－1－ （Provisional Translation ） 
 
Basic Policy concerning the Promotion of Contracts considering Reduction of 
Emissions  of Green house Gases and Others  by the State and Other Entities  
 
1. The basic direction for the pr omotion  of contracts that consider  reduction s of 
emissions of greenhouse gases and others . 
(1) Background and significance of the pr omotion  of green contracts  
In light of  the scale and severity of its anticipated impacts, global warming is the 
most significant environmental issue threaten ing the foundations of human survival.  
According to the "Summary for Policymakers of the Working Group I Contribution to the Sixth 
Assess ment Report of the Intergovernmental Panel on Climate Change (IPCC)" released in August 
2021, it is unequivocal that human influence has warmed the atmosphere, ocean and land. 
Widespread and rapid changes in the atmosphere, ocean, cryosphere and biosphere have occurred. 
The scale of recent changes across the climate system as a whole and the present state of many 
aspects of the climate system are unprecedented over many centuries to many thousands of years.  
In Japan, the average temperature has risen, heavy  rains, damage caused by typhoons, 
effects on crops and ecosystems, etc., and it is not easy to clarify the relationship 
between individual weather disasters and global warming, but analysis using numerical 
models based on observation values predicts that the risk of heavy rains and intense heat 
will increase further in the future as global warming progresses.  
 
In light of this situation, Japan declared in October 2020 that will aim for net -zero 
greenhouse gas emissions, namely "net -zero by 2050", and at th e Global Warming 
Prevention Headquarters and the U.S. -sponsored Leaders’ Summit on Climate in April 
2021, Japan aims to reduce its greenhouse gas emissions by 46% in FY 2030 from its 
FY 2013 levels, setting an ambitious target which is aligned with the lon g-term goal of 
achieving net -zero by 2050. Furthermore, Japan will continue strenuous efforts in its 
challenge to meet the lofty goal of cutting its emission by 50%.  
It is not only harmful g reenhouse gases that humanity emits into the environment. 
While s ocio-economic activities characterized by mass production, mass consumption 
and mass waste have benefited us greatly , such activities have wasted the Earth ’s limited 
resources and hampered the natural cyclical change of materials, imposing a heavy load 
on the global environment.  
 
Against this background, we must  ensure the development and prosperity of  
－2－ human kind by seeking solutions to these challenges. To this end, it is essential to reduce 
emission s of greenhouse gases and other substances that negatively impact the 
environment (hereinafter, “greenhouse gases  and others ”) across  all sectors. In particular, 
it will be an  overridingly important approach to strive to reduce emissions of 
greenhouse gas es and others  by addressing the reduction of environmental loads in 
connection with the award of contracts.  
The emissions of Greenhouse gas es and others  related to power supply, procurement 
of automobiles, procurement of ships, energy conservation improvement , refurbishment  
and construction , for which details on the award of contracts to address reduction s of 
emissions of  greenhouse gas es and others  (hereinafter, ‘‘green contracts ’’) are stipulated 
by this Basic Policy, account for about 90% of the total greenhouse gas emissions 
sourced from the Government. In "the National Government Action Plan  (Cabinet 
decision on October 22, 202 1)" based on Article 20 of the Act on Promotion of Global 
Warming Countermeasures (Law No.117 of 1998), "using the FY 2013 level as the 
benchmark, greenhouse gas emissions directly and indirectly emitted in connection with 
affairs and projects of each gover nmental administrative organ should be reduce 50% by 
FY 2030. As provided for by the plan, in promoting green cont racts, the government 
tackles reduction of greenhouse gas emissions certainly in its affairs and projects, and 
strives for further reductions.  
 
