Quantum Commodity Intelligence – Japan submitted its new climate goals under the Paris Agreement to the UN’s climate arm last week, setting 60% and 73% targets to reduce greenhouse gas emissions by 2035 and 2040, respectively, compared with 2013 levels. The new Nationally Determined Contribution (NDC) also reiterated the country’s plans to use international carbon credits under its Joint Crediting Mechanism (JCM).
The country has long targeted JCM credits equivalent to 100 million tonnes of CO2 (tCO2e) to contribute to its 2030 climate goal – a 46% reduction against the 2013 baseline – but included a new goal in the latest NDC of 200 million tCO2e by 2040 from the JCM.
The 100 million tCO2e target was already the biggest single demand signal from an individual country for the 2030 period for what will eventually become credits under the Paris Agreement’s Article 6 mechanism.
Japan is in the process of revising the requirements for developers of JCM projects so that functions such as verification and registration are greater aligned with newly-agreed rules for the Paris Agreement’s Article 6 carbon markets following operationalisation of the latter at the COP29 climate summit in Baku in November.
“We will work to further expand and accelerate specific projects and expand initiatives based on Article 6 of the Paris Agreement to countries around the world through the ‘Partnership for the Implementation of Article 6 of the Paris Agreement’ while perfecting the system and structure of the JCM,” said Japan’s Ministry of Economy, Trade and Industry (METI) in a statement on COP29 outcomes.
The JCM has been in operation since 2013 two years before the Paris Agreement was signed and more than a decade before decisions on Article 6 mechanisms were agreed, requiring work to bring the two in more alignment.
Implementation
In response to COP29’s backing for rules regarding authorisations of credits, which are effectively approvals of carbon credits, known as Internationally Transferred Mitigation Outcomes or ITMOs, by both buyer and seller countries, METI said “JCM approval, reporting and other procedures will be steadily implemented”.
Satoru Iino, director of the Office of International Carbon Markets at the MoE’s Global Environment Bureau, told Quantum that the JCM will be aligned with the UN-backed Article 6 under the Paris Agreement.
“JCM is implemented consistent with Article 6 already,” Iino said, adding that there was no need for any project to transition from JCM to Article 6. Under the Article 6, countries have to report the content of the cooperative approach and authorise projects, followed by filing of a report for each project annually, he added.
Japan had already submitted an initial report with Thailand in October and now plans to file a revised report covering all the 29 countries, Iino said. The country is also requesting the partner JCM nations to submit their initial reports, which have already been drafted for almost all the 29 countries by the Paris Agreement Article 6 Implementation Partnership (A6IP) Centre.
“For half of the 29 countries, particularly those who have signed mutual memorandum of cooperation recently, they have already included Article 6 implementation,” Iino said. The older agreements will need to be revised but it was not likely to be difficult, he added.
But while the JCM rules are being brought more in line with what is need for Article 6 compliance, Japan also needs to increase the number of projects, if it is to meet the 100 million tCO2e goal, let alone 200 million tCO2e. Japan has 29 JCM bilateral agreements in place and over 250 projects in development. However, currently only 770,309 carbon credits have been issued under the JCM, according to the government’s JCM website.
One project listed – Prey Lang Wildlife Sanctuary Stung Treng REDD+ project in Cambodia – is expected to deliver over 4.14 million JCM credits over its lifetime, but the next highest is a solar power development in Vietnam, still at validation, that will supply more than 500,000 units. Several projects in Thailand and Indonesia are expected to supply between 300,000 and 400,000 tCO2e but the vast majority of the other schemes are supplying volumes much lower than these.
Meeting
Earlier this month, the Ministry of Environment met with representatives from the 29 countries that have JCM agreements with Japan at a so-called Global Partners Meeting in Tokyo to discuss the expansion of the scheme’s activities. “We discussed on varied sectors’ projects including agriculture and CCS [carbon capture and storage] in addition to other existing energy sectors,” another government official said.
The vast majority of projects listed on the Japan government’s JCM website relate to renewable energy or energy efficiency, but new sectors have the potential to increase supply. Work has been ongoing for some time on a methodology to cut methane emissions in rice production in the Philippines.
On February 3, the Japanese and Filipino authorities tasked with implanting JCM in the Philippines approved the ‘Methane Emission Reduction by Water Management in Rice Paddy Fields’ methodology.
The methodology will be used by Japanese project developer Green Carbon, which said it had started work on a project across approximately 600 hectares in Batangas Province using a technique known as alternate wetting and drying (AWD). The aim is to expand the project to up to 10,000 hectares over the next decade to deliver carbon credits under the JCM equivalent to about 10,000 tCO2e, the company said.
In October last year, the company signed a memorandum of understanding with Bulacan Province in the north of the Philippines on a JCM project starting with an 800-hectare development, which could expand to 30,000 hectares by the end of the decade.
It is also planning more AWD projects in another six provinces in the country and is supporting work to develop other methodologies for rice methane in other Southeast Asian countries under the JCM.
Officials from Japan’s Ministry of Agriculture, Forestry and Fisheries have previously told Quantum that an AWD method is being developed for use in Vietnam, and more countries in Asia are being targeted.
Iino told Quantum that a methodology to cut emissions by changing the feed in pig farming is planned. He said that the first JCM carbon capture and storage methodology was approved in December, and Thailand is also working on a plan for such a method. The methodology was presented by Thailand at the Global Partners Meeting in Tokyo.
Japan is also looking to increase the number of countries that it is partnering with on the JCM. An agreement with Malaysia is being targeted for the summer, which in Japan is from June to August, while another is planned with Brazil by November, Iino said. “[Malaysia is] the chair country of ASEAN this year, so there will be a sort of annual conference at some point, perhaps in summer. Our plan is to sign an MoU with Malaysia in summer,” he said.
Japan is also in talks with Brazil for a JCM agreement and is hoping to sign it before or during the COP30 climate talks in the Brazilian city of Belem in November, Iino said. “Brazil is in a way a greener country already, which means less potential to issue credits,” he said, adding that there will still be potential areas such as forestry.
The country is also awaiting confirmation on a JCM deal with India, with negotiations ongoing for almost two years. “We heard they have already finalised almost all the internal examination, however, there is still need to finalise inter-ministerial coordination but that’s a matter of their domestic internal process,” Iino said. Japan has signed JCM agreements with 29 countries.
