Japan · Emissions trading system (mandatory)

Japan's GX-ETS: mandatory emissions trading, with a price band of ¥1,700–¥4,300

Since April 2026, companies emitting 100,000 tonnes of CO2 or more must hold allowances for their emissions. Allowances are allocated free; credits can cover up to 10%; and a government-set price band limits the cost. The first filing, allocation and surrender all fall in 2027–28.

Tokyo, Minato City skyline with Tokyo Tower in evening light
Tokyo, Minato City skyline with Tokyo Tower in evening light. Photo: David Kernan, CC BY 4.0, source. Resized only; no other change.
Summary

In brief

Japan's mandatory ETS began in FY2026 (April 2026) and covers companies with direct CO2 emissions of 100,000 t or more — about 300–400 companies, nearly 60% of national greenhouse gas emissions.

For FY2026 the reference ceiling is ¥4,300 and the adjustment floor ¥1,700 per tonne; from FY2027 both rise by 3% plus expected price inflation each year. A shortfall left unsurrendered costs the ceiling price × 1.1 (¥4,730 in FY2026).

Allowances are free: by sector benchmark or by past emissions cut 1.7% a year (0.3% for process emissions). J-Credits and JCM credits may cover up to 10%.

Because FY2026 is a transition year, filing and allocation move to FY2027, the allowance market opens around autumn 2027, and the first surrender is due 31 January 2028.

Data

Prices and benchmarks

The official price band sets the limits. Government J-Credit tenders (last held in 2023) are the only official price history for credits.

Credit prices from government tenders, 2018–2023 (JPY per tCO2)

Renewable-power creditsEnergy-saving credits01,2502,5003,7505,0002018-012019-012020-012021-012022-012023-05FY2026 floor ¥1,700 (for scale)FY2026 ceiling ¥4,300 (for scale)3,2461,551

Source: J-Credit Scheme Secretariat; METI. Checked 2026-11-12. Weighted average winning prices, ex-tax. The floor and ceiling apply to ETS allowances, not to these credits; they are drawn only for scale. The government stopped running tenders after the 14th (May 2023); June 2020 had no energy-saving winners.

Table of the same figures
PeriodRenewable-power creditsEnergy-saving credits
2018-011,7161,148
2018-041,7241,395
2019-011,8301,602
2019-041,8011,506
2020-011,8511,473
2020-061,887—
2021-012,1911,500
2021-042,5361,518
2022-012,9951,574
2022-043,2781,607
2023-053,2461,551

Price band: FY2026 fixed, FY2027 onward rises at least 3% a year

CeilingFloor01,5003,0004,5006,000FY2026FY2027FY2028FY2029FY20304,3004,8401,7001,914

Source: METI. Checked 2026-11-12. FY2026 values are official (solid). Dashed points are calculated minimums: prior year × 1.03. The official rule also adds the expected price-index change for each year, which is not yet published, so actual values will be higher.

Table of the same figures
PeriodCeilingFloor
FY20264,3001,700
FY20274,429 (calc.)1,751 (calc.)
FY20284,562 (calc.)1,804 (calc.)
FY20294,699 (calc.)1,858 (calc.)
FY20304,840 (calc.)1,914 (calc.)

Allocation benchmark for coal-fired power, FY2026–FY2030 (kg-CO2 per kWh)

kg-CO2/kWh00.250.50.751FY2026FY2027FY2028FY2029FY20300.80980.80810.80650.76160.7165

Source: METI. Checked 2026-11-12. Official value in t-CO2/kWh ×10⁻⁴, converted to kg only for display.

Table of the same figures
Periodkg-CO2/kWhSource (checked)
FY20260.8098METI 2026-11-12
FY20270.8081METI 2026-11-12
FY20280.8065METI 2026-11-12
FY20290.7616METI 2026-11-12
FY20300.7165METI 2026-11-12
Chronology

Timeline

Red dates are still ahead.

From voluntary phase to first surrender

  • 2023-04Voluntary GX-ETS phase 1 begins (FY2023–FY2025).
  • 2023-05-19GX Promotion Act promulgated.
  • 2025-06-04Amendment making the ETS mandatory promulgated; in force 1 April 2026.
  • 2026-01-05Registration of verification bodies opens.
  • 2026-04-01Mandatory GX-ETS takes effect.
  • 2026-09-30Deadline for first filing and transition plans.
  • 2027 autumnAllowance trading market expected to open.
  • 2027-09-30FY2026 targets filed; allocation follows by end-November (first-year special rule).
  • 2028Fossil fuel levy starts (FY2028).
  • 2028-01-31First surrender of allowances for FY2026 emissions.
  • 2033Paid allocation (auctions) for power generators begins (FY2033).

