NEWS RELEASE
23-D-1631

February 27, 2024
Japan Credit Rating Agency, Ltd. (JCR) announces the following Climate Transition Bond Evaluation Results.

The Government of Japan
1st Japan Climate Transition Bond

Assignment

Overall
Evaluation

Greenness/
Transition
Evaluation(Use of Proceeds)

Management,
Operation andTransparency
Evaluation

Green 1(T)

gt1

m1

IssuerRedemption Date

The Government of Japan
10-year Japan Climate Transition Bonds
5-year Japan Climate Transition Bonds
interest-bearing government bonds
10-year bonds: JPY 799.5 billion
5-year bonds: JPY 799.8 billion
10-year bonds: Nominal Coupon 0.70% (per annum)
5-year bonds: Nominal Coupon 0.30% (per annum)
10-year bond: February 14, 20245-year bond: February 27, 2024
10-year bond: December 20, 2033
5-year bond: December 20, 2028

Method ofRedemption

Lump-sum redemption at maturity

Use of Proceeds

Businesses that meet the eligibility criteria identified in
the Climate Transition Bond Framework based on the
GX Promotion Strategy

Subject
Type
Issue AmountInterest Rate
Auction Date

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Evaluation Overview▶▶▶ 1. Overview of Japan

Japan is located off the coast of the Far East and East Asia at the eastern tip of the Eurasiancontinent, and along the northwest coast of the Pacific Ocean, forming an arcuate archipelago asa whole. Approximately 70 per cent of Japan's land is mountainous, and approximately 67 percent of that is forest. Japan is a country that experiences more natural disasters such as
earthquakes and typhoons than any other country in the world. 18.5 per cent of earthquakes ofmagnitude 6 or higher that occur around the world occur in Japan. In addition, Japan accounts
for 17.5 per cent of the damage caused by natural disasters including typhoons and earthquakes
worldwide. In Japan, natural disasters, which have become increasingly severe in recent years,
have caused much damage, including blackouts that lasted for several weeks, and further
measures to both mitigate and adapt to climate change have become an urgent and top priority
issue.
Japan has many manufacturing industries that are internationally competitive. According to the2023 White Paper on Manufacturing Industries, there were 825 major manufacturing items in 2020,of which 220 items had a global share of 60 per cent or more, making it an overwhelming leader
in the world. Approximately 70 per cent of this is used as parts and materials for electronics andautomobiles, making this a strength of Japan's manufacturing industry.1
The total amount of greenhouse gas ﴾hereinafter referred to as "GHG"﴿2 emissions in Japan withthe thriving manufacturing industry, was 1.17 billion tons-CO2e as of FY 2021 that ranked the fifthlargest in the world; however, the actual amount in FY 2021 was reduced by approximately 16.9
per cent from FY 2013. Of which, the total carbon dioxide ﴾hereinafter referred to as "CO2"﴿
emissions amounted to 1,064 million tons-CO2 and 92.9 per cent of the emissions are resulting
from energy use. The breakdown by sector is as follows: the energy transformation sector, 40.4
per cent; the industrial sector, 25.3 per cent; the transportation sector, 16.7 per cent; thecommercial industry, etc. sectors, 5.6 per cent and the residential sector, 4.8 per cent.

▶▶▶ 2. Overview of Japan's transition strategy

The Government of Japan declared "2050 carbon neutral" in October 2020, based on the goals
set out in the Paris Agreement ﴾substantially reduce global greenhouse gas emissions to holdglobal temperature increase to well below 2°C above pre-industrial levels and pursue efforts tolimit it to 1.5°C above pre-industrial levels,﴿ and legalized it by amending the Act on Promotionof Global Warming Countermeasures in 2021. In April 2021, the government expressed that it——————————————
Ministry of Economy, Trade and Industry, Ministry of Health, Labor and Welfare, Ministry of Education, Culture, Sports, Scienceand Technology “2023 White Paper on Manufacturing Industries ﴾Annual report based on Article 8 of Basic Act on the
Promotion of Core Manufacturing Technology﴿” https://www.meti.go.jp/report/whitepaper/mono/2023 /index.html
2CO2, methane, dinitrogen monoxide ﴾nitrous oxide,﴿ hydrofluorocarbons ﴾HFC,﴿ perfluorocarbons ﴾PFC﴿ and sulfur hexafluoride
﴾SF6﴿
1

