j-credit scheme

J-Credit Scheme

June 2020

J-Credit Scheme

1. Outline of J-Credit Scheme

SMEs

「Voluntary Action Plan」participants, etc.

Biomass boiler

Credits(GHG

emission reduction)Capital

Solar power generation

Heat pump

Agriculture Households

Certification of Domestic

CDM

Atte

station

Com

mitte

e

※Local governments also participate

Entities etc.

Atte

station

Com

mittee

Forest management, Afforestation

Vitalize new scheme by integrating two similar schemes (Domestic CDM, J-VER) that issued credits respectively

Promote GHG emission reductions and removals in Japan after 2013 continuously and actively Enhance CSR activities and voluntary carbon offsetting

Domestic CDM J-VER

J-Credit Scheme

Central government

Project participants

Application for project registration, application for

certification of credits

Credits

Credits

Capital

Users of CreditsUtilize for

voluntary carbon offsetting

Utilize for Energy Efficiency Act

(※２)

Utilize for “Keidanren’s

commitment to a low carbon society”

Utilize for Act on Promotion of Global

Warming Countermeasures

(※1)

Steering committee

Certification committeeDiscussion

(※１)Adjustment for reporting emissions under GHG emissions reporting system based on the Act(※２)Reporting the registered projects as “joint energy efficiency projects” under the Energy Efficiency Act

＋

Until end of March

2013

After April 2013

Outline of J-Credit Scheme

Local govs Forestry

Biomass boiler

Credits(GHG

emission reduction

and removal)

Capital

Certification of J-VER

3

1. CO2 emission reductions and energy savings are achieved

2. Saving running costs /Profit from selling of the credits

3. Covers projects other than energy related projects such as forest sinks

4. PR effects

1. Utilization for achievement of Voluntary Action Plan targets

2. Utilization for voluntary carbon offsetting and CSR activities (environmental protection, regional activities)

3. Report adjusted emissions taking into account the obtained credits

4. Report the registered projects as “joint energy efficiency projects” under the Energy Efficiency Act

5. Reporting to CDP questionnaire (see p.21 for more information)

Demand Side(Large Enterprises)

○ Additional value to their energy-saving equipment and services

Equipment Suppliers

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Supply Side(Small and Medium Enterprises )

Merits for the participants

①Developmentof Methodology

(※ If necessary)

②Project Planning

③Validation

④Discussion・Registration

⑤Monitoring·Calculation

⑥Verification

⑦ Discussion·Certification

Approval ofProposed

Methodology

Validation

Developmentof PDD

Discussion・Registration

Request Registration of Project

Central government／Committee(Secretariat)

Project ParticipantStep Examining Authorities

Monitoring·Calculation

Request Certification of Credit

Discussion ·Certification

Verification

Contract

Contract

Development of PDD

Registration of Project

Monitoring·Certification

Submission of Proposed

Methodology

Receive Validation Report Report

Receive Verification Report

Report

Process of the J-Credit Scheme

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Structure for rules and documentation in J-Credit Scheme

①Implementation Outline

⑤Methodologies

②Implementation Rule(For examining authorities)

④Rules for developing Methodologies

③Rules for monitoring and calculation ⑥Adhesive terms

and conditions(for examining

authorities)

⑥Adhesive terms and conditions

(for project participants)

Documents that project participants must follow

Documents that examining authorities must follow

②Rules of implementation(For project participants)

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• No limits for project participants※Under Domestic CDM, there was a condition that participants of the Voluntary Action Plan cannot be project participants.

• However, when project participants also participate in Keidanren's Commitment to a Low Carbon Society, credits certified from their project cannot be used to achieve the target of Keidanren's Commitment to a Low Carbon Society

Major Players in J-Credit Scheme①

Project participants

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Management (Ministry of Economy, Trade and Industry, Ministry of the Environment, Ministry of Agriculture, Forestry and Fisheries)

Major Players in J-Credit Scheme②

Establish

Secretariat

Steering committee

Certification committee

Opinion

Establish

Support

○Task① Approval and revision of documents② Establishment of steering committee and certification committee③ Registration of projects④ Certification of credits⑤ Creation and management of registry⑥ Designation of examining authorities⑦ Approval of Regional J-Credit Scheme⑧ Others

○RoleManagement of J-Credit Scheme, authority to approve and revise documents, register projects, certify credits and approve Regional J-Credit Schemes, etc.

