset Management Co., Ltd.
|SAKAE KOUKAN CO., LTD
|Daiwa House REIT Investment Corporation
|SAKATA INX CORPORATION
|Decarbonization Support Co., Ltd.
|Sanyo Syoji CO., LTD.
|DIGITAL GRID Corporation
|SAPPORO HOLDINGS LTD.
|Eco Works Co., Ltd.
|Schroder Investment Management (Japan) Limited
|ECO-PLAN Co., Ltd.
|SEIKO GROUP CORPORATION
|EDO KAGURA Corporation
|SEKISUI CHEMICAL CO., LTD.
|Eisai Co., Ltd.
|SequencEnergy CO., LTD
|E-Konzal Co., Ltd.
|Shinkin Central Bank
|SHIONOGI & CO., LTD.
|Foster Electric Company, Limited
|Shizuoka Yaizu Shinkin Bank
|SKYLARK HOLDINGS CO., LTD.
|FUJIFILM Holdings Corporation
|SoftBank Group Corp.
|Furukawa Electric Co., Ltd.
|Sony Group Corporation
|Green Nets Co., Ltd.
|Sumitomo Heavy Industries, Ltd.
|Sumitomo Mitsui Construction Co., Ltd.
|Hokkai PEEM Co., Ltd.
|Sumitomo Pharma Co., Ltd.
|i GRID SOLUTIONS Inc.
|SUNRISE Co., Ltd.
|Suntory Holdings Limited
|iiie co., ltd.
|IKEA Japan K.K
|Terras Energy Corporation
|J. FRONT RETAILING Co., Ltd.
|TESS Holdings Co., Ltd.
|The Asahi Shimbun Company
|Japan Real Estate Asset Management Co., Ltd.
|THE SHIGA BANK, LTD．
|Japan Renewable Energy Corporation
|Joshin Denki Co., Ltd.
|Toyo Ink SC Holdings Co., Ltd.
|Kajiwara Iron Works Co., Ltd.
|Kasetsukizai Co., Ltd.
|UTSUMI CO., LTD.
|Kirin Holdings Company, Limited
|Kisyou Co., Ltd.
|Wacom Co., Ltd.
|Kokusai Kogyo Co., Ltd.
|KONICA MINOLTA, INC.
|WATERSTAND Co., Ltd.
|Yamato Jyuken, Inc.
|LLC Odawara-kanagote Farm
|YATSUMOTO TSUSHO CO., LTD
|Local Green Project Support Laboratory Corp.
Local governments (Total 9)
|City of Kyoto
|City of Sapporo
|Tokyo Metropolitan Government
|Musashino City Government Office
NGOs and other stakeholders (Total 37)
|Association of the Professional Engineers Network for Ecological Energy Earth
|Association to create a society with a consumer citizenship
|Chiba University of Commerce
|Citizens’ Climate Lobby Japan
|Peace & Nature
|Climate Action Network Japan
|Renewable Energy Institute
|Climate Youth Japan
|Renewable Energy Organization of Hokkaido
|Collective Action Institute
|Sacred Heart Institute for Sustainable Futures
|Eco Work Jissenjuku
|SLSV CES INSTITUTE
|Environmental Veterans Firm
|Fukui Small Hydropower Plant Promotion Council
|Sustainability Forum Japan
|Hokkaido Green Purchasing Network
|Institute for Geothermal Information
|Tokushima Regional Energy General Incorporated Association
|Institute for Sustainable Energy Policies
|Ueda Citizens’ Energy
|Japan Association of Environment and Society for the 21st Century
|Utsukushima NPO Network
|JAPAN CLIMATE LEADERS’ PARTNERSHIP
|World Federalist Movement
|Japan Photovoltaic Energy Association
|Japan PV Planner Association
Sachihiko Harashina, President, Chiba University of Commerce
Decarbonization requires a shift to a natural energy society that uses neither fossil fuels nor nuclear power, but renewable energy derived from natural systems. Society operates with planning and freedom, and carbon pricing that utilizes market mechanisms will accelerate decarbonization toward the 2030 goal. However, if only some actors voluntarily take action, such honest people might end up losing money. Market systems will work well only if there are proper rules, and everyone follows the rules. In order to create a society that allows diverse actors to promote CO2 reduction under fair rules, it is essential to introduce carbon pricing as an economic system.
Daisaku Kadokawa, Mayor of Kyoto City
Kyoto City is working to create a “Zero Carbon Ancient City Model” to achieve zero CO2 emissions from the civilian sector by 2030, and to enhance regional strength by decarbonizing Kyoto’s culture and lifestyle. There are only six years remaining until 2030.
In order to accelerate the shift to clean energy and achieve the common global goal of 1.5°C, it is imperative to quickly introduce a fair and effective carbon pricing system that allows all stakeholders to promote emission reductions.
Let us work together to achieve a prosperous decarbonized society.
Mikako Suzuki, Corporate Officer in charge of ESG and Risk Management, ESG Strategy Division, RICOH COMPANY, LTD.
The climate crisis is becoming more serious to the point of being called global boiling. We all must share a renewed awareness that our efforts by 2030 will greatly affect the future of our planet, taking concrete and rapid actions. To this end, it is necessary to mobilize all systems and policies including carbon pricing that contribute to the achievement of the 1.5 degrees Celsius goal to support the efforts of local governments, companies, and citizens.
Also, actions to help achieve the 1.5 degrees Celsius goal are becoming a requirement in all aspects of business, and a delay in Japan’s efforts will have a negative impact on the competitiveness of Japanese companies. The Ricoh Group will continue to work with all stakeholders to promote climate actions and advocacy to realize a decarbonized society.