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aimed to reduce GHG by 46 per cent ﴾from FY 2013﴿ in FY 2030 and continuingly challenge torealize 50 per cent reduction as an interim goal for carbon neutral in 2050.
As mentioned above, energy-derived CO2 accounts for a little under 90 per cent of total GHG
emissions of Japan. It is therefore significant to steadily take concrete measures for
decarbonization in the industry, business, transportation and residential sectors, based on thenational energy basic plan and the national energy mix to achieve the 2030 target. The
Government of Japan launched GX that is to transform the industrial and social structures fromfossil energy-centered since the Industrial Revolution into clean energy-centered in the 6thStrategic Energy Plan decided in the cabinet in October 2021. The government has held the GX
Implementation Council, chaired by the Prime Minister and composed of experts from thegovernment, private sector experts and academia since 2023 and compiled Basic Policy for the
Realization of GX. The GX Promotion Act and the GX Decarbonization Electricity Act were enacted
in 2023, and a system to promote the initiatives toward "Pro-Growth Carbon Pricing ﴾CP﴿
Concepts" was established. "GX Promotion Strategy" was decided in the cabinet in July 2023,
based on the GX Promotion Act as a concrete strategy for implementing a series of policies.
The government centered to seek for further energy consumption reduction and for making
renewable energy the main power sources as its first prioritized strategy. It then supports to realize
the development of next-generation technologies in 22 sectors, including, but not limited to, themaximum utilization of nuclear power or hydrogen/ammonia/carbon recycling.

▶▶▶ 3. Validity on Transition Strategy ﴾Outline of Alignment Evaluation with CTFH﴿

The Government of Japan's transition strategy and specific policies satisfy the four elements of
the Climate Transition Finance Handbook 3 and the Basic Guidelines on Climate Transition
Finance4 ﴾collectively referred to as the CTFH, etc.﴿. The goal set by the Government of Japan toreduce GHG emissions by 46 per cent compared to 2013 levels in 2030 meets the goal of limiting
global temperature rise to below 2°C as set by the Paris Agreement, but does not meet the goal
limiting global temperature rise to 1.5°C or lower. JCR expects the government’s further
considerations to accelerate its efforts to reach even higher targets which will be enable 1.5°Clevel rise. JCR evaluates the level of ambition as being relatively ambitious when comparing thetarget values of other countries with the same base year.
The Government of Japan's transition strategy calls for public and private sectors to invest 150
trillion yen over the next 10 years in order to achieve carbon neutrality in 2050 and the interim
milestone goal of 2030 ﴾46 per cent reduction compared to 2013﴿. The plan is to go beyond the
SDS scenario ﴾Business As Usual﴿, as the government is planning to attract GX investment by——————————————
International Capital Market Association ﴾ICMA﴿ “Climate Transition Finance Handbook 2023”
https://www.icmagroup.org/sustainable-finance/the-principles-guidelines-and-handbooks/climate-transition-financehandbook/4
Financial Services Agency, Ministry of Economy, Trade and Industry, Ministry of the Environment “Basic Guidelines on Climate
Transition Finance 2021 Edition” https://www.meti.go.jp/press/2021/05/20210507001/20210507001-1.pdf
3

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implementing investments stipulated in the Climate Transition Bond Framework in advance. JCR
evaluates that this is a highly ambitious strategy, requiring efforts in addition to the BAU.

▶▶▶ 4. Overview of climate transition bond evaluation

The subjects of this evaluation are the 10-year Japan Climate Transition Bonds and 5-year Japan
Climate Transition Bonds to be issued by Japan in February 2024 ﴾collectively or individuallyreferred to as the "1st Japan Climate Transition Bonds" or the "Bonds"﴿. JCR will evaluate whether
this Bonds complies with the Green Bond Principles ﴾GBP﴿ 5 , Green Bond Guidelines ﴾GB
Guidelines﴿6, CTFH, etc. Although these are principles or guidelines and are not legally supported
regulations, JCR conducts evaluations by referring to the principles and guidelines as currently
unified domestic and international standards.
The Government of Japan has established eligibility criteria for the Climate Transition Bond
Framework in line with the goals and policies established in the GX Promotion Strategy based on
the Plan for Global Warming Countermeasures, the Basic Energy Plan, etc. The projects for which
the proceeds of this Bonds will be used are R&D funds and/or subsidy programs selected by theGovernment of Japan which meets the eligibility criteria set forth in its framework. In addition,although many of the eligible projects are research and development funding and subsidy
programs and are unlikely to directly cause serious negative environmental or social impacts,
environmental and social considerations should be taken into account when evaluating andselecting individual eligible projects. Based on the above, it is expected that the use of proceedsfrom this Bonds will promote GX initiatives across Japan and contribute to achieving carbon
neutrality in 2050 and its milestone goal in 2030. Looking at the specific allocation of funds by
CO2 emitting sector, JCR sees that measures are being taken in a well-balanced manner, as shownin the figure below.

