🇯🇵 Japan becomes the first country in the world to integrate durable CDR into a compliance market 🇯🇵

🎯 The Japanese government recently announced the inclusion of durable carbon dioxide removal (hashtag#CDR) voluntary carbon credits into its Green Transformation Emissions Trading System (hashtag#GXETS).

📜 The GX-ETS, launched in April 2023, represents a major initiative within Japan’s broader climate strategy and covers around 600Mt/year of emissions.

🌬️ It aims to reduce greenhouse gas emissions and promote sustainable industrial practices through a "pledge and review" system. Initially voluntary, it is set to transition to mandatory participation post-2026.

The breakdown of Japan’s new cautious yet progressive approach towards leveraging CDR in national emissions reduction strategies

🏭 CDR methodologies such as CCU (in long-lasting products), hashtag#DACCS, hashtag#BECCS (inc hashtag#BiCRS), and Coastal Blue Carbon will be integrated - other methods may be added in the future depending on progress in the formulation of other methodologies.

⏳ There is a capped eligibility to neutralize up to 5% of total covered emissions. CDR credits can therefore offset a maximum of 30Mt per year, reflecting a strategic, incremental integration of CDR technologies.

🌏 The system permits global CDR credit production with a minimum 20% Japanese equity participation, fostering international collaborations and opening substantial financial opportunities for domestic companies.

💭 The first phase involves voluntary participation from domestic companies in a baseline-and-crediting type system. The system is designed to evolve into a compliance market in 2026 (Phase 2), with plans for Phase 3 (starting in fiscal year 2033) thereafter.

❓I still have a lot of open questions regarding the GX-ETS, particularly what exactly will happen after 2026, which sectors will be affected, and what amount of emissions will actually be compensated with CDR. Will watch this space closely and report back.

👀Could this set the precedent for the integration of durable CDR into compliance markets? Will be keeping an eye on these future developments!

Shoutout to Akifumi (Chris) Takigawa for bringing this to my attention and sharing regular updates on the GX ETS.

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