Japan Pioneers First Urban-Based Emissions Trading System

Japan Pioneers First Urban-Based Emissions Trading System

At the government level, a tax on oil-based products and energy resources such as gas, LPG, coal and others has been charged at the rate of 289 yen per tCO2, starting from 2012, in Japan. The tax raised is being used to help support the building of energy-efficient infrastructure, renewable-energy production, and other measures to reduce carbon dioxide emission. The tax has produced an average of 260 billion US dollars in revenue each year through 2016.

There is also a slightly different but similar tax called “environmental and forestation tax” at the rate of $10.00 a year for each resident. This will be put in place starting from 2024. Revenue will be channeled into works such as preventative measures against climate change, periodic thinning or reforestation as attempts to push up carbon-sinking.

At the national level, there has been ongoing discussion to introduce a Cap-and-Trade system. However, due to the lack of attention and understanding on the part of citizens and unwillingness on the part of corporations ailing from a long-lasting stagnant economy, the legislation for introduction Cap-and-Trade system has yet to be implemented.

However, the municipality of Tokyo has joined a Cap-and-Trade system since 2010 with an aim to cut carbon emission by 25% by the end of 2020. Tokyo’s Cap-and-Trade program affects about 1,300 existing large commercial and industrial buildings, which account for about 20 percent of the city’s total carbon emissions. Cornell and Tokyo governmental researchers have pored over five years of data from the city’s Cap-and-Trade program – the world’s first such program that focused on urban buildings – and found it achieved more than a 20 percent reduction in emissions.

Stringent policies reduced energy consumption, heightened awareness and drove behavior for further change, said Hua, who has been working for seven years with the Tokyo Metropolitan Government to track the Tokyo Cap-and-Trade Program – the world’s first such measure targeting large urban buildings for emissions mitigation and sustainability. “It’s a unique, effective mandatory policy alternate to building codes,” said Hua.

In Tokyo, there are about 1300 corporations with yearly consumption of over 1500 kL-worth energy, that are part of the Cap-and-Trade system. These companies comprise over 40% of total CO2 emitted in Tokyo area. The system is revised every 5 years, with new plan for the next 5 years to be released soon.

Activity Rating:  ** Standing Still

A decade ago the government put in place a carbon tax that is still quite small. Some corporations and municipalities in Tokyo are environmentally aware and are part of an urban Cap-and-Trade system. It is important that this system is introduced by the government at a national level to push forward national efforts to combat climate change.

Take Action:


We urge politicians in Japan to put the agenda of climate change on the table and push for a national Cap-and-Trade system to support climate change action. A national Cap-and-Trade system has the potential to make an important contribution to climate change mitigation.  

Contact Information:

Prime Minister Shinzo Abe at cabinet office: +81 (0)3-5252-2111

Leader of Opposition party (Constitutional Democratic Party) of Japan: +81 (0)3-6811-2301


Outline of Caps and Trade System in Tokyo municipality:   https://www.env.go.jp/policy/tax/misc_jokyo/attach/intro_situation.pdf

Carbon Tax in Japan: https://www.env.go.jp/earth/cp09_gijigaiyou.pdf

Discussion of Carbon Pricing at Ministry of Environment:  https://www.kankyo.metro.tokyo.lg.jp/climate/zenpan/tokyogreenbuild2015.files/P14-15.pdf

This Post was submitted by Climate Scorecard Japan Country Manager Yukiko Nukina

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