Insights
Tokyo Stock Exchange Kicks Off Carbon Credit Market
TSE
Tokyo Stock Exchange launched its carbon credit market as planned in October. This article gives an update on plans for the carbon credit market and the latest news on JPX Group’s own efforts to achieve carbon neutrality.
On October 11, 2023, Tokyo Stock Exchange launched its carbon credit market as planned. The market has got off to a strong start: in the eight days between October 11 and October 20, a total of 10,044 t-CO2 of credits were traded. 7,667 t-CO2 of these were in the Renewable Energy (Electricity) category, but there has been trading in five categories. Daily trading data can be found on the Japanese webpage at the bottom of this article.
The carbon credit market has been established in response to the “GX League Basic Concept” announced by the Ministry of Economy, Trade and Industry (METI) in February 2022 and the “Basic Policy for the Realization of GX” approved by the government in February 2023, which included the establishment of a carbon credit market to enable emissions trading for the GX League. (For more background to the market launch, please see this article from July: https://investmentjapan.jp/esg/3784/)
On the launch of the market, Japan Exchange Group, Inc. Group CEO Yamaji Hiromi commented: “Recognizing that the establishment of this market is a unique contribution that only an exchange could make toward the global goal of achieving carbon neutrality, we wish to utilize our experience in operating financial instruments exchange markets and our knowledge from last year’s Technical Demonstration Project for Carbon Credit Market, while cooperating with market participants and related parties to promote the carbon credit market in line with the progress being made in emissions trading by the government.”
In addition, in September TSE was selected by METI to carry out a “Carbon Credit Market Trading Stimulation Project,” which will involve 1) running a market maker scheme for J-Credits on the market, 2) researching the business activities of overseas carbon credit markets, and 3) carrying out analysis of economic models. Starting with these, TSE will continue to work towards further stimulation of trading. In the longer term, TSE will also be considering the expansion of the market to include other types of credits, depending on demand.
Carbon Credit Market webpage (Japanese):
https://www.jpx.co.jp/equities/carbon-credit/index.html
Information in English including for prospective market participants:
https://www.jpx.co.jp/english/equities/carbon-credit/index.html
Daily report (Japanese)
https://www.jpx.co.jp/equities/carbon-credit/daily/index.html
JPX is progressing towards its own carbon neutrality target
Japan Exchange Group, Inc. (JPX) has also been working towards its own carbon neutrality target, set in 2021, which aims for all electricity used across Group companies to be renewable by FY2024. As of March 2023, it had reduced approximately 30% of emissions (from a FY2020 base) through switching electricity contracts and purchasing renewable energy certificates at its main office buildings and other facilities.
In addition to these and other methods, JPX is reaching further towards its target through generating its own renewable energy. In June 2022, JPX issued a green bond to raise funds to acquire solar power and biomass generation facilities for this purpose. Subsidiary JPX Market Innovation & Research (JPXI) now owns several solar power generation facilities, which started coming online in August 2022, and a biomass generation facility using discarded cooking oil as fuel, which came online in April 2023. These initiatives should enable JPX to reduce its CO2 emissions by around 80% by the end of FY2023.
In the latest development, JPXI announced on October 27 that it has signed a Virtual Power Purchase Agreement with Marubeni Power Retail Corporation, which will provide it with 20 years’ worth of renewable energy usage certificates from new solar power generation facilities. These will also use some used solar panels, as part of a new venture by Rexia Corporation that aims to tackle the issue of wastage in the solar panel industry. This initiative is expected to provide JPX with a further 15% of emissions reductions.
JPX hopes that its proactive work to reduce its own emissions will encourage the companies listed on its markets in their own decarbonization efforts.
Press release on the Virtual Power Purchase Agreement:
