Cabinet Decision on the Bill for the Act for Partially Amending the Act on the Promoting Transition to the Decarbonized Growth Economic Structure and the Act on the Promotion of Effective Utilization of Resources

1. Purpose of the bill

Under the Act on the Promoting Transition to the Decarbonized Growth Economic Structure, which was established in FY2023, Japan has been working out the specifics of the Pro-Growth Carbon Pricing Concept as a measure for striking a balance between the achievement of carbon neutrality by 2050 and economic growth, i.e., green transformation (GX).

Aiming to promote transition to the decarbonized growth economic structure, the Ministry of Economy, Trade and Industry (METI) will develop a foundation for a system aimed at achieving both carbon pricing, which is an effort for working out the specifics of the Growth-Oriented Carbon Pricing Concept, and a circular economy, which is one of the pillars that promote GX.

2. Outline of the bill

(1) Partial amendment of the Act on the Promoting Transition to the Decarbonized Growth Economic Structure

1. Legalization of the emissions trading system

The bill is to require, from FY2026, businesses whose direct carbon dioxide emissions are above a certain level to participate in the emissions trading system and allow the government to allocate emissions allowances to such businesses without compensation in accordance with the government’s guidelines in which characteristics are considered by industry, and based on this, require such businesses to submit a report on their emissions data and hold emissions allowances equivalent to the emissions data in the fiscal year following the fiscal year when emissions allowances have been allocated to the businesses.

Moreover, the bill is to take necessary measures to stabilize trading prices by developing a market in which businesses are able to trade the gap between allocated emissions allowances and emissions data and setting the upper and lower limit prices for emissions allowances.

2. Specification of the GX-surcharge collection measure

The bill is to develop the technical matters necessary for implementing the GX-surcharge, whose application will start from FY2028, including payment deadlines, penalties for non-payment, and payment exemptions for fossil fuels not used in Japan.

3. Development of financial support for the field of GX

The bill is to allow the government to use the proceeds from the issuance of GX Economic Transition Bondsto offset the reduction in revenue in the general account due to tax breaks for goods in the fields of GX as part of the effort under the tax concessions for promoting domestic production in strategic areas.

(2) Partial amendment of the Act on the Promotion of Effective Utilization of Resources

1. Introduction of a requirement for businesses to utilize recycled resources

The bill is to stipulate a measure that will designate products in which businesses are required to utilize recycled resources and require manufacturers whose production amount is above a certain level to submit a plan and regularly report on their utilization of recycled materials.

2. Promotion of environmentally friendly designs

The bill is to establish a certification system for outstanding, environmentally friendly designs, including designs that facilitate the disassembly and sorting of products and designs that lead to longer product life, from the perspective of promoting the effective utilization of resources and decarbonization.

3. Promotion of further recycling of raw materials that are necessary for achieving GX

The bill is to take a special measure under the Act on Waste Management and Public Cleaning, in which businesses that have received certification for their high collection targets are not required to obtain a license for collecting and recycling designated products if they observe appropriate management practices.

4. Promotion of Circular Economy Commerce

The bill is to newly establish categories of businesses engaging in Circular Economy Commerce, including sharing, and to set standards that such businesses should meet from the perspective of the effective utilization of resources.

Related Materials (in Japanese)

• Summary of the bill for the Acts(PDF:566KB)
• Outline of the bill for the Acts(PDF:180KB)
• Bill for the Acts and the reason therefor(PDF:438KB)
• Comparison of the prior and revised provisions(PDF:569KB)
• Referential provisions(PDF:397KB)

Division in Charge

• Office for Promoting GX Implementation, Cabinet Secretariat
• Environmental Economy Office, GX Policy Group, METI
• Resource Efficiency and Circular Economy Division, GX Policy Group, METI