Through these measures, we aim to  build a society where in people in every country 
can enjoy wellbeing in a sound , fertile environment conserved in all dimensions , from a 
global level to the community level —one that  can be  inherited by future generations … 
in other words , a sustainable society.  
It is e xpected  that when concluding  green contracts , in view of various fa ctors other 
than price while  bearing in mind  economical efficiency and paying due regard to the 
inherent wisdom and efforts of industr y, we can effectively improve environmental 
efficiency (in terms of environmental load related to the production of goods or the 
provision of services per unit) and ensure any increase in the environmental burden  can 
be contained,  even  as our economy becomes more affluent and “value added. ” 
Moreover, it is also expected  that this will  give rise to new econ omic activities by taking 
the lead in creating higher -performing green technologies and products that contribut e 
to environmental conservation.  
The State, independent administrative institutions, etc. (referring to independent 
administrative institution(s) , etc. defined in Article 2, paragraph 3 of the Law 
concerning the Promotion of Contracts considering Reduction of Emissions of  
－3－ Greenhouse Gases and others  by the State and Other Entities [Law No. 56 of 2007; 
hereinafter , “the Law” ]; the same shall apply h ereunder), local governments and local 
independent administrative institutions (hereinafter , “the State, etc.”) occupy  a 
significant p lace in  the national economy as a central player engaged in daily economic 
activities . In addition, the modality of conclu ding contracts by the State, etc. is of great 
importance, influencing th ose concluded by other entities. Therefore, it would bring  
significant benefits  to markets if the State, etc. establish the practice of concluding  
green contracts .  
Along with the purp ort of Article 24 of the Basic Environmental Law (Law No. 91 of 
1993) and Article 3, paragraph 3 of the Act on Promotion of Global Warming 
Countermeasures , it is called upon the State, etc. to take the initiative in promoting 
green contracts , which can be expanded by the private sector, thereby encouraging a 
nationwide shift to the pr omotion  of contracts that take account of the reduction of 
emissions of greenhouse gas es and others . 
 
(2) Basic concept concerning the pr omotion  of green contracts  
The head of each ministry or agency, etc. (referring to “the head of each ministry or 
agency, etc.” set forth in Article 2, paragraph 5 of the Law; the same shall apply 
hereinafter) and the heads of independent administrative institutions, etc. shall strive to, 
pursua nt to the provisions of Article 6 of the Law, as stipulated in this Basic Policy, take 
necessary measures for the promotion  of green contracts . 
 
In practice, the following approach es shall be taken toward the conclusion of contracts:  
 
(i)When entering into green contracts , the reduction of emissions of greenhouse gas es 
and others  should be considered in as wide range of fields as possible, in 
recognition that it is expected to be an effective approach toward the spread of 
eco-friendly good s and services (hereinafter , “goods, etc.”) in markets to take into 
account various factors other than price while bearing in mind economical 
efficiency.  
 
(ii) It is essential to keep in mind the concern that unless a contract considers  the 
reduction of emissions of greenhouse gas es and others , larger volumes of 
greenhouse gases  and others  are likely to be emitted in connection with the 
production  and use, etc. of goods, etc. under the relevant contract, as a consequence 
of which the State, etc. might incur  higher costs fo r environmental conservation.   
－4－  
(iii) It is essential to promote National Government Action Plan  effectively through 
green contracts . In particular, for independent administrative institutions, etc. to 
promote green contracts , it is preferab le to take a well-planned approach, in 
accordance with  National Government Action Plan , while respecting the 
characteristics of an individual institution.  
 
(iv) When specifying requisite performances  etc. for procurement, these specifications 
should be necessary, sufficient and clear, in line with administrative purposes, etc., 
and contract -related information  shou ld be publicized . When setting forth 
requirements, the evaluation methodology, procedures for  the award of contracts, 
etc., and when implementing contracts, it is essential to ensure fair competition 
with due consideration, by taking necessary  measures  to prevent  small and 
medium -sized enterprises from unfair disadvantage.  
 
(v) When implementing m easures concerning the promotion  of green contracts , it is 
essential to ensure accordance with other measures concerning the award of 
contracts by the States, etc.  
 
(vi) When implementing measures concerning the p romotion  of green contracts , it is 
essentia l to ensure consistency  with measures described in the Basic Energy Plan 
stipulated in Article 12, paragraph 1 of the Basic Act on Energy Policy (Law No. 71 
of 2002) and other measures related to the reduction of emissions of greenhouse 
gases and others  by the States,  etc.  
 
(vii) It is required to ensure accordance with other administrative purpose, with due 
consideration to compliance with the WTO Agreement on Government 
Procurement, lest an unnecessary impediment be posed on international trade.  
 
