Japan Prepares to Issue Green Transformation Bonds in 2023

The Japanese government said it will aim to issue new bonds as early as next year to encourage investment in projects aimed at the reduction of carbon dioxide emissions to expedite the country’s transition to a green economy.

At a meeting of the GX (Green Transformation) Implementation Council, which discusses initiatives to achieve decarbonization and attended by Prime Minister Fumio Kishida, government officials confirmed that a road map for the issuance of the bonds would be compiled this month and bills related to the bonds would be presented at the parliamentary session starting in January 2023.

The GX meeting at the prime minister's office also approved a plan for a carbon pricing system as part of Japan’s efforts to reach carbon neutrality by 2050.

The government plans to use the revenue it will collect from the system to fund a 20 trillion yen (US$140 billion) policy aimed at encouraging businesses to invest in decarbonization.

The levy is part of a system in which the government will require businesses, including importers of fossil fuels such as coal or oil, to pay in proportion to their CO2 emissions.

It is anticipated that the government will initially require electricity companies, which operate a number of thermal power plants, to participate in the emissions trading system.

The GX meeting also included a draft paper on measures to strengthen decarbonization support for small- and medium-sized firms, and for other Asian nations.

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