Source: GX League (METI); e-Gov (Digital Agency); METI.

Mechanism

How it works

The yearly cycle once the system is running (FY2026 shifts one step later).

File → allocate → trade → surrender

  1. Step 1

    File a target

    Covered companies report an emissions target and transition plan, verified by a registered body.

  2. Step 2

    Receive free allowances

    By sector benchmark, or past emissions cut 1.7% a year (0.3% for process emissions).

  3. Step 3

    Trade surplus and shortfall

    Allowances may be traded between companies; speculative trading is prohibited.

  4. Step 4

    Surrender by 31 January

    Hold allowances equal to verified emissions; up to 10% may be J-Credits or JCM credits.

  5. Step 5

    If still short

    Pay a charge: unsurrendered volume × ceiling price × 1.1.

Source: METI; e-Gov (Digital Agency); METI (Industrial Structure Council).

Coverage

Scope

Direct CO2 only, judged company by company.

Who and what is covered

Source: METI; e-Gov (Digital Agency); METI (Industrial Structure Council); GX League (METI); Ministry of the Environment. Checked 2026-11-12.

Table of the same figures
ItemRule
ThresholdDirect CO2 emissions of 100,000 t or more, average of the previous 3 fiscal years
GasesCO2 only; Scope 2 and non-CO2 gases excluded
UnitPer company; subsidiaries are separate (joint filing allowed)
Companies coveredAbout 300–400
Share of emissionsNearly 60% of Japan's GHG emissions
Voluntary phase (FY2024)Over 700 GX League companies, about 60% of emissions
Japan's FY2024 emissionsAbout 994 MtCO2e net (−28.7% vs FY2013)
Offsets

Credits and offsets

Credits help meet the obligation within a fixed limit; the price band bounds the cost.

Credits, markets and penalties

Source: METI (Industrial Structure Council); METI; e-Gov (Digital Agency); J-Credit Scheme Secretariat. Checked 2026-11-12.

Table of the same figures
ItemStatus
Credit limit10% of each year's emissions
Eligible creditsJ-Credits and JCM credits
Non-compliance chargeUnsurrendered volume × ceiling × 1.1 (FY2026: ¥4,730 per t, calculated)
Fine for false filingUp to ¥500,000 (Art. 143)
Registered J-Credit projects1,497 (14.87 MtCO2 certified cumulatively; goal 15 Mt by FY2030)
Reference

All figures

77 figures with numbers, each linked to the official text with the date we checked it.