2. Basic matters related to the r eduction of greenhouse gas emissions for contracts with 
overriding priority on the reduction of greenhouse gas emissions.  
(1) Contracts related to the supply of electricity  
Basic matters related to the reduction of emissions of greenhouse gas es and others  for 
contracts related to the supply of electricity are stipulated as follows:  
- When concluding a contract related to the supply of electricity, it is essential 
to contract electricity retailer with a low greenhouse gas emission factor.   
－5－ - For contracts to be concluded  by bidding related to the supply of electricity, it 
is essential to  select the successful  bidder on the basis of price from among 
those qualified bidders who have met the requisite standard of greenhouse gas 
emission factors , effort of reducti on of environmental loads  (the status of 
introduction of renewable  energy, the status of use of un utiliz ed energy),  the 
status of disclosure of power supply composition and greenhouse gas emission 
factor, etc. , which is prescribed in advance  (hereinafter , “the bottom -cut 
method”),  until otherwise provided for by the basic policy . 
- When considering details of bidding procedures  under  the bottom -cut method, 
ensuring fair competition, until otherwise provided for by the basic policy , 
consider t he appropriate region, refer to the state of supply of electricity in the 
region  and the greenhouse gas emission factor of the electric ity retailer .  
- When concluding a contract related to the supply of electricity, it is essential 
to specify the minimum ratio of renewable energy electricity to the electricity 
to be procured, to enter into contract with a electricity retailer  acknowledged as 
capable of supplying electricity to meet the required power demand, the 
estimated power consumption, etc. as describ ed in specifications throughout 
the term of contract reliably and stably.  
- Endeavor to procure renewable energy electricity that contributes to the 
expansion of the introduction of renewable energy sources as much as possible.  
- The State and independent administrative institutions, etc. shall endeavor to 
ensure the appropriate and reasonable use of energy and, when implementing 
contracts related to the supply of electricity, to ensure fair competition with due 
consideration, by t aking measures necessary to prevent  small and 
medium -sized enterprises from unfair disadvantag e, and at the same time, to 
ensure consistency  with measures concerning the conclusion of contracts by 
other States, etc., measures described in the Basic Energy Plan stipulated in 
Article 12, paragraph 1 of the Basic Act on Energy Policy (Law No. 71 of 
2002) and other measures related to the reduction of emissions of greenhouse 
gases and others  by the  States,  etc. 
 
(2) Contracts related to the procurement , etc.  of greenhouse gas -emitting products  
(i) Contracts related to the procurement , etc.  of automobiles  
Basic matters related to the reduction of emissions of greenhouse gas es and others  for 
contracts related to the procurement  and lease  of automobiles are stipulated as follows:  
- For contracts to be concluded  by bidding related to the procurement  and lease   
－6－ of automobiles, it is essential to enter into contract with a party whose proposal 
is rated the best when comprehensively evaluated i n terms of procurement  
price and environmental performance.  
- With regard to requisite performance at the time of ordering, it is essential to 
prescribe requirements  by taking properly administrative purposes into account, 
giving  due consideration  not to restrict biddings unnecessarily.  
- With regard to specific requirements for a particular bid, the procuring party 
shall set forth details, based on data on the use of automobiles.  
 
(ii) Contracts related to the procurement of ships  
Basic matters related to the reduction of emissions of greenhouse gas es and others  for 
contracts related to the procurement of ship s are stipulated as follows:  
- When contracting for the outline design or the basic design for planning to 
procure  ships, it is essential  to employ  the procedure to select a party who has 
offered  the most excellent technical proposal by  evaluat ing comprehensively in 
light of the specified technical requisite standards, including features 
addressing the reduction of emissions of greenhouse gases and others  in 
principle . However, t his rule does not necessarily apply to the ships with 
overriding priority on other factors than the reduction of emissions of 
greenhouse gases and others, or the ships with little room for the design 
innovations.  
- When a small craft  is to be procured , it is essential to stipulate  the requi sites 
of the propulsion machinery  (power engine) of a small craft . In principle, when 
setting the requisite, it includes  the standard of the fuel consumption rate etc. of 
the propulsion machinery , and describ ing it clearly in a specification etc. 
However, th is rule does not necessarily apply to the ships with overriding 
priority on other factors than the reduction of emissions of greenhouse gases 
and others.  
 