——————————————
International Capital Market Association ﴾ICMA﴿ "Green Bond Principles 2021" https://www.icmagroup.org/green-social-andsustainability-bonds/green-bond-principles-gbp/
6
Ministry of the Environment “Green Bond Guidelines 2022 Edition” https://wwitnv.go.jp/content/000062495.pdf
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Figure 1: Relationship between use of proceeds and CO2 emitting industries17

In the process of selecting projects set out in this bonds by the government include ﴾1﴿ a liaison
system between relevant ministries and agencies has been established; ﴾2﴿ the selection is to be
finally approved in the GX Implementation Council haired by the Prime Minister; ﴾3﴿ bonds to beissued, based on this framework are managed separately from other accounts in the energy
supply and demand account of the special account for energy measures and ﴾4﴿ allocated projects
are separately categorized as GX-related budgets in the same account. JCR therefore has
evaluated that a system has been established to properly classify and manage proceeds financed,
based on this framework. JCR has also confirmed that reporting contents/periods on the
allocation of proceeds and impacts are adequately established. Accordingly, JCR has evaluatedthat the management and operation system in the national government has been established andhas transparency.
Accordingly, JCR has assigned "gt1" to the "Greenness/Transition Evaluation (Use ofProceeds),"m1" to the "Management, Operation and Transparency Evaluation" and "Green 1﴾T﴿"
to the "JCR Climate Transition Bond Evaluation" for this Bonds. JCR has evaluated that this Bonds
satisfies the criteria for items required in the "Green Bond Principles," "Green Bond Guidelines,"and CTFH, etc.

——————————————
7

Created by JCR based on the Ministry of the Environment's "Japan’s National Greenhouse Gas Emissions and Removals in FY
2021 ﴾Final Figures﴿"
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Table of contents
Chapter 1: Overview of Evaluation Targets
Chapter 2: Alignment with Climate Transition Finance Handbook
2-1. Japan's Economic Policy and Transition Strategy
2-2. Alignment with Items Required in the Climate Transition Finance Handbook
Chapter 3: Consistency with Green Bond Principles, etc.
■ Evaluation Phase 1: Green/Transition evaluation
I. Use of Proceeds
JCR's Key Consideration in This Factor
Current status of evaluation target and evaluation of JCR
1. Overview of use of proceeds
2. Project overview and impact (environmental improvement effect)
3. Negative impact on the environment and society
4. Consistency with SDGs

■ Evaluation phase 2: Management, Operation and Transparency Evaluation
I. Selecting Criteria and Processes of the Use of Proceeds
JCR's Key Consideration in This Factor
Current status of evaluation target and evaluation of JCR
1. Goal
2. Selection criteria
3. Process
II. Management of Proceeds
JCR's Key Consideration in This Factor
Current status of evaluation target and evaluation of JCR

III. Reporting
JCR's Key Consideration in This Factor
Current status of evaluation target and evaluation of JCR

IV. Efforts to Address Organizational Environmental Issues
JCR's Key Consideration in This Factor
Current status of evaluation target and evaluation of JCR■ Evaluation phase 3: Evaluation Result (Conclusion)

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Chapter 1: Overview of Evaluation Targets
The subjects of this evaluation are the 10-year Japan Climate Transition Bonds and 5-year Japan
Climate Transition Bonds to be issued by Japan in February 2024 ﴾collectively or individuallyreferred to as the "1st Japan Climate Transition Bonds" or the "Bonds"﴿.
The funds financed from this bonds will be allocated to the projects, aiming to realize the 2050
carbon neutral that is an international commitment aligned with the Paris Agreement and a 46
per cent reduction by FY 2030 ﴾from FY 2013﴿ based on the "Strategy for Promoting Transition
to a Decarbonized, Growth-Oriented Economic Structure ﴾known as GX Promotion Strategy﴿."The proceeds shall be selected from the measures/projects stipulated “GX Promotion Strategy”
as well as the Climate transition finance framework established by the government. It will be
repaid by several measures, since future carbon pricing ﴾"CP" refers to charge for fossil fuels andexpenses borne by specified business in the electricity sector﴿ as financial resources: 1﴿ it shallbe taken into account the balance between benefits and burdens of citizens, 2﴿ the investment
decision is difficult for the private sector while considering the benefits and burdens perspectives
and 3﴿ it shall be prioritized to the investment area which will contribute to realize both emission
reduction and industrial competitiveness strengthening and economic development of Japan.
The government considers to support high emission companies which participate in emission
trading system called “GX League8”. So the implementing bodies of the use of proceeds shall beselected from those companies.
The "GX Promotion Strategy" listed 14 future action for efforts as exemplified in the"Decarbonization initiatives for GX on the premise of ensuring a stable energy supply" that
promote toward decarbonization by the public and private sectors. The Government of Japan
has organized these efforts into the Climate Transition Bond Framework as eligibility criteria for"Japan Climate Transition Bonds," which are individual issues of GX Economy Transition Bonds
﴾See Japan Climate Transition Bond Framework 9 and JCR Evaluation Report 10 published on
November 7, 2023﴿.
In the Japan Climate Transition Bond Framework, the Government of Japan states that the
selection of the use of proceeds will be based on the "basic conditions" of investment promotion
measures based on the basic concept of upfront investment support for GX Economy Transition
Bonds shown in Table 1﴾eligible business﴿.

