Latest news with #JointCreditingMechanism
Japan Forward
19-07-2025
- Business
- Japan Forward
Energizing the India-Japan Relation
In a move to expedite decarbonization efforts while reducing clean energy costs, Japan and India are finalizing a Joint Crediting Mechanism (JCM). This bilateral framework will allow both nations to share emission reduction credits. It will also aid Japan in fulfilling its climate commitments. Japan's goal of achieving net zero by 2050 and India's 45% emissions reduction target by 2030 highlight the natural partnership between the two countries in decarbonization and economic growth. With Japanese companies increasingly interested in entering the Indian market as a relocation destination for production bases or as an investment opportunity, this article explores the potential of partnerships in the carbon market sector. Under the JCM, Japanese companies will invest in and deploy advanced carbon reduction technologies in India. In return, Japan will receive carbon credits that can offset its emissions or be traded within its national carbon market. The initiative falls under Article 6.2 of the Paris Agreement, which ensures internationally recognized and verifiable emissions reductions. Once finalized, carbon credits will be officially registered and tracked. Joint committees will be formed to oversee project implementation and to verify credit issuance through the formulation of a detailed report. Consequently, this mechanism will help both countries meet their nationally determined contributions under the Paris framework. A wide range of sectors, including solar thermal energy, green hydrogen, and sustainable aviation fuel, are expected to benefit from JCM investments. Originally initiated by Japan, the JCM facilitates the transfer of technical expertise and climate-friendly technologies from developed to developing countries. While developed nations benefit by outsourcing their emissions reductions, often at a lower cost, this supports sustainable development in host countries. It helps mobilize international finance, alleviating the cost burden for the recipient country. Currently, Japan has established similar agreements with 11 other countries, including Indonesia, Kenya, and Vietnam. India and Japan have discussed a JCM partnership since 2014. In 2023, a $600 million USD fund was jointly launched by India's quasi-sovereign wealth fund, the National Investment and Infrastructure Fund, and the Japan Bank for International Cooperation (JBIC) to invest in sustainable projects. JBIC contributed 51% of that total, while the remainder came from India. JBIC Governor Hayashi Nobumitsu signs an MOU with the National Investment and Infrastructure Fund Limited of India, establishing the India-Japan Clean and Growth Platform. (©JBIC) The fund aimed to invest in sustainable projects in areas such as e-mobility, renewable energy, and waste management. Other key initiatives, such as the Perform, Achieve, and Trade, or "PAT" scheme, have facilitated a long-standing India-Japan collaboration in energy efficiency. This partnership has reduced 10 million tons of CO₂ emissions, saved 25 million tons of oil equivalent energy, and generated $10 billion in investments. For a country like India, which is vulnerable to climate change, adopting clean technologies is both essential and urgent. Achieving low or zero carbon emissions necessitates access to these technologies. However, such technologies often come with high upfront costs. This may exceed what the governments of developing countries can currently fund. They are typically expensive or not widely available. For example, generating electricity from coal is cheaper than using green hydrogen, solar or thermal power, despite the environmental cost. In this context, Japan's role becomes critical. It helps to equalize the cost of clean energy with conventional, polluting sources by subsidizing these technologies. Today, problems such as a severed supply chain, amid an unstable global situation, have aligned both countries' efforts and broader climate ambitions to build effective carbon markets. Coal continues to dominate India's power mix due to its lower capital costs. However, with Japanese subsidies, alternatives such as energy storage systems and solar thermal plants could become economically viable. They could thereby accelerate India's energy transition. It has the potential to transform India's energy sector by improving the competitiveness and affordability of renewable energy technologies. Beyond emissions cuts and costs, the JCM has the potential to generate jobs in both nations by fostering investments in low-carbon technologies. It promises to drive economic growth by creating skilled jobs, becoming a double-edged weapon. India can strategically channel these funds into underdeveloped clean energy sectors, leveraging Japanese expertise to expedite its transition to a low-carbon economy. This aligns with India's dual goals of sustainable development and economic expansion. Meanwhile, Japanese companies gain access to a rapidly growing market for clean technologies. The initiative is likely to strengthen India-Japan strategic ties. This complements their collaboration in infrastructure, defense, and economic security. It also counterbalances China's growing regional influence, having a ripple effect on different domains of collaboration. However, the ultimate goal is for India to adopt and scale these technologies independently, making JCM a high-stakes and high-impact partnership. India is poised to introduce its long-awaited carbon market by 2026. The market for the sale and purchase of carbon credits does not currently exist in our country. Under this program, those who use fossil fuels or emit carbon would buy carbon credits. Meanwhile, those who use