ItemValueSource (checked)
Inclusion thresholdDirect CO2 emissions of 100,000 t or more (average of previous 3 fiscal years)METI 2026-11-12
Threshold set by Cabinet Order100,000 t (Article 2 of the Enforcement Order)e-Gov (Digital Agency) 2026-11-12
Covered gas and scopeCO2 only, direct emissions (Scope 1); Scope 2 and non-CO2 gases excludedMETI 2026-11-12
Compliance unitJudged per company; subsidiaries treated as separate entities (joint filing allowed)METI 2026-11-12
Expected number of covered companiesApprox. 300-400 companiesMETI (Industrial Structure Council) 2026-11-12
Share of national GHG emissions coveredNearly 60% of Japan's GHG emissionsMETI (Industrial Structure Council) 2026-11-12
GX League voluntary ETS participation (FY2024)Over 700 companies, about 60% of Japan's emissionsMETI (Industrial Structure Council) 2026-11-12
Reference price ceiling, FY2026JPY 4,300 per t-CO2 allowanceMETI 2026-11-12
Adjustment reference price (floor), FY2026JPY 1,700 per t-CO2 allowanceMETI 2026-11-12
Subcommittee recommendation on FY2026 ceilingJPY 4,300 per allowance (1 t-CO2)METI (Industrial Structure Council) 2026-11-12
Subcommittee recommendation on FY2026 floorJPY 1,700 per allowance (1 t-CO2)METI (Industrial Structure Council) 2026-11-12
Price escalation rule FY2027-FY2030Prior-year price x (1.03 + projected domestic corporate goods price index change)METI 2026-11-12
Ceiling mechanism (deemed holding)When triggered, firms may pay ceiling price per allowance instead of surrendering, limited to shortfall vs. allocatione-Gov (Digital Agency) 2026-11-12
Floor mechanismGX Promotion Organization may buy allowances when average price falls below the adjustment reference pricee-Gov (Digital Agency) 2026-11-12
Proposed ceiling trigger (under discussion)Proposal: monthly average price above ceiling for 3 consecutive monthsMETI 2026-11-12
Allocation methodFree allocation by government based on sector guidelinesMETI 2026-11-12
Grandfathering annual reduction rate (energy-related CO2)1.7% per continuous reporting yearMETI 2026-11-12
Grandfathering annual reduction rate (process CO2)0.3% per continuous reporting yearMETI 2026-11-12
Benchmark: coal-fired power, FY2026-FY20308.098, 8.081, 8.065, 7.616, 7.165 (x10^-4 t-CO2/kWh)METI 2026-11-12
Benchmark: LNG/city-gas power, FY2026-FY20303.857, 3.855, 3.853, 4.258, 4.656 (x10^-4 t-CO2/kWh)METI 2026-11-12
Benchmark: cement (per t clinker), FY2026-FY20300.8392, 0.8370, 0.8349, 0.8328, 0.8306 t-CO2/t clinkerMETI 2026-11-12
Benchmark: paper (pulping & papermaking), FY2026-FY20301.086, 1.067, 1.048, 1.029, 1.010METI 2026-11-12
Offset credit usage cap10% of each year's emissionsMETI (Industrial Structure Council) 2026-11-12
Credit cap in allocation guidelineCancelled credits counted up to 0.1 x direct emissionsMETI 2026-11-12
Eligible creditsJ-Credits and JCM creditsMETI 2026-11-12
Surrender obligationHold allowances equal to verified emissions by 31 January of the following yeare-Gov (Digital Agency) 2026-11-12
Non-compliance chargeUnsurrendered volume x reference ceiling price x 1.1e-Gov (Digital Agency) 2026-11-12
Implied non-compliance charge, FY2026JPY 4,730 per t-CO2 (= 4,300 x 1.1)METI 2026-11-12
Penalty for failure to file / false filing (Art.143)Fine of up to JPY 500,000e-Gov (Digital Agency) 2026-11-12
Speculative trading prohibitedAllowances must not be subject to speculative tradinge-Gov (Digital Agency) 2026-11-12
Number of registered verification bodies (listed)18 bodies listed on METI page as of 2026-11-04 update (count of listed names)METI 2026-11-12
Verification body registration opened5 January 2026METI 2026-11-12
Verification fee: target check, 0.1-1 Mt emittersJPY 3,104,700e-Gov (Digital Agency) 2026-11-12
Verification body registration validity5 yearse-Gov (Digital Agency) 2026-11-12
Mandatory ETS startFY2026 (from April 2026)METI 2026-11-12
GX Promotion Act amendment promulgated4 June 2025 (Act No. 52 of 2025); in force 1 April 2026e-Gov (Digital Agency) 2026-11-12
GX Promotion Act promulgated19 May 2023 (Act No. 32 of 2023)e-Gov (Digital Agency) 2026-11-12
First filing and transition plan deadline30 September 2026METI 2026-11-12
First-year special rule: allocationFY2026 target filing and allocation take place in FY2027 (filing by 30 Sep 2027, allocation end-Nov)METI 2026-11-12
First surrender date (FY2026 obligations)31 January 2028METI 2026-11-12
Allowance trading market openingAround autumn FY2027METI 2026-11-12
ERMS registry/reporting systemPlanned launch around June 2026METI 2026-11-12
Paid allocation (auction) for power generatorsFrom FY2033e-Gov (Digital Agency) 2026-11-12
Fossil fuel levy startFrom FY2028e-Gov (Digital Agency) 2026-11-12
GX-ETS Phase 1 (voluntary) periodFY2023-FY2025GX League (METI) 2026-11-12
Phase 1 NDC-level reduction rates (2013 base)27.0% (FY2023), 29.7% (FY2024), 32.4% (FY2025)GX League (METI) 2026-11-12
