METI Compiles Technology Roadmap for Transition Finance in the Automobile Sector toward the Transition to Decarbonization

1. Background

To achieve carbon neutrality by 2050, it is important to promote the provision of funds not only for efforts that have already met the level of decarbonization, such as renewable energy, but also for efforts that the hard-to-abate industries, i.e., industries which face difficulties in reducing carbon dioxide emissions, tackle to achieve a steady transition toward decarbonization.

METI, jointly with the Ministry of the Environment and the Financial Services Agency, formulated the Basic Guidelines on Climate Transition Finance (hereinafter referred to as the “Basic Guidelines”) in May 2021. The Basic Guidelines organize the basic concepts for financial instruments labelled as “transition bonds/loans.”

Moreover, as an effort to show the hard-to-abate industries some specific future directions of transition for achieving carbon neutrality by 2050, METI held a series of meetings of the Taskforce Formulating Roadmaps for Climate Transition Finance in the Automobile Sector (Chair: Dr. Akimoto Keigo, Group Leader, Systems Analysis Group, Research Institute of Innovative Technology for the Earth (RITE)) and has compiled a Technology Roadmap for Transition Finance in the Automobile Sector, following the release of a series of roadmaps in the iron and steel, chemical , electric power, gas and oil, cement, and paper/pulp sectors.

These roadmaps in these eight economy and industry sectors, combined with those for the shipping and aviation sectors which were formulated since October 2021, cover approximately 80% of the total carbon dioxide emissions in Japan. By making use of these roadmaps, financing towards the hard-to-abate industries will be further facilitated through transition finance and other means.

2. Overview

This roadmap shows, based on scientific evidence, the steady efforts toward low carbon emissions, such as energy conservation, higher efficiency and fuel conversion that are currently available for Japan to achieve carbon neutrality by 2050. It also explains future innovative technologies together with the background and timelines, while referring to domestic policies, international scenarios and other information.

In particular, the automobile sector is characterized by the fact that the ratio of emissions from business activities by others (Scope 3), specifically emissions from use of vehicles by users, is greater than that of the direct and indirect emissions from business activities, e.g., automobile manufacturing, in the automobile sector (Scopes 1 and 2). In light of this, the roadmap focuses not only on the efforts for reducing emissions from product manufacturing and the manufacturing and supply of energy sources, but also features measures that may change the way in which vehicles are used.

This roadmap should be referred to by companies when considering measures against climate change by making use of transition finance. It will also assist financial institutions in deciding whether the decarbonization strategies and efforts that companies are eligible for transition finance.

Related Material

• Technology Roadmap for “Transition Finance” in Automobile Sector (March 2023)(PDF:2,247KB)

Related Links

• Transition Finance
• "Basic Guidelines on Climate Transition Finance" Announced (May 7, 2021)
• Basic Guidelines on Climate Transition Finance (May 2021)(PDF:3,199KB)
• Basic Guidelines on Climate Transition Finance (Overview) (May 2021)(PDF:538KB)

Divisions in Charge

Information on transition finance as a whole:

Environmental Economy Office, Industrial Science and Technology Policy and Environment Bureau

Information on this roadmap:

Automobile Division, Manufacturing Industries Bureau