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Model Example in the Iron and Steel Sector Selected for the Transition Finance Model Projects

January 20, 2022

With the aim of promoting the spread of transition finance, the Ministry and Economy, Trade and Industry (METI) supports examples of finance that conform to the Basic Guidelines on Climate Transition Finance and are deemed to have model qualities. It has recently selected the first model example in the iron and steel sector.

1. Outline of the project

In order to achieve a carbon-neutral society by 2050, it will be important to promote financing for projects such as renewable energy that are already at the level of decarbonization, and in addition, financing for transition efforts to move industries that emit large quantities of CO2 toward decarbonization.

METI worked together with the Ministry of the Environment (MOE) and the Financial Services Agency (FSA) to formulate the "Basic Guidelines on Climate Transition Finance" (hereinafter referred to as the Basic Guidelines) in May 2021. The guidelines organize the basic concepts for labeling as transition bonds/loans.

In addition, METI is formulating roadmaps that provide a concrete direction toward transition that industries with large CO2 emissions should follow. As the first deliverable, it published the Technology Roadmap for Transition Finance in the Iron and Steel Sector in October 2021.

In order to promote the spread of transition finance, this project provides information on and reduces the assessment costs for examples that conform to the Basic Guidelines and roadmap and have model qualities.

2. The results of the examination

After rigorous examination by the examination committee, a transition bond that JFE Holdings, Inc. plans to procure was selected as a model example.
This is the first model example in the Iron and steel sector, and its conformity with the Technology Roadmap for Transition Finance in the Iron and Steel Sector has also been verified.
JFE Holdings, Inc. is considering using the transition bond to fund the development of super-innovative steel production processes, energy saving efforts, efficiency improvements, and manufacturing eco-friendly products.

Notes:
This project does not assess any of the risks regarding transition finance as a financial product (bond or loan). It is important to note that even in the case of the model examples for this project, credit risks and other risks exist as with normal financing. With respect to this project's model examples, anyone who procures, acquires, sells, or possesses this kind of funding must take full responsibility in doing so. METI will assume no responsibility for any associated damage, losses, or costs incurred.

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