J-Credit Scheme Octorber 2017 J-Credit Scheme
1. Outline of J-Credit Scheme
Outline of J-Credit Scheme 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 Until end of March 2013 Voluntary Action Plan participants, etc. Capital SMEs Heat pump Agriculture Biomass boiler Credits(GHG emission reduction) Households Solar power generation Certification of Domestic CDM Attestation Committee Local governments also participate + Capital Local govs Biomass boiler Entities etc. Credits(GHG emission reduction and removal) Forestry Forest management, Afforestation Certification of J-VER Attestation Committee J-Credit Scheme Application for project registration, application for certification of credits Credits Users of Credits Utilize for Keidanren s commitment to a low carbon society Utilize for voluntary carbon offsetting After April 2013 Central government Steering committee Credits Discussion Project participants Certification committee Capital Utilize for Act on Promotion of Global Warming Countermeasures ( 1) Utilize for Energy Efficiency Act ( 2) ( 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 3
Merits for the participants Supply Side (Small and Medium Enterprises ) 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 Equipment Suppliers Additional value to their energysaving equipment and services Demand Side (Large Enterprises) 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) 4
Process of the J-Credit Scheme Step Development of PDD Project Participant Examining Authorities Central government /Committee (Secretariat) 1Development of Methodology ( If necessary) Submission of Proposed Methodology Approval of Proposed Methodology 2Project Planning Development of PDD Contract Registration of Project 3Validation Receive Validation Report Report Validation 4Discussion Registration Monitoring Certification Request Registration of Project Discussion Registration 5Monitoring Calculation Monitoring Calculation Contract 6Verification Receive Verification Report Report Verification 7 Discussion Certification Request Certification of Credit Discussion Certification 5
Structure for rules and documentation in J-Credit Scheme 1Implementation Outline 2Rules of implementation (For project participants) 3Rules for monitoring and calculation 2Implementation Rule (For examining authorities) 4Rules for developing Methodologies 5Methodologies 6Adhesive terms and conditions (for project participants) 6Adhesive terms and conditions (for examining authorities) Documents that project participants must follow Documents that examining authorities must follow 6
Major Players in J-Credit Scheme1 Project participants 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 7
Major Players in J-Credit Scheme2 Management (Ministry of Economy, Trade and Industry, Ministry of the Environment, Ministry of Agriculture, Forestry and Fisheries) Role Management of J-Credit Scheme, authority to approve and revise documents, register projects, certify credits and approve Regional J-Credit Schemes, etc. Task 1 Approval and revision of documents 2 Establishment of steering committee and certification committee 3 Registration of projects 4 Certification of credits 5 Creation and management of registry 6 Designation of examining authorities 7 Approval of Regional J-Credit Scheme 8 Others Establish Steering committee Central government (management) Opinion Support Secretariat Certification committee Establish 8
Major Players in J-Credit Scheme3 Examining Authorities Institutes that execute validation and verification Validation:examination of PDD before registration of projects Verification:examination of monitoring report before certification Requirement for registration Holding ISO 14065 certification to guarantee credibility of the scheme 9
Designated Examining Authorities(As of Octorber 2017) Name of Authorities Validation Verification EN IN AG WA FO EN IN AG WA FO Deloitte Tohmatsu Sustainability Co., Ltd. Perry Johnson Registrar Clean Development Mechanism, Inc. Japan Management Association GHG Certification Center Lloyd s Register Quality Assurance Limited Japan Bureau Veritas Japan Co., Ltd. Japan Quality Assurance Organization Japan Smart Energy Co., Ltd. Nippon Kaiji Kyokai 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 10
2. Projects & Methodologies
Eligible Projects for J-Credit Scheme Projects Action that reduce GHG emissions or enhance GHG removals 1 2 3 4 5 6 7 8 9 Requirement for registration Implemented within Japan Implemented within two years prior to, on or after the registration-request day 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.) Not the identical activities with other projects registered on similar schemes Satisfies additionality In principle, payout time for facilities of projects is more than three years Implemented based on approved methodologies Validated by examining authorities Takes action to keep permanence (Forest sink only) Meets all the other requirements of J-Credit Scheme 12
Methodologies Methodologies Methodologies rule boundary, calculation formula and method of monitoring for each technology of emission reduction and removal. Type of Methodologies 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 Concept of Baseline and Credit Emission reduction credit is the difference between the baseline emission and actual emission after implementation of projects. 1 Baseline emission Emission reduction (1-2) 2 Actual emission Implementing projects 13
