Japan passes law mandating companies to join carbon emissions trading scheme by 2026

Japan's parliament has officially passed a new law requiring hundreds of major firms to participate in a carbon emissions trading system starting in April 2026, according to Anadolu Agency.

The legislation is part of Japan's broader climate strategy and applies to companies emitting 100,000 tons or more of carbon dioxide annually. These firms must now join the Green Transformation-Emissions Trading System, designed to curb industrial greenhouse gas output.

The Japanese government estimates that the corporate sector is responsible for nearly 60% of the country’s greenhouse gas emissions. Under the newly revised law, between 300 and 400 companies will be obligated to take part in the system.

The trading mechanism will set a maximum emission allowance for each participant. If companies exceed their limit, they will need to purchase carbon credits from the market. Those with emissions below their allowance can sell surplus credits, creating a financial incentive to reduce emissions further.

The move signals a strong policy shift in Japan’s climate action, placing clear responsibility on large-scale emitters to contribute to national and global decarbonization efforts.

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