According to the International Energy Agency (IEA), roughly half of CO₂ emission cannot be reduced by existing technologies. The IEA highlights the importance of innovation support through sovereign (i.e., national governments and government agencies) bonds from the viewpoint of utilizing national credit, as there is a risk private firms cannot resolve entirely on their own.
In these circumstances, Japan is in a leading position on new technologies and business development to solve challenges such as the limitation of available renewable energy, heat demand and demand of raw material within the industrial sector. Funding these technologies and businesses will lead to innovation and significantly contribute to decarbonization in areas where existing technologies are not sufficient.
In addition, keeping in mind of geopolitical risks such as the Ukraine crisis, middle-to-long term steady decarbonization by securing energy supply and security is necessary. Furthermore, considering Japan’s high manufacturing industry ratio and low job mobility, just transition is an important challenge where it is essential to promote a comprehensive policy package such as design of carbon pricing (CP) with predictability and consideration at GX Implementation Council with experts from labor and economic community.

Japan Climate Transition Bond Framework (PDF file)