Phase 1 trading scopeDomestic direct emissions only (Scope 1)GX League (METI) 2026-11-12
GX League basic concept endorsements (Feb 2022)440 companiesGX League (METI) 2026-11-12
GX League endorsers (as of Feb 2023)679 companies, over 40% of Japan's CO2 emissionsGX League (METI) 2026-11-12
GX League wind-downActivities ended after FY2025 except reporting/settlement of voluntary tradingGX League (METI) 2026-11-12
J-Credit registered projects (incl. transferred)1,497 projectsJ-Credit Scheme Secretariat 2026-11-12
J-Credit cumulative certified volume14.87 Mt-CO2 (after 69th committee)J-Credit Scheme Secretariat 2026-11-12
J-Credit 2030 certification target15 Mt-CO2 by FY2030J-Credit Scheme Secretariat 2026-11-12
Japan GHG net emissions FY2024Approx. 994 Mt-CO2e, -28.7% vs FY2013Ministry of the Environment 2026-11-12
Japan CO2 emissions FY2024Approx. 971 Mt-CO2, -26.0% vs FY2013Ministry of the Environment 2026-11-12
Implied emissions covered by GX-ETSRoughly 600 Mt-CO2e (nearly 60% x ~994 Mt); indicative onlyMinistry of the Environment 2026-11-12
JCM partner country pages listed32 partner countries listed on JCM site (count)Government of Japan (JCM) 2026-11-12
J-Credit govt tender #4 (2018-01): renewable power avg priceJPY 1,716/t-CO2 (weighted avg, ex-tax)J-Credit Scheme Secretariat 2026-11-12
J-Credit govt tender #5 (2018-04): renewable power avg priceJPY 1,724/t-CO2 (weighted avg, ex-tax)J-Credit Scheme Secretariat 2026-11-12
J-Credit govt tender #6 (2019-01): renewable power avg priceJPY 1,830/t-CO2 (weighted avg, ex-tax)J-Credit Scheme Secretariat 2026-11-12
J-Credit govt tender #7 (2019-04): renewable power avg priceJPY 1,801/t-CO2 (weighted avg, ex-tax)J-Credit Scheme Secretariat 2026-11-12
J-Credit govt tender #8 (2020-01): renewable power avg priceJPY 1,851/t-CO2 (weighted avg, ex-tax)J-Credit Scheme Secretariat 2026-11-12
J-Credit govt tender #9 (2020-06): renewable power avg priceJPY 1,887/t-CO2 (weighted avg, ex-tax)J-Credit Scheme Secretariat 2026-11-12
J-Credit govt tender #10 (2021-01): renewable power avg priceJPY 2,191/t-CO2 (weighted avg, ex-tax)J-Credit Scheme Secretariat 2026-11-12
J-Credit govt tender #11 (2021-04): renewable power avg priceJPY 2,536/t-CO2 (weighted avg, ex-tax)J-Credit Scheme Secretariat 2026-11-12
J-Credit govt tender #12 (2022-01): renewable power avg priceJPY 2,995/t-CO2 (weighted avg, ex-tax)J-Credit Scheme Secretariat 2026-11-12
J-Credit govt tender #13 (2022-04): renewable power avg priceJPY 3,278/t-CO2 (weighted avg, ex-tax)J-Credit Scheme Secretariat 2026-11-12
J-Credit govt tender #14 (2023-05): renewable power avg priceJPY 3,246/t-CO2 (weighted avg, ex-tax)J-Credit Scheme Secretariat 2026-11-12
J-Credit govt tender #4 (2018-01): energy-saving avg priceJPY 1,148/t-CO2 (weighted avg, ex-tax)J-Credit Scheme Secretariat 2026-11-12
J-Credit govt tender #5 (2018-04): energy-saving avg priceJPY 1,395/t-CO2 (weighted avg, ex-tax)J-Credit Scheme Secretariat 2026-11-12
J-Credit govt tender #6 (2019-01): energy-saving avg priceJPY 1,602/t-CO2 (weighted avg, ex-tax)J-Credit Scheme Secretariat 2026-11-12
J-Credit govt tender #7 (2019-04): energy-saving avg priceJPY 1,506/t-CO2 (weighted avg, ex-tax)J-Credit Scheme Secretariat 2026-11-12
J-Credit govt tender #8 (2020-01): energy-saving avg priceJPY 1,473/t-CO2 (weighted avg, ex-tax)J-Credit Scheme Secretariat 2026-11-12
J-Credit govt tender #10 (2021-01): energy-saving avg priceJPY 1,500/t-CO2 (weighted avg, ex-tax)J-Credit Scheme Secretariat 2026-11-12
J-Credit govt tender #11 (2021-04): energy-saving avg priceJPY 1,518/t-CO2 (weighted avg, ex-tax)J-Credit Scheme Secretariat 2026-11-12
J-Credit govt tender #12 (2022-01): energy-saving avg priceJPY 1,574/t-CO2 (weighted avg, ex-tax)J-Credit Scheme Secretariat 2026-11-12
J-Credit govt tender #13 (2022-04): energy-saving avg priceJPY 1,607/t-CO2 (weighted avg, ex-tax)J-Credit Scheme Secretariat 2026-11-12
J-Credit govt tender #14 (2023-05): energy-saving avg priceJPY 1,551/t-CO2 (weighted avg, ex-tax)J-Credit Scheme Secretariat 2026-11-12
J-Credit govt tender #9 (2020-06): energy-savingNo successful bidsJ-Credit Scheme Secretariat 2026-11-12
J-Credit govt tender #1 (2016-06): avg priceJPY 510/t-CO2 (1,000 t sold)J-Credit Scheme Secretariat 2026-11-12
J-Credit govt tender #2 (2017-01): avg priceJPY 1,594/t-CO2 (500,000 t sold)J-Credit Scheme Secretariat 2026-11-12
J-Credit govt tender #3 (2017-04): avg priceJPY 908/t-CO2 (500,000 t sold)J-Credit Scheme Secretariat 2026-11-12
J-Credit govt tender #14 (2023-05): renewable volume sold256,204 t-CO2 sold vs 330,500 t bidJ-Credit Scheme Secretariat 2026-11-12
Government tender sales endedSecretariat no longer runs tenders; last (14th) tender May 2023J-Credit Scheme Secretariat (METI/MOE/MAFF) 2026-11-12
Questions