power from non-fossil sources would receive carbon credits that they can sell in the market. The introduction of carbon credits should incentivize manufacturers to adopt green energy solutions, reducing carbon emissions and enhancing compliance with global regulations. India's strong potential in green hydrogen, energy efficiency, waste management, and biogas also reaffirms Japan's commitment to supporting these initiatives. An EMCO Power Plant in India (©Epagemakerwiki) There have been significant roadblocks to warming India-Japan relations in the climate domain. The negotiations with India have been ongoing since 2014. They highlight the complexity of such high-stakes climate agreements. Challenges also remain in ensuring that emissions reductions are not double-counted. It will be crucial to uphold the mechanism's credibility and prevent any compromise of its integrity. Additionally, there is a concern that Japan might use the JCM to delay more decisive domestic climate actions. Critics argue that developed countries should prioritize cutting emissions at home first, as it feeds into domestic political debate on climate. However, supporters of the mechanism contend that international cooperation through frameworks like the JCM facilitates faster and more cost-effective global progress toward climate goals. Furthermore, long-term sustainability is another critical issue. India must ultimately develop the capability to adopt and scale these technologies independently. This will require not only funding but also knowledge transfer, training, and the development of infrastructure. Without such capacity-building, the JCM risks becoming a short-term fix rather than a foundation for lasting transformation. India must cultivate the ability to sustain and expand these technologies over time. India is the world's third-largest GHG emitter, primarily due to its coal and industrial activities. The trend with other JCM partnerships, such as those in Vietnam, already shows achievements in measurable CO₂ reductions in key sectors. A similar trajectory can also be expected for India by targeting high-emission areas with solutions like sustainable aviation fuel and green hydrogen. Although the exact emissions reduction targets under the India-Japan JCM have not yet been disclosed, the potential is significant. The Japan-India JCM could serve as a global blueprint for climate cooperation if implemented effectively. It has the potential to reduce the cost of climate action, accelerate technology transfer, and strengthen diplomatic ties. That helps both nations move closer to their climate goals. Focus is on the potential of green ammonia, hydrogen, and solar energy in industrial transformation, as well as the importance of carbon dioxide removal technologies. There is a need for technology transfer, financing, and strategic partnerships to boost sustainability efforts. Both nations are committed to climate action. Innovative technologies and strong policy frameworks can create mutually beneficial pathways toward decarbonization. Japan's approach to carbon markets aligns well with India's sustainability goals. Japan's commitment to strengthening investment ties with India through the JCM framework, which promotes energy security and a low-carbon future, is well-timed. By aligning sustainability objectives with strategic interests, this partnership can show how developed and developing countries can collaborate meaningfully to address one of the most significant challenges of our time: climate change. Author: Varuna Shankar
New Straits Times
10-07-2025
- Business
- New Straits Times
Expo 2025 Osaka elevates Japan-Malaysia economic relations
KUALA LUMPUR: The Expo 2025 Osaka serves as a launchpad for deeper cooperation in key economic sectors, proving to be a significant platform for enhancing economic relations between Japan and Malaysia, according to the Japan External Trade Organisation (JETRO). JETRO Kuala Lumpur managing director Koichi Takano noted that the expo presents a great opportunity to elevate cooperation between Japan and Malaysia to a new level as it opens up a long-term investment space that will continue to deliver benefits. "Looking ahead, JETRO anticipates robust growth in investment across decarbonisation, renewable energy, digital technology, the halal sector and high-value services. "Malaysia's role as the ASEAN chair in 2025 is expected to further accelerate cooperation, particularly through its involvement in the Asia Zero Emission Community (AZEC) initiative championed by Japan," he told Bernama. The AZEC Summit, scheduled to be held in Malaysia this year, marks a significant milestone in energy collaboration between the two countries. According to Takano, the ongoing negotiation of the Joint Crediting Mechanism is expected to unlock more opportunities for Japanese environmental technologies to be applied in Malaysia. "JETRO has compiled a catalogue of Japanese companies contributing to decarbonisation and is actively supporting their expansion in the Malaysian market. "These efforts are complemented by growing investment interest in consumer-related sectors such as food products, healthcare, education and Japanese lifestyle services," he noted. To unlock the full potential of Japan-Malaysia trade ties in the coming decade, Takano stressed that strengthening the existing relationship of trust is the most critical step. He said Japan, once Malaysia's largest investor, retains strong ties with the country, and JETRO remains committed to serving as a bridge for future cooperation. "Economic security, energy transition and resilient supply chains are shared priorities. Building on our longstanding trust, we can create lasting partnerships that benefit both nations. "JETRO will continue to lead efforts in business matching, market entry support and strategic engagement, ensuring Japanese companies remain active and invested in Malaysia's future," he said. Japanese firms sees Malaysia as a hub In addition, Takano said Japanese companies are also taking advantage of strategic tax incentives and increasingly considering Malaysia for regional headquarters. He believed that Malaysia's attractiveness is further enhanced by its competitive cost base and growing role in regional value chains. "JETRO is playing a key role in supporting these developments by providing updated information on policies, investment incentives and strategic sector opportunities. "With Malaysia's current economic growth at 5.1 per cent, compared with 3.6 per cent the previous year, Japanese firms are showing increased confidence in the local market," he added. The organisation's 2024 Business Conditions Survey revealed that profitability among Japanese companies in Malaysia continues to exceed the ASEAN average – attributable to strong performance in manufacturing, particularly in sectors such as electrical and electronics, food processing, transport equipment and general machinery. Takano explained that Japanese small and medium enterprises (SMEs) have long contributed to Malaysia's manufacturing sector and continue to evolve with the changing economic landscape. He expressed optimism that extending local SME support schemes to Japanese SMEs could further strengthen their resilience and integration. TVET reform a shared challenge In addressing workforce development, JETRO acknowledged the Malaysian government's efforts through Technical and Vocational Education and Training (TVET) reforms as Japan also faces similar labour challenges and is responding by promoting robotics, artificial intelligence and strategic foreign workforce integration. He emphasised that these shared challenges require long-term commitment, continuous dialogue and policy coordination. "Malaysia's Look East Policy has played a key role in fostering bilateral understanding, with more than 28,000 Malaysians having studied in Japan to date. "Collaboration in education also continues through institutions such as the Malaysia-Japan International Institute of Technology and the University of Tsukuba Malaysia," he noted.
Japan Forward
03-07-2025
- Business
- Japan Forward
India and Japan's Blueprint for Sustainable Growth
In a move to expedite decarbonization efforts while reducing clean energy costs in India, Japan and India are finalizing a Joint Crediting Mechanism (JCM). This bilateral framework will enable both nations to exchange emission reduction credits, supporting Japan in fulfilling its climate commitments. Japan's goal of achieving net-zero by 2050 and India's 45% emissions reduction target by 2030 highlight the natural partnership between the two countries in decarbonization and economic growth. Japanese companies are increasingly interested in entering the Indian market as a relocation destination for production bases or as an investment opportunity. Therefore, this article explores the potential of partnerships in the carbon market sector. Under the JCM, Japanese companies will invest in and deploy advanced carbon reduction technologies in India. In return, Japan will receive carbon credits that can offset its emissions or be traded within its national carbon market. The initiative falls under Article 6.2 of the Paris Agreement, which ensures internationally recognized and verifiable emissions reductions. Once finalized, carbon credits will be officially registered and tracked. Joint committees will be formed to oversee project implementation and to verify credit issuance through the formulation of a detailed report. Consequently, this mechanism will assist both countries in meeting their nationally determined contributions (NDCs) under the Paris framework. A wide range of sectors, including solar thermal energy, green hydrogen, and sustainable aviation fuel (SAF), are expected to benefit from JCM investments. Originally initiated by Japan, the JCM facilitates the transfer of technical expertise and climate-friendly technologies from developed to developing countries. Developed nations benefit by outsourcing their emissions reductions, often at a lower cost. Meanwhile, this supports sustainable development in host countries. It helps mobilize international finance, alleviating the cost burden for the recipient country. Currently, Japan has established similar agreements with 11 other countries, including Indonesia, Kenya, and Vietnam. India and Japan had been discussing a JCM partnership since 2014. In 2023, a $600 million fund was jointly launched by India's quasi-sovereign wealth fund, the National Investment and Infrastructure Fund (NIIF), and the Japan Bank for International Cooperation (JBIC) to invest in sustainable projects. JBIC contributed 51% of that total, while the remainder came from India. The fund aimed to invest in sustainable projects in areas such as e-mobility, renewable energy, and waste management. Other key initiatives, such as the Perform, Achieve, and Trade (PAT) scheme, have facilitated a long-standing India-Japan collaboration in energy efficiency. This partnership has reduced 10 million tons of CO2 emissions, saved 25 million tons of oil equivalent energy, and generated $10 billion in investments. Prime Minister Shigeru Ishiba (second from left) and Indian PM Narendra Modi (third from left) attend a working lunch at the G7 and Outreach Partners Meeting. Climate was a big topic at the meeting. June 18, 2025 (Courtesy of the Government of Canada) For a country like India, which is vulnerable to climate change, adopting clean technologies is both essential and urgent. Achieving low or zero carbon emissions necessitates access to these technologies. However, such technologies