Japan to implement carbon emissions trading system for steel industry

• Emission caps to be specific to each process, segment
  
  
• Potential impact on competitiveness raises concerns
  
  

Japan Metal Daily: The Japanese government is considering the implementation of a carbon dioxide (CO2) emissions trading system (ETS) for the steel industry, aiming to introduce it in FY'26. This system will involve setting emission caps for steelmakers and allowing them to trade emission allowances.

The government is planning to adopt a benchmark method to establish emission allowance quotas. This method will involve setting specific emission intensity standards for each industry, including the steel sector. In the case of steel, the standards may be set for individual processes such as blast and electric furnaces. Companies exceeding these standards would be required to purchase emission credits or pay monetary penalties.

The government is considering dividing industries into detailed categories to ensure fairness in the benchmark-setting process. For instance, electric arc furnace manufacturers specialising in ordinary steel and specialised variants would have different standards. Companies with multiple verticals would need to comply with the standards for each respective business.

While the ETS is intended to promote decarbonisation, there are concerns that it could potentially impact the competitiveness of industries, such as steel, on the international landscape. The government is committed to designing the system in a way that mitigates such adverse effects.

The introduction of a CO2 ETS is a significant step towards achieving Japan's goal of carbon neutrality. By incentivising emissions reductions and promoting cleaner technologies, the government aims to position Japan as a leader in sustainable industrial development.

Note: This article has been written in accordance with a content exchange agreement between Japan Metal Daily and BigMint.