Frequently asked questions

When did Japan's mandatory emissions trading start?

In FY2026, from April 2026. The Act amendment was promulgated on 4 June 2025 and took effect on 1 April 2026, after a voluntary phase in FY2023–FY2025.

Which companies must take part?

Companies whose direct CO2 emissions average 100,000 tonnes or more over the previous three fiscal years — about 300–400 companies, nearly 60% of Japan's greenhouse gas emissions. Only direct CO2 (Scope 1) counts.

What are the price ceiling and floor?

For FY2026 the reference ceiling is ¥4,300 and the adjustment floor ¥1,700 per tonne of CO2. From FY2027 to FY2030 each year's price is the prior year's price × (1.03 + the projected change in the corporate goods price index).

What happens if a company is short of allowances?

It must surrender allowances equal to verified emissions by 31 January of the following year. Any shortfall costs the ceiling price × 1.1, which is ¥4,730 per tonne for FY2026 (a calculated value).

Can J-Credits be used for compliance?

Yes. J-Credits and JCM credits may cover up to 10% of a company's emissions each year.

How are free allowances decided?

By government sector benchmarks where they exist (for example coal-fired power, LNG power, cement, paper), or by past emissions reduced 1.7% a year for energy-related CO2 and 0.3% for process CO2.

When does the allowance market open and when is the first surrender?

The market is expected to open around autumn FY2027. Because FY2026 is a transition year, filing and allocation happen in FY2027 and the first surrender is due 31 January 2028.

When do auctions start?

Paid allocation for power generators is set to start in FY2033. A fossil fuel levy on upstream suppliers is set to start in FY2028.

Gaps

Not listed yet

Items we could not confirm in an official text are left out on purpose.

  • Ceiling and floor for FY2027 onward: formula only, values not yet published.
  • The number of companies that actually filed by 30 September 2026: not published in the sources checked.
  • The trigger for the ceiling mechanism (a proposal of three months above the ceiling is still under discussion).
  • GX推進法改正の法律案概要・要綱など METI /files/ 配下のPDF(例 https://www.meti.go.jp/files/900015393.pdf) — curl は403、内蔵ブラウザでも本文の代わりに空の応答(HTTP 202・チャレンジ画面とみられる)が返り、本文を読めなかった。迂回はしていない。同内容は改正法本文(e-Gov)とニュースリリースで代替確認。
  • 内閣官房 GX実行会議資料(cas.go.jp の PDF・index) — curl で PDF の代わりに HTML/404 が返り本文取得できず。
  • GX推進機構 排出量取引制度ポータル(ets.gxa.go.jp) — 接続できず(応答なし)。
  • 2026年9月30日までに実際に届出をした制度対象者の数 — 公式資料で数値を見つけられなかった(第10回小委資料は割当量の公表方法の議論のみ)。
  • 2027年度の上限・下限価格の水準 — 小委で「2027年度の上下限価格の決定」が審議事項に挙がっているのみで、数値は未公表。
  • GX-ETS第1フェーズの超過削減枠の取引量・約定価格の推移 — 取引所サイト由来の価格・売買の統計は掲載しない方針。政府(GXリーグ)側の集計資料も見つけられなかった。
  • JPXカーボン・クレジット市場の月次・日次の価格推移(時系列) — 取引所サイト由来の価格は掲載しない方針のため収録していない。政府の公表値は見つけられなかった。
  • GXリーグ参画企業数の最新値(2025年度) — 参画企業一覧ページは社名の羅列のみで総数の記載なし。英語版中間整理の「700社超(FY2024)」を代わりに収録。
Record

Sources