Approved Methodologies 1 As of Octorber, 2017, 61 methodologies were approved. Energy saving, 40, Renewable energy, 9, Industrial Processes, 5, Agriculture, 3, Waste,2, Forest, 2 Type of methodologies Energy saving Methodologies Introduction of high efficiency boilers Introduction of high efficiency heat pumps Introduction of high efficiency industrial furnaces Introduction of high efficiency air conditioning facilities Renewal of fan and pump or installation of inverter and controlling equipment Introduction of high efficiency lighting facilities Introduction of co-generation equipment Renewal oftransformers Switch from private heat source equipment to outside heat sources Introduction of electric generators utilizing waste steam Utilizing recovered waste heat Introduction of electric vehicles Improving delivery efficiency of Propane gases utilizing IT Reducing meter reading utilizing IT Introduction of high efficiency vending machines Introduction of high efficiency refrigeration equipment Renewal of roll ironers Renewal of electric marine vessels Switch from fossil fuel or grid power to fuel from waste Renewal of fan and pump Renewal of construction machinery and industrial trucks by introducing electricity-operated machineries and trucks Renewal of productive facilities (machine tools, press machines or injection machines Introduction and utilization of digital tachograph and other equipment that support eco-drive Upgrade of TV sets 14
Type of methodologies Energy Saving Renewable Energy Approved Methodologies 2 Methodologies Renewal of private electric generators Renewal of drying machines Energy efficiency improvement of air conditioning facilities by installing a rooftop greenery Renewal of construction machinery and industrial trucks by introducing hybrid machineries and trucks Introduction of natural gas vehicles Introduction of high efficiency printing machines Renewal of servers Introduction of high efficiency plumbing products Energy efficiency improvement by relocating servers to outside data centers Installation of car navigation systems with environmentally-friendly driving systems Energy efficiency improvement of land transportation of marine container Reduction of fossil fuel by renewal of sewage sludge dryers Switch to cooperative delivery Introduction of high efficiency refrigerant processing facilities Construction of energy-saving house Use of concrete containing less portland cement Fuel switch from fossil fuel or grid power to biomass solid fuel (woody biomass fuel) Introduction of solar power generation Renewal ofheat 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 sewage sludge) Introduction of hydroelectric power generation Fuel switch from fossil fuel or grid power to biogas Introduction of wind power Renewal of electric power facility utilizing renewable heat 15
Type of methodologies Industrial Process Agriculture Waste Forest Sink Approved Methodologies 3 Methodologies 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 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 nitrification inhibitor Reduction of fossil fuel for incineration by reducing volume of sludge utilizing microbially-activated solvent Transition offood waste treatment from landfilling to composting Forest management activity Afforestation activity 16
Programme of activities Can add continuously Programme of activities Project participants (e.g.)houses with Solar Power Generation 1Registration of projects 2Certification of credits J-Credit Certification Committee Registration, Certification Examination Authorities Validation, Verification Credits Management of programme of activities Execution of J-credit process 1Validate PDD 2Verify Monitoring Report Merits of programme of activities Facility managers Suppliers, Sales and maintenance companies, Energy Service Companies NGOs, Local governments, etc. 1Prepare a system for management of project properly 2Examine each emission reduction for compliance rules below 1) Fulfill requirements of project 2) Each emission reduction avoid double registration 3) Amount of Each emission reduction is under 500t-CO2/y 4) All emission reduction fulfill Same methodologies 3Execute process of projects 1) Facility Managers can add new participants continuously after registration of the projects. 2) Reduction of Examination fees (Usually, each projects should be examined individually.) 3) Reduction of workload of project participants 17
3. Facts & Figures
1st Oct./2013 2nd Dec./2013 3rd Jan./2014 4th Mar./2014 Registration of Project and Certification of Credit 5th May/2014 6th Aug./2014 7th Oct./2014 8th Dec./2014 9th Feb./2015 10th Mar./2015 11th May/2015 12th July/2015 13th Sept./2015 14th Dec./2015 15th Feb./2016 16th Mar./2016 17th June/2016 18th Aug./2016 19th Sep./2016 20th Dec./2016 21th Feb./2017 22nd Mar./2017 23rd June./2017 24th Aug./2017 25th Oct./2017 The number of project registration: 230 (Expected emission reduction by 2030: 7.8Mt-CO2) The number of credit certification: 384 (Certified credit in total:2.5 Mt-CO2) The number of renewable energy:3,161,129 (MWh) 450 <The cumulative number of projects in J-credit scheme > (As of Octorber, 2017) 400 350 300 Registered projects Credit-certified projects 275 299 349 363 368 384 250 200 150 100 50 0 64 68 71 50 22 5 0 9 2 4 8 11 15 21 82 89 29 35 115 116 119 102 74 51 58 63 232 208 195 184 176 176 182 187 190 161 128 134 144 124 208 216 216 230 2013 2014 2015 2016 2017 19
Expected emission reduction from registered projects Other than programme of activities Programme of activities Introduction of cogeneration equipment, 4, 17.1kt-CO2 Others, 91, 75.3kt-CO2 Introduction of high efficiency industrial furnaces, 2, 59.2kt- CO2 Total 778.2kt-CO2 Forest management activity, 22, 242.2kt- CO2 Introduction of high efficiency air conditioning facilities, 5, 134.3kt-CO2 Introduction of electric vehicles, 2, 288.3kt-CO2 Introduction of cogeneration equipment, 6, 327.1kt-CO2 Introduction of high efficiency lighting facilities, 6, 336.3kt-CO2 Total 5,572.3kt-CO2 Others, 17, 62.1kt- CO2 Introduction of high efficiency boilers, 42, 161.1kt-CO2 Fuel switch from fossil fuel or grid power to biomass solid fuel (woody biomass fuel), 33, 223.2kt-CO2 Introduction of solar power generation, 24, 4,424.2kt-CO2 (As of Octorber, 2017) 20
4. Application
Using the J-Credit for reporting to the CDP questionnaire The purchased credit resulting from renewable energy, can be reported as your company's renewable energy amount J-Credit Scheme HP "The list of credits for sale" (as of August, 2017) 22
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/ Official Auctions The 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: Time June, 2016 January, 2017 April, 2017 Average price** 510 yen/t-co2 1,594 yen/t-co2 908 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. 23