3. Basic matters related to contracts for energy conservation improvement projects.  
Basic matters related to contracts for energy conservation improvement projects 
(referring to “energy conservation improvement projects” described in Article 5, 
paragraph 2 , item 3 of the Law; hereinafter , “ESCO project”) are stipulated as follows:  
- When planning an ESCO project, it is essential to grasp in advance the 
conditions of existing facilities  accordingly , and draw up a plan for a program 
by making use of means for  implementing an ESCO project appropriately and  
－7－ smoothly, such as feasibility stud ies, etc.  
- When planning an ESCO project, it is essential to properly formulate a 
long-term in -service program  and to realize  thorough discussion, lest terms and 
conditions of a contract be subject to change within the term of contract.  
- When deciding the ESCO operator, it is essential to comprehensively  evaluate 
proposals not only by comparing prices but also by determining which offered  
technical proposal  with other facto rs is the most suitable for the equipment and 
systems of the relevant facility, with innovations fully incorporated.  
- In concluding a contract for an ESCO project, it is essential to consult 
thoroughly with the implementing operator in advance concerning the sharing 
of potential risks to arise during the period of the project.  
- When implementing an ESCO project, it is essential to formulate guidelines 
on maintenance and measurement/verification, according to the contract to be 
concluded.  
- Before the comp letion of an ESCO project, with regard to area(s) pertaining 
to the technical scope employed as an ESCO project, it is essential to require 
the implementing operator to create guidelines on proper maintenance and 
administration following  the termination of  the project.  
 
4. Basic matters related to the reduction of emissions of greenhouse gas es and others  
under contracts other than those listed in the preceding 2 and 3 that fall into the 
categories of contracts related to buildings or other contracts awarded  by the State 
and independent administrative institutions, etc.  
(1) Contracts related to buildings  
Basic matters for contracts related to the design of buildings, contracts related to the 
operation and maintenance  of buildings, and contracts related to the refurbishment  of 
buildings (hereinafter referred to as "contracts related to buildings") are stipulated as 
follows:  
- When constructing new building construction, in principle, it is essential to 
convert building s to ZEB ( Net Zero E nergy  Building) and introduce renewable 
energy.  
- When refurbishment  existing buildings, based on the energy  conservation  
effects of the refurbishment , medium to long -term refurbishment  plan with a 
view to ZEB conversion shall be consid ered as necessary.  
- When contracts related to buildings, in order to decarbonize buildings 
throughout their life cycle, from the planning and design phase of buildings to  
－8－ the operational phase of maintenance and management, as well as the 
refurbishment ph ase of buildings, effective cooperation and evaluation of 
measures and initiatives at each phase based on data measurement and analysis 
of energy consumption, etc., and the establishment of processes to achieve the 
required performance, including the use o f experts, shall be considered.  
 
(i) Contracts related to  the design of buildings  
Basic matters for contracts related to buildings are stipulated as follows . However, 
this rule does not necessarily apply to the projects with overriding priority on other 
factors than the reduction of emissions of greenhouse gas es and others , or the projects 
with little room for such design innovations.  
- When ordering for the design service pertaining to the construction or 
large -scale refurbishment  of a building, it is essential to employ  the procedure 
to select a party who has offered  the most excellent technical proposal  by 
evaluat ing comprehensively in light of the specified technical requisite 
standards , including features ad dressing the reduction of emissions of 
greenhouse gas es and others  in principle  (including affirmative  use of natural 
energy) (hereinafter , “the green proposal procedure”).  
- When ordering for the design service pertaining to the construction or 
large -scale refurbishment  of a building, it is essential to describe the 
environmental conservation performance based on the extension of the service 
life of the facility, energy and resource conserv ation, use of natural energy, and 
the use of materials and equipment such as wood in consideration of reducing 
environmental impact  required for the design output clearly in contract 
documents  in principle . 
- When contracting for the design service pertain ing to the construction or 
large -scale refurbishment of a building, it is essential to describe in the contract 
documents as necessary, the introduction of energy management functions in 
light of the importance of utilizing data such as energy consumption throughout 
the life cycle of the building.  
- If the green proposal procedure is employed, and when features addressing 
the reduction of emissions of greenhouse gas es and others  contained in the 
technical proposal  offer ed by the selected party are judged ap propriate in terms 
of economical efficiency as well, it is essential to ensure the relevant features 
of the technical solution are reflected in the design output, by clearly describing 
the appropriate features in contract documents.   
－9－ - If the green proposal  procedure is employed, it is essential to conclude a 
contract with the selected party and to require the other party (the designer) of 
the contract to assess life -cycle CO 2 emissions (LCCO 2), in addition to 
comprehensive environmental conservation perform ance, with regard to the 
design output.  
- When ordering through the green proposal procedure, it is essential to 
announce to that effect officially with an outline of the order in advance, and 
when the outline has been modified, to publicize the outline as  modified.  
- When ordering through the green proposal procedure, it is essential to provide 
necessary information for those who are invited to offer  technical , and to 
ensure those parties are allowed reasonable time for preparation.  
- When ordering through the green proposal procedure, it is essential to ensure 
impartiality, transparency, and objectivity.  
 
