JAPAN Trends and Developments Contributed by: Takahiro Kobayashi, Shigeki Okatani, Yusuke Murakami and Hirohiko Tanaka, Mori Hamada
Long-term decarbonisation power source auction The long-term decarbonisation power source auc- tion, which is implemented as a new category of the capacity mechanism, started in FY 2023. Under this system, power producers and battery-energy stor- age system operators selected through the auction will be compensated for developing and maintaining their capacity to produce electricity for 20 years, in principle. Thermal power using hydrogen and ammo- nia (both only and co-firing); thermal power using LNG only; hydroelectric, geothermal, solar, wind and nuclear power plants, as well as grid battery-energy storage systems, are eligible for the auction. Since the inaugural FY 2023 auction round, the detailed design of the mechanism has been reviewed and refined for each subsequent round, reflecting the outcomes of previous auctions and ongoing policy discussions. As of June 2026, preparations are under way for the fourth auction round, designated for FY 2026.
lowing goals in its final report on the CCS long-term roadmap published in March 2023: • by 2030, Japan will foster a supportive business environment for CCS projects to start operation; • after 2030, Japan will see extensive development of CCS projects; and • by 2050, Japan will be able to store approximately 120 to 240 million tonnes of carbon annually. The CCS Business Act, which was enacted in May 2024 to establish a permit system and safety regula- tions for exploratory drilling and storage, came into force on 22 May 2026. Its implementing cabinet orders provide, among other things, that CO₂ stored in off- shore reservoirs must generally have a purity level of at least 99%, while also establishing registration pro- cedures for storage rights and related security inter- ests. Alongside these regulatory frameworks, practical support measures are being developed with a view to final investment decisions (FIDs) around 2026 and project launches around 2030, highlighted by nine advanced CCS projects currently supported by the Japan Organization for Metals and Energy Security (JOGMEC).
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