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Central government(management)

Holding ISO 14065 certification to guarantee credibility of the scheme

Examining Authorities

Institutes that execute validation and verification

※Validation：examination of PDD before registration of projects

※Verification：examination of monitoring report before certification

Major Players in J-Credit Scheme③

Requirement for registration

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Name of AuthoritiesValidation Verification

EN IN AG WA FO EN IN AG WA FO

Deloitte Tohmatsu Sustainability Co., Ltd. ● ● ● ● ● ●

Perry Johnson Registrar Clean DevelopmentMechanism, Inc. ◎ △

Japan Management Association GHGCertification Center ◎ △ △ ◎

Japan Quality Assurance Organization △ ● △ ◎ ● ◎

Nippon Kaiji Kyokai ◎ ◎

Designated Examining Authorities(As of June2020)

◎ ISO14065 Certification○ Temporary Registration①：Within two years from application● Temporary Registration②：In case registered authorities are less than one in an area (less than three in a forest area)△ Special Exception for temporary registration

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2. Projects & Methodologies

Eligible Projects for J-Credit Scheme

・ProjectsAction that reduce GHG emissions or enhance GHG removals

① Implemented within Japan② Implemented within two years prior to, on or after the registration-request day ③ Not an identical activity with any preceding project whose certification period has

already expired (A project’s certification period ends within eight years after the period’s commencement day and no later than March 31, 2031.)

④ Not the identical activities with other projects registered on similar schemes⑤ Satisfies additionality※In principle, payout time for facilities of projects is more than three years

⑥ Implemented based on approved methodologies

⑦ Validated by examining authorities

⑧ Takes action to keep permanence (Forest sink only)

⑨ Meets all the other requirements of J-Credit Scheme

Requirement for registration

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Concept of “Baseline and Credit”

Emission reduction credit is the difference between the baseline emission and actual emission after implementation of projects.

Methodologies

・MethodologiesMethodologies rule boundary, calculation formula and method of monitoring for each technology of emission reduction and removal.

Energy (EN)Energy saving(EN-S)

Reduce energy related emissions by reducing fossil fuel

Renewable energy(EN-R)Reduce energy related emissions by replacing fossil fuel to renewable energy

Industrial Processes (IN)Reduce GHG emissions from industrial processes through chemical or physical change

Agriculture (AG)Reduce GHG emissions from agricultural sector (livestock, farm land)

Waste (WA)Reduce GHG emissions from waste management

Forest (FO)

Enhance GHG removals by managing forest sink

Type of Methodologies

① Baseline emission

Emission reduction(①－②)

Implementing projects

② Actual emission

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Type of methodologies

Methodologies

Energy saving

Introduction of high efficiency boilersIntroduction of high efficiency heat pumpsIntroduction of high efficiency industrial furnacesIntroduction of high efficiency air conditioning facilitiesRenewal of fan and pump or installation of inverter and controlling equipmentIntroduction of high efficiency lighting facilitiesIntroduction of co-generation equipmentRenewal of transformersSwitch from private heat source equipment to outside heat sourcesIntroduction of electric generators utilizing waste steamUtilizing recovered waste heatIntroduction of electric vehiclesImproving delivery efficiency of Propane gases utilizing ITReducing meter reading utilizing ITIntroduction of high efficiency vending machinesIntroduction of high efficiency refrigeration equipmentRenewal of roll ironersRenewal of electric marine vesselsSwitch from fossil fuel or grid power to fuel from wasteRenewal of fan and pumpRenewal of construction machinery and industrial trucks by introducing electricity-operatedmachineries and trucksRenewal of productive facilities (machine tools, press machines or injection machinesIntroduction and utilization of digital tachograph and other equipment that support eco-driveUpgrade of TV sets

Approved Methodologies ①As of October, 2019, 62 methodologies were approved. Energy saving, 41, Renewable energy, 9, Industrial Processes, 5, Agriculture, 3, Waste,2, Forest, 2

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Type of methodologies

Methodologies

Energy Saving

Introduction of private electric generatorsRenewal of drying machinesEnergy efficiency improvement of air conditioning facilities by installing a rooftop greeneryRenewal of construction machinery and industrial trucks by introducing hybrid machineries and trucks

Introduction of natural gas vehiclesIntroduction of high efficiency printing machinesRenewal of serversIntroduction of high efficiency plumbing productsEnergy efficiency improvement by relocating servers to outside data centersInstallation of car navigation systems with environmentally-friendly driving systemsEnergy efficiency improvement of land transportation of marine containerReduction of fossil fuel by renewal of sewage sludge dryersSwitch to cooperative deliveryIntroduction of high efficiency refrigerant processing facilitiesConstruction of or renovation for energy-saving housesUse of concrete containing less portland cementIntroduction of CO2 application system at horticulture facility

Renewable Energy

Fuel switch from fossil fuel or grid power to biomass solid fuel (woody biomass fuel)Introduction of solar power generationRenewal of heat source equipment utilizing renewable heat

Fuel switch from fossil fuel or grid power to biomass liquid fuel (BDF, bioethanol, biooil)

Fuel switch from fossil fuel or grid power to biomass solid fuel (biomass solid fuel from sewagesludge)Introduction of hydroelectric power generationFuel switch from fossil fuel or grid power to biogasIntroduction of wind powerRenewal of electric power facility utilizing renewable heat

Approved Methodologies ②

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Approved Methodologies ③Type of

methodologiesMethodologies

Industrial Process

Switch cover gas in casting magnesium from SF6 to lower GWP gases

Introduction of recovery and degradation systems of N2O used for anesthesia

Gas switch from SF6 to COF2 in the liquid crystal display production process

Introduction of GHG-free insulated switchgears

Reduction of HFC gas in spray duster cans used for equipment maintenance

Agriculture

Abatement of N2O emissions from pig and broiler excreta disposal by utilizing low-protein feed