(ii) Contracts  related to the operation and maintenance  of buildings  
Basic matters for contracts related to the operation and maintenance  of buildings are 
stipulated as follows : 
- When ordering a contract for the operation and maintenance  of a building, in 
principle, it is essential to describe in the contract documents the contents of 
consideration for the reduction of emissions of greenho use gas es and others . 
- When ordering a contract related to the operation and maintenance  of a 
building, the orderer shall consider a contracting method that contributes to 
operational improvement, such as a multi -year contract or a batch order for 
several facilities, based on the actual energy consumption conditions and 
characteristics of the target facility.  
- When se lecting a business operator based on a comprehensive evaluation of 
price and factors other than price among contracts related to the operation and 
maintenance  of buildings submitted for bidding, in principle, it is essential to 
require to proposals that in clude content that takes into consideration the 
reduction of emissions of greenhouse gas es and others.  
- When contracting for the operation and maintenance of a building, 
implementer shall be requested to use eco -tuning, etc., to measure and analyze 
data s uch as energy consumption, and to improve operations by reflecting the 
analysis results. In addition, the actual operation data shall be utilized for 
examination of the refurbishment plan.  
- With regard to specific required specifications and bidding condi tions shall be  
－10－ set by the procurer based on the use and characteristics , etc. , of the building.  
 
(iii) Contracts  related to the refurbishment  of buildings  
Basic matters for contracts related to the refurbishment  of buildings are stipulated as 
follows:  
- Refurbishment of buildings is ESCO project or refurbishment project other 
than ESCO project that contribute to energy conservation and decarbonization 
(hereinafter referred to as "other energy conservation refurbishment project").  
- When the pla n for refurbishment, appropriate building refurbishment project 
(ESCO project or other energy conservation refurbishment project) shall be 
selected from a comprehensive perspective, such as determining the feasibility 
of introducing ESCO project based on d ata measurement and analysis of data 
such as the characteristics of the facility and energy consumption, and the 
results of data analysis.  
 
(a) Contracts  related to the ESCO project  
The basic matters of the contract for the energy  conservation  improvement  project 
(ESCO project) are as listed in 3 above.  
 
(b) Contracts  related to the other energy conservation refurbishment  project  
Basic matters for contracts related to the other energy conservation refurbishment  
project  are stipulated as follows:  
- When the plan for other energy conservation refurbishment project, efforts 
shall be made to utilize data such as energy consumption at the operation phase 
of the facility, and as necessary, energy management functions that contribute 
to operational improve ment in operation and maintenance  after re furbishment  
shall be expanded.  
- When ordering other energy conservation refurbishment project, a contract 
method that contributes to the reduction of energy consumption or greenhouse 
gas emissions shall be selecte d according to the characteristics of the facility 
and the purpose of the renovation.  
- With regard to  specific required specifications and bidding conditions shall be 
set by the procurer based on the purpose , etc.,  of the refurbishment of the 
building.  
 
