JAPAN Law and Practice Contributed by: Rintaro Hirano, Yutaro Fujimoto, Yurika Masakane and Yutaro Kato, Nagashima Ohno & Tsunematsu
Further, on 18 February 2025, the Cabinet approved the 7th Strategic Energy Plan under the Basic Act on Energy Policy (the “Strategic Energy Plan”). This sets forth the fundamental direction of the national energy policy. Under the revised plan, the phrase “reduce dependence on nuclear power as much as possible”, which had appeared in the previous (6th) Strategic Energy Plan was removed. This suggests a shift towards a more prominent role for nuclear power in Japan’s long-term energy strategy. On the same day, the Cabinet also approved the Global Warming Countermeasures Plan. This plan outlines concrete measures to achieve Japan’s GHG reduction targets for 2030, 2035 and 2040. In this context, the government updated the Nationally Determined Contribu- tion (NDC) of Japan under the Paris Agreement, including revising GHG reduction targets to a 60% reduction by 2035 and a 73% reduction by 2040 from 2013 levels. These targets serve as linear milestones towards achieving carbon neutrality in 2050. Green Transformation In addition, on 10 February 2023, the govern- ment developed a roadmap that outlines invest- ment promotion measures to be taken by the government to achieve the Green Transforma- tion (“GX”) and, as a means to realise some of these measures, the Act on the Promotion of the Smooth Transition to a Decarbonised Growth Economy (the “GX Act”) was passed on 12 May 2023 and took effect in June 2023. The GX Act provides as follows: • The government can issue “GX Bonds” (scheduled to total approximately JPY20 trillion) from 2023 to 2032 to secure finan- cial resources to invest in businesses and research relating to increasing industrial com-
petitiveness and reducing GHG emissions. These GX Bonds are to be redeemed by 2050 from the “Surcharge for Fossil Fuels” and the “Surcharge for Specific Operators” (each as defined below). • The following two systems will be introduced in phases in preparation for the full-scale implementation of an emissions trading system – (a) the “Surcharge for Fossil Fuels” is to be imposed from 2028 on those who mine or import fossil fuels, according to the amount of GHG emissions generated from the fossil fuels they mine or import, which will be calculated based on the volume of fossil fuels they mine or import; and (b) GHG emission allowances will be allo- cated from 2033 to electricity generators with higher GHG emissions (the “Specific Operators”) partly for free and partly by auction (the charge incurred by Specific Operators to acquire such emission allow- ances by auction is called the “Surcharge for Specific Operators”), and the percent- age of emission allowances allocated by auction is scheduled to gradually increase. Subsequently, on 25 February 2025, the Cabinet submitted a Bill to amend the GX Act. The draft legislation aims to facilitate the smooth transition to a decarbonised growth-oriented economic structure and introduces measures including the legal codification of the GHG emissions trading system. Under the proposed system, starting in 2026, businesses falling within the scope of the scheme will receive emissions allowances free of charge, based on government-issued guidelines that reflect the specific characteristics of each industry. These guidelines also take into account factors such as the risk of offshoring production
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