Conversion of disposal management system for livestock excreta

Mitigation of N2O emissions from tea land soil by applying chemical fertilizers containing nitrificationinhibitor

WasteReduction of fossil fuel for incineration by reducing volume of sludge utilizing microbially-activatedsolvent

Transition of food waste treatment from landfilling to composting

Forest SinkForest management activity

Afforestation activity

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Can add continuously

(e.g.)Houses with Solar Power Generation

Programmatic operator/manager

A programmatic project

Suppliers,Sales and maintenance companies,Energy Service CompaniesNGOs, Local governments, etc.

Examination Authorities

J-Credit Certification Committee

Validation, Verification

Programmatic projects

Credits ・Management of programmatic project

・Execution of J-credit process

①Having a suitable operation and management system②Confirming all reduction activities’ satisfaction of

the following requirements:1) Satisfying the common project requirements2) No double registration3) Falling under the single project-specific category for

the combined reduction activities4) Applying the same methodology(ies) and being

monitored with the same parameters

③Executing the procedures of programmatic projects

①Validate PDD②Verify Monitoring Report

Registration, Certification

①Registration of projects②Certification of credits

Merits of programmatic projects

1) Programmatic operator/managers can add new reduction activities continuously after registration of the project.2) Reduction of examination fees (Usually, each projects should be examined individually.)3) Reduction of workload of reduction activities

Multiple reduction activities

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3. Facts & Figures

Registration of Projects and Certification of Credits

＜The cumulative number of projects and certifications in J-credit scheme ＞

The number of projects registered: 325 (Total expected emission reduction/removal by 2030:13.0 mil. t-CO2)

The number of credit certifications: 752 (Total certified credits：5.9 mil. t-CO2)

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(As of 23 June 2020)

5 9 2250 64 68 71 82 89 102 115 116 119 128 134

161 176 176 182 187 190208 216 216 230 235 249 260 266 273 277 282 285 291 292 298 304 307 317 325

0 2 4 8 11 15 21 29 3551 58 63 74

124144

184 195 208232

275299

349 363 368384

415

468493

519556

597624 637 639

661683

702721

742 752

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2013 2014 2015 2016 2017 2018 2019 2020

Registered projects

Credit-certified projects

Expected emission reduction/removal from registered projectsby project types (applied methodologies)

Ordinary (stand-alone) projects

(Other than programmatic ones)Programmatic projects

20(As of 23 June 2020)

Fuel switch from fossil fuel or grid

power to biomass solid fuel (woody biomass fuel), 56,

1,620.3kt-CO2

Switch cover gas in casting magnesium from SF6 to lower

GWP gases , 1, 388.3kt-CO2

Forest management activity, 34, 379.0kt-CO2

Introduction of high efficiency boilers, 54, 192.0kt-CO2

Introduction of high efficiency industrial furnaces, 3, 64.8kt-

CO2 Others, 112, 179.0kt-CO2

Total2,823.4kt-CO2

Introduction of solar power generation, 40, 6,209.3kt-CO2

Introduction of high efficiency

lighting facilities, 13, 767.8kt-CO2

Introduction of high efficiency boilers, 1,

400.7kt-CO2

Introduction of co-generation

equipment, 7, 346.8kt-CO2

Introduction of electric vehicles, 3,

313.0kt-CO2

Others, 30, 265.3kt-CO2

Total8,303.0kt-CO2

4. Application

Using the J-Credit for reporting to the CDP questionnaire

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J-Credit Scheme HP "The list of credits for sale" (as of August, 2017)

The purchased credit resulting from renewable energy, can be reported as your company's renewable energy amount

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Trading J-Credits – How to Buy and Sell the Credits –

J-Credits can be sold and purchased at:- bilateral negotiations; and- the official auctions.

For those who need to buy and sell J-Credits, the J-Credit Scheme website* provides:- list of credits on sale for bilateral negotiations; and- information on the official auctions.

* https://japancredit.go.jp/market/corner/

Time Average price**

June, 2016 510 yen/t-CO2

January, 2017 1,594 yen/t-CO2

April, 2017 908 yen/t-CO2

March, 2018 Renewable Energy1,716 yen/t-CO2

Energy saving and others1,148 yen/t-CO2

April, 2018 Renewable Energy1,724 yen/t-CO2


January, 2019 Renewable Energy1,830 yen/t-CO2


April, 2019 Renewable Energy1,801 yen/t-CO2


January, 2020 Renewable Energy1,851 yen/t-CO2


** The average prices are calculated by dividing the total contract amount (yen) by the total traded volume (t-CO2) at each auction.

■Official AuctionsThe official auctions held by the J-Credit Scheme Secretariat provide opportunities to purchase J-credits including government-owned ones. Contract Prices and trading volume are determined through successful bids.Average prices at the past auctions are as follows: