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METI considering emissions trading scheme for power utilities

The Ministry of Economy, Trade and Industry (METI) began studies on the introduction of an emissions trading scheme for power generation companies. The envisaged plan will require power utilities to buy emissions quotas from other companies when their emissions exceed the upper limit and to depend more on CO2-free, renewable energy sources. To achieve the goal of cutting greenhouse gas emissions to “net zero,” the government will urge the power industry to make changes as the sector is responsible for emitting large amounts of CO2.


By sector, the electricity industry is responsible for 40% of CO2 emissions in Japan. METI is already mulling the introduction of an emissions trading scheme for the auto industry, which is responsible for around 20% of the total emissions. The government hopes that including the power generation sector in the scheme will make its net-zero measures more effective.


To realize the decarbonization of the electricity industry, the percentage of LNG-fired and coal-fired power plants needs to be slashed. In addition to renewable energy, METI also hopes to use hydrogen to realize its net-zero emissions goal, as hydrogen does not emit CO2 even when it is combusted. METI will leverage the introduction of an emissions trading scheme for the power generation industry to facilitate investment in hydrogen-fired power generation for commercial use by around 2030. (Abridged)


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