——————————————
GX is an abbreviation for Green Transformation, which refers to the transformation and activities aimed at achieving this goalby utilizing clean energy while avoiding the use of fossil fuels as much as possible. The GX League is a group of companies
that are actively working on GX, together with players from the government, academia, and finance who are taking on thechallenge of GX, to discuss reforming the entire economic and social system and creating new markets. It was established by
the Ministry of Economy, Trade and Industry as a place to practice creativity.
9
Cabinet Secretariat / Financial Services Agency / Ministry of Finance /Ministry of Economy, Trade and Industry / Ministry of theEnvironment, "Japan Climate Transition Bond Framework", November 2023
https://www.meti.go.jp/policy/energy_environment/global_warming/transition/climate_transition_bond_framework_eng.pdf
10
JCR "Japan Climate Transition Bond Framework Evaluation Report", November 2023
https://www.jcr.co.jp/download/b5abf0635c83b738b5c0dbc0628553c0b1bc9d13dcb3365a5c/23d1036en_2.pdf
8

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Table 1: GX Economy Transition Bond “basic conditions” in the selection of the use of proceeds (overview) 11
I.
II.
III.
IV.

Basic Conditions
Efforts that are truly difficult to make investment decisions solely by the private sector
Efforts that contribute to strengthening industrial competitiveness, economic growth and emission
reduction, which are essential for achieving GX
Integration with regulations and institutional measures that change corporate investment anddemand-side behaviour
Efforts that contribute to the expansion of domestic investment including for human capital

The government prioritizes projects that align with the types which meet each of therequirements from A to C for increasing industrial competitiveness/economic growth and therequirements from 1 to 3 for emission reduction as candidates subject to support in addition to
the aforementioned principles.

Figure 2: Requirements for selecting the use of proceeds for GX economy transition bonds12——————————————
Source: Cabinet Secretariat / Financial Services Agency / Ministry of Finance /Ministry of Economy, Trade and Industry /Ministry of the Environment, "Japan Climate Transition Bonds Framework", November 2023
12
Source: Cabinet Secretariat / Financial Services Agency / Ministry of Finance /Ministry of Economy, Trade and Industry /Ministry of the Environment, "Japan Climate Transition Bonds Framework", November 2023
11

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Based on the above, JCR evaluates the alignment of this Bonds with the Green Bond Principles,
the Green Bond Guidelines of the Ministry of the Environment, and CTFH, etc., based on JCR
Green Finance Evaluation Methodology in the next chapter in detail.

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Chapter 2: Alignment with Climate Transition Finance Handbook
2-1. Japan's Economic Policy and Transition Strategy<Outline/Political/Social Situations>Japan is located off the coast of the Far East and East Asia at the eastern end of the EurasianContinent and the coastal areas in northwestern part of the Pacific Ocean, and it is island arcs asa whole. The land area is roughly 378,000 km2, approximately 70 per cent of which ismountainous terrain that include roughly 67 per cent of forests and it ranks 62nd in the world.
Natural disasters, such as earthquakes or typhoons has hit Japan more often than the rest of theworld. While Japan's land area accounts for only about 0.29 per cent in the world, 18.5 per centof earthquakes with a magnitude of 6 or higher have occurred in Japan since 7.1 per cent of theworld's active volcanoes are located in Japan where there are many active faults. The amount ofdamage that Japan has suffered by natural disasters, including typhoons or earthquakes
accounts for 17.5 per cent of the world; therefore, Japan is called as a disaster-prone country.
Further measures from both mitigation/adaptation to climate change are urgent and the mostimportant issues since many damage has recently occurred due to earthquakes and intensifying
storms and floods disasters although the national government strives to make the country more
resilient to climate change and earthquakes.

Number of houses power outages(10 thousands)

2018
Hokkaido
Eastern
Iburi
Earthquake:Max
2.95
millionhousing, 99per cent resolved after 50hours

Typhoon Jebi: Max 2.40 million
housing, 99per cent resolved after

Number of houses
power outages(10 thousands)

Heavy rain in Western Japan
Max 80,000
housing, 99percent resolved
after 120 hours

Hours after the max power outages (hrs)

120 hours

Typhoon Trami: Max 1.80 million
housing, 99per cent resolved
after 70 hours

Request for power saving（Hokkaido Earthquake）

Hours after the max power outages

Figure 3: The number of power outages and time taken to resolve in each disaster13

The Japanese GDP in 2022 ranked third after the United States and China thanks to a large
number of internationally competitive manufacturing companies. According to the 2023 White
Paper on Manufacturing Industries, Japan has 825 major manufacturing items in 2020 of which
220 items hold 60 per cent or more global market shares, a predominantly high number,——————————————
13

Agency for Natural Resources and Energy at https://www.enecho.meti.go.jp/about/special/johoteikyo/blackout.html
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compared to the United States ﴾99 items,﴿ Europe ﴾50 items﴿ and China ﴾45 items.﴿ Roughly 70
per cent of the items are parts/materials, including electronics or automobiles, which is thestrength of the Japanese manufacturing industry.
The total amount of GHG emissions in Japan with the thriving manufacturing industry, was 1.17
billion tons-CO2e as of FY 2021, ranked the fifth largest in the world; however, the actual amountin FY 2021 was reduced by approximately 16.9 per cent from FY 2013. Of which, the total CO2
emissions amounted to 1,064 million tons-CO2, and 92.9 per cent of the emissions are resulting
from energy use. The breakdown by sector is as follows: the energy transformation sector, 40.4
per cent; the industrial sector ﴾the iron and steel, chemical and allied products and other industry﴿,25.3 per cent; the transportation sector, 16.7 per cent; the commercial industry, etc. sectors, 5.6
per cent and the residential sector, 4.8 per cent ﴾Figure 3, before electricity and heat distribution.﴿

Figure 4: Breakdown of CO2 emissions by sector (Final figures for FY 2021)14

The Government of Japan has aggressively led the decarbonization initiatives in the international
community with ambitious developmental promotion of solid/new technologies by discussing
over global promotion of GX that is a transformation of the entire economic and social system
so as to shift to the clean energy-centered economy, society and industrial structure from thefossil fuel-centered since the Industrial Revolution, based on the spirit of the Paris Agreement
and furthermore to integrate carbon neutral, a circular economy and nature revival byaccelerating the measures against climate change in the whole world and by compiling anagreement, stating to aim to keep the global temperature rise below 1.5 °C by 2030 in the "G7
Sapporo Climate, Energy and Environment Ministers' Meeting" as its host country in the G7
Hiroshima Summit in May 2023.
——————————————
14

The outline of the 2021 Greenhouse Gas Emissions/Absorption ﴾Final Figures﴿ by National Institute for Environmental Studies
under the jurisdiction of Ministry of the Environment
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<Plan for Global Warming Countermeasures>
The Government of Japan established goals set forth in the Paris Agreement ﴾keep the global
temperature rise well below 2 °C and to pursue efforts to limit the temperature increase evenfurther to 1.5 °C﴿ and set out the basic principles for promoting global warming countermeasures,such as realizing decarbonized society for the 2050 Carbon neutral, the integrated improvementof the environment, economy and society and the close cooperation with citizens and otherparties concerned in the Act on Promotion of Global Warming Countermeasures revised in
March 2021. The goal of reducing GHG by 46 per cent in FY 2030 from FY 2013 as an interim
target was announced, adding its challenge continues to further reduce by 50 per cent in thePlan for Global Warming Countermeasures revised in October 2022, based on the revised Act on
Promotion of Global Warming Countermeasures.
The transition of GHG emissions in Japan, which is the premise of the plan, is shown in Figures
5 and 6, respectively. The total GHG emissions amounted to 1.170 billion t-CO2e in FY 2021,
decreased by roughly 16.9 per cent ﴾238 million t-CO2e﴿ from FY 2013 ﴾1.408 billion t-CO2e.