Japan’s Voluntary Emission Trading Scheme (JVETS)

In designing a new market mechanism, it is important to learn from past experiences of similar acticities. MOEJ conduct the Japan’s Voluntary Emission Trading Scheme (JVETS) and the Offset Credit　Scheme (J-VER) as domestic system in Japan. JVETS supports voluntary CO2 reduction activities by business operators, and J-VER scheme is a verification scheme for credit generated through the reduction/ removal by sinks of greenhouse gases carried out via domestic projects. These activities may offer helpful perspectives for the new mechanisms

Scheme outline

• Launched by MOEJ in 2005
• Supports voluntary CO2 reduction activities by business operators to ensure their emission reduction targets in a cost-effective way with subsidy and emissions trading
• Participants of JVETS constitute a part of Experimental Integrated ETS (2008~).

Achievements

(Total participants: 303 companies)

Commitment Period	FY2006	FY2007	FY2008	FY2009
Achieved Reduction(kt-CO2)	377(29%)	280(25%)	383(23%)	950(28%)
Committed Reduction(kt-CO2)	273(21%)	217(19%)	136(8%)	335(10%)
Number of transactions	24	51	23	24
Average JPA price (JPY/t-CO2)	JPY1,212	JPY1,250	JPY800	JPY750

• Assigned JPA = (Base year emissions (An average for the past 3 years)–(Committed reduction)
• Development of infrastructure: Monitoring, reporting and verification guidelines, thirdparty verification, the emissions management system and the registry for allowance.

JVETS Operation Infrastructure

One of the big contributions of JVETS is that it has established basic infrastructure (the emission monitoring, reporting and verification guidelines, registry system, and emissions management system etc.) which is required for smooth operation.

MRV in JVETS

Monitoring and Reporting Flow of JVETS

Step 1 : Identification of geographic boundary
■Identify the geographic boundary of the site by using public documents such as Fire Defense Law report, Factory Location Law report, etc.

Step 2 : Identification of emission sources and system boundary
■Identify emission sources using document such as Fire Defense Law report, High Pressure Gas Safety Law, equipment list, purchase bill, etc.
■Identify emission sources owned/operated by other companies and omit them from the boundary.
■Among the emission sources inside the boundary, those which are below the emission threshold may be omitted.

Step 4 : Establishment of monitoring/calculation structur
■Assign individuals responsible for monitoring and calculation.
■State “how” and “who” monitor the data, and “how” and “who” manage the quality of the calculation result.

Calculation Method of JVETS

(Covered Gas ：CO2)

Type	Activity
CO2 from fuel consumption	Fossil fuel burning （including for automobile use within boundary）
CO2 from electricity and heat	Use of electricity and heat supplied from outside boundary
CO2 from waste management	waste incineration / combustion and waste recycling
CO2 from industrial process	Cement production, burnt lime production, use of lime or dolomite, ammonia production, chemical goods production, use of acetylene, dry ice, liquefied carbon dioxide or aerosol.

• Calculation method is based on "Act on Promotion of Global Warming Countermeasures"
• Calculation Method
• Fuel： Emissions＝Activity（fuel use）× Heat value per unit volume × Emission factor
• Other： Emissions＝Activity × Emission factor

Three core information systems of JVETS

System	System overview	Contribution
Registry system	• Manages the initial allocations (JPAs), emissions allowance transactions(trading) and retirement • Manages all accepted allowances and credits in JVETS (JPAs and jCER) • Emission allowance transaction time: 10am-6pm (JST) on business days	• No double counting and the same security level of allowance retirement as the national registry in Kyoto Protocol • Open access to the web-based registry system for all participants
Emissions management system	• Based on the emissions monitoring and reporting guidelines, all participants’ emissions base years and their actual emissions amounts in their commitment periods are stored under the system. • The data are used for third-party verification. • EU-ETS verifiers voluntarily use similar management systems	• Integrated emissions calculation method • Streamlined emissions calculation and verification processes • Database of all stakeholder information
Trade matching system(“GHGtrade.com”)	• Encourages emission allowance transactions among the participants • Requires pre-contacts before sales of allowances • Updates allowance prices and amounts for participants’ transactions on the notice board. (After confirmation of the contract details, participants should pay to their clients’ bank accounts and apply for allowance transactions in the registry system.)	• Opportunities for the participants to find their trading counterparts through the Internet

• Calculation method is based on "Act on Promotion of Global Warming Countermeasures"
• Calculation Method
• Fuel： Emissions＝Activity（fuel use）× Heat value per unit volume × Emission factor
• Other： Emissions＝Activity × Emission factor

Documents of JVETS

May 2011	Japan's Voluntary Emissions Trading Scheme (JVETS)
Mar 2011	Japan's Voluntary Emissions Trading Scheme (JVETS)

• Source:
• Japan's Voluntary Emissions Trading Scheme (J-VETS)