Large Japanese emitters are turning to carbon credits on Tokyo Stock Exchange Inc.’s voluntary market as they prepare for the launch of the country’s mandatory emissions trading scheme, according to an exchange official.
“We are seeing strong demand coming into the market,” said Natsuko Gunji, general manager of the exchange’s carbon trading office. She said part of the buying is driven by companies anticipating the introduction of Japan’s new compliance market, while others are moving to retire credits within the current fiscal year to meet existing climate commitments.
Under proposed rules, companies will be allowed to use voluntary credits to offset up to 10% of emissions regulated under the new GX-ETS, which is due to begin in April. The scheme is expected to cover around 60% of Japan’s total emissions and is a central element of the government’s plan to cut emissions by 46% by 2030 compared with 2013 levels.
Prices for voluntary credits on the exchange are converging across categories ahead of the mandatory scheme, according to Bloomberg Intelligence. Credits generated from renewable electricity continue to trade at a premium to the proposed price ceiling for allowances under the compliance market.
Carbon credits linked to renewable power reached highs of ¥6,600 ($42.12) a tonne in February and April last year, but have since fallen by nearly 25%. Even so, prices remain above the ¥4,300 ceiling proposed in December by Ministry of Economy, Trade and Industry for the GX-ETS.
Across global carbon markets, analysts see diverging trends. BloombergNEF expects European and Australian markets to remain bullish, while voluntary carbon credits and some US programmes could face greater pressure in 2026 amid policy reviews and political uncertainty. The EU is also considering expanding the scope of its carbon border measures, a move that could tighten supply and support prices.
Despite the growth of emissions trading schemes worldwide, BloombergNEF data show that only about 30% of existing mechanisms cover at least half of a jurisdiction’s emissions. Where they are in place, however, such schemes are becoming major revenue sources for governments. In 2024, the EU Emissions Trading System generated a record $42 billion, with prices rising a further 20% in 2025, pointing to higher revenues ahead.