(2) Contracts related to the industrial waste management   
－11－ Basic matters for contracts related to the ind ustrial waste man agement  are stipulated 
as follows:  
- For contracts to be concluded  by bidding related to the industrial waste 
management , it is essential to  select the successful  bidder  under the bottom -cut 
method  who has met the requisite standard of effort of reduction of emission s 
of greenhouse gas es and the requisite standard of ability  and results, etc. 
concerning execution of proper industrial waste management . 
- With regard to concrete  requirements for a bid  under the bottom -cut, the 
procuring party shall decide in consideration of the characteristic of the 
processed industrial waste.  
 
5. Other important matters related to the pr omotion  of green contracts  
(1) Promotion of green contracts  in all contract categories  
For all of the contract categories , as well as  listed in the preceding 2 through 4 , 
including associated contracts permitting the installation of equipment in government 
buildings, it is preferable to ensure features of the  contract , to make use of the goods, 
etc. pertaining the  contract , and to conduct affairs related to the award of contracts in a 
way as to contribute to the reduction of emissions of greenhouse gas es and others  in 
connection with the implementation of projects under co ntract and affairs to award 
contracts. Also, due consideration should be given lest the reduction of emissions of 
greenhouse gas es and others  in the administrative field cause increased  emissions of 
greenhouse gas es and others  in non -administrative sectors . 
 
(2) Establishment of structure to promote contracts  
The head of each ministry or agency and the heads of independent administrative 
institutions, etc. shall establish a structure to promote green contracts . In principle , it is 
required that the head of the structure shall be a person who is competent in supervising 
green contracts  entirely for the internal organization (in the case of each ministry or 
agency, a person who holds the office of or equivalent to Director Gen eral [Chief 
Secretary ] or higher) and also that all internal organizations shall be involved in the 
structure. In particular, departments/divisions in charge of environmental affairs and 
departments/divisions in charge of accounting/procurement shall engag e in the structure 
on their own initiative.  
 
(3) Publication of a summary of contracts concluded, etc.  
When publishing a summary of concluded green contracts , the head of each ministry  
－12－ or agency and the heads of independent administrative institutions, etc . shall publish  a 
summary in a form as plain as possible.  
 
(4) Implementation of programs to enhance personnel’s understanding for further 
promotion of green contracts  
The head of each ministry or agency and the heads of independent administrative 
institu tions, etc. shall seek to provide the personnel, including officials in charge of 
business practice relating to contracts, opportunities to enhance their understanding of 
green contracts  and to acquire technical knowledge useful for concluding such 
contrac ts. 
 
(5) Compilation, etc. of information  
The State, with the view of contributing to the promotion of green contracts  by the 
State, independent administrative institutions, etc., local governments, local independent 
administrative institutions, and other citizen of the State, shall compile and analyze the 
data relating to the concluded green contracts  and other data, and shall make the results 
of such compilation and analysis extensively available in an easily understandable form. 
The head of each ministry  or agency and the heads of independent administrative 
institutions, etc. shall seek to conclude contracts that contribute to the reduction of 
environmental loads as much as possible by making sufficient use of existing 
information including the relevant i nformation.  
 
(6) Harmonization with other measures  
The State shall engage reasonably and effectively in the publication and compilation, 
etc. of information in coordination with the system established for the enforcement of 
Law Concerning the Promotion of Procurement of Eco -friendly Goods and Services by 
the State and Other Entities  (Law No. 100 of 2000), which stands for a pioneering 
initiative addressing  the environment.  
 
(7) Review of the Basic Policy  
With the view of contributing to further promotion of  green contracts , the State shall  
examine the progress of implementing this Basic Policy, and  review this Basic Policy 
whenever deemed necessary , based on the results of the examination,  in reference to 
available information/data described in (5) and so fo rth. 
In this regard, with the view of contributing to the smooth implementation of green 
contracts by the State, etc., the Minister of the Environment shall provide the head of  
－13－ each ministry of agency, the heads of independent administrative institutions, etc., the 
heads of local governments, and the heads of local independent admini strative 
institutions with information related to subject matters to be examined, which shall be 
made available at the onset of examination pertaining to the review of this Basi c Policy. 
The head of each ministry or agency and the heads of independent administrative 
institutions, etc. shall seek to grasp the present condition, etc. so as to prepare 
sufficiently to take necessary measures without hassle in case this Basic Policy is 
reviewed as a result of examination, by making use of the relevant information provided 
by the Ministry of the Environment.