The government of Japan announced the completion of its first Climate Transition Bond offering, raising 800 billion yen ($5.3 billion) in proceeds to finance efforts to support the country's transformation to a carbon-neutral economy. , with a particular focus on decarbonization. reduce industrial sectors.
The 10-year bond issuance marks the first tranche of a planned $11 billion round of transition bond financing, kicking off the government's plan to raise up to 20 trillion yen ($133 billion) to fund the efforts climate transition over the next decade.
Japan has committed to achieving net-zero emissions by 2050, with an interim 2030 target of reducing greenhouse gas emissions by 46% by 2030. In 2021, the government revealed plans to approximately double the share of renewable energy to 36%-38% of the energy mix by 2030, from less than 20%.
Government estimates indicate that 150 billion yen ($1 billion) of public and private investment will be needed over the next decade in order to achieve the country's decarbonization goals, with the majority of the investment needed aimed at transformation industries and making major improvements. in energy efficiency.
The use of proceeds for Japan's transition bonds, as outlined in the government's Climate Transition Bond Framework published in November 2023, must be allocated to specific categories, in projects aligned with the “GX (Green Transformation) Promotion Strategy ” of Japan, with priority given to investment in sectors that contribute to reducing emissions and increasing industrial competitiveness and economic growth, with projects carried out mainly by companies in sectors that are difficult to reduce.
In the framework, the government declared:
“In addition to further promoting green investment in areas such as renewable energy, it is also important to promote the decarbonization transition, such as low carbon initiatives in sectors that are difficult to reduce (the industrial and energy conversion sectors where there are no alternative measures to decarbonization technically and economically at this point) from the point of view.”
Eligible investment categories follow the 14 “Future Actions” initiatives of the GX Promotion Strategy, which target transitions on the energy supply side, such as supporting renewables, nuclear power, hydrogen and batteries, as well as transformations on the energy side. demands ranging from promoting energy efficiency, facilitating the introduction of clean fuels in industry and the movement of resources to transforming the transport sector, carbon recycling and CCS, and infrastructure.
The government plans to issue the second tranche of bonds on February 27, with 1.4 trillion yen ($9.3 billion) in climate transition bonds planned to be issued in the fiscal year starting in April 2024.