often come with high upfront costs. This may exceed what the governments of developing countries can currently fund. They are typically expensive or not widely available. For example, generating electricity from coal is cheaper than using green hydrogen or solar thermal power, despite the environmental cost. In this context, Japan's role becomes critical. It helps to equalize the cost of clean energy with conventional, polluting sources by subsidizing these technologies. Today, problems such as a severed supply chain, amid an unstable global situation, have aligned both countries' efforts and broader climate ambitions to build effective carbon markets. Coal continues to dominate India's power mix due to its lower capital costs. However, with Japanese subsidies, alternatives such as energy storage systems and solar thermal plants could become economically viable, thereby accelerating India's energy transition. It has the potential to transform India's energy sector by improving the competitiveness and affordability of renewable energy technologies. Beyond emissions cuts and costs, the JCM has the potential to generate jobs in both nations by fostering investments in low-carbon technologies. Furthermore, it promises to drive economic growth by creating skilled jobs. India can strategically channel these funds into underdeveloped clean energy sectors, leveraging Japanese expertise to expedite its transition to a low-carbon economy. This aligns with India's dual goals of sustainable development and economic expansion. Meanwhile, Japanese companies gain access to a rapidly growing market for clean technologies. The initiative is likely to strengthen India-Japan strategic ties, complementing their collaboration in infrastructure, defense, and economic security. It also counterbalances China's growing regional influence, having a ripple effect on different domains of collaboration. However, the ultimate goal is for India to adopt and scale these technologies independently, making JCM a high-stakes and high-impact partnership. India is poised to introduce its long-awaited carbon market by 2026. The market for the sale and purchase of carbon credits does not currently exist in our country. Under this program, those who use fossil fuels or emit carbon would have to buy carbon credits, while those who use power from non-fossil sources would receive carbon credits that they can sell in the market. The introduction of carbon credits should incentivize manufacturers to adopt green energy solutions, reducing carbon emissions and enhancing compliance with global regulations. India's strong potential in green hydrogen, energy efficiency, waste management, and biogas reaffirms Japan's commitment to supporting these initiatives. There have been significant roadblocks to warming India-Japan relations in the climate domain. Negotiations with India have been ongoing since 2014, highlighting the complexity of such high-stakes climate agreements. Challenges also remain in ensuring that emissions reductions are not double-counted. This will be crucial to upholding the mechanism's credibility and preventing any compromise of its integrity. Additionally, there is a concern that Japan might use the JCM to delay more decisive domestic climate actions. Critics argue that developed countries should prioritize cutting emissions at home first, as it feeds into domestic political debate on climate. However, supporters of the mechanism contend that international cooperation through frameworks like the JCM facilitates faster and more cost-effective global progress toward climate goals. Long-term sustainability is another critical issue. India must ultimately develop the capability to adopt and scale these technologies independently. This will require not only funding but also knowledge transfer, training, and the development of infrastructure. Without such capacity-building, the JCM risks becoming a short-term fix rather than a foundation for lasting transformation. India must cultivate the ability to sustain and expand these technologies over time. India is the world's third-largest GHG emitter, primarily due to its coal and industrial activities. Similar JCM partnerships, such as those in Vietnam, have already achieved measurable CO2 reductions in key sectors. A similar trajectory can be expected for India by targeting high-emission areas with solutions like sustainable aviation fuel and green hydrogen. Although the exact emissions reduction targets under the India-Japan JCM have yet to be disclosed, the potential is significant. The Japan-India JCM could serve as a global blueprint for climate cooperation if implemented effectively. It has the potential to reduce the cost of climate action, accelerate technology transfer, and strengthen diplomatic ties. This should help both nations move closer to their climate goals. Technological options include the potential of green ammonia, hydrogen, and solar energy in industrial transformation. Carbon dioxide removal technologies are also highlighted as important. There is a need for technology transfer, financing, and strategic partnerships to boost sustainability efforts. Both nations are committed to climate action. Through innovative technologies and strong policy frameworks, they can create mutually beneficial pathways toward decarbonization. Japan's approach to carbon markets aligns well with India's sustainability goals. Its commitment to strengthening investment ties with India through the JCM framework, which promotes energy security and a low-carbon future, is well-timed. By aligning sustainability objectives with strategic interests, this partnership can show how developed and developing countries can collaborate meaningfully to address one of the most significant challenges of our time. Author: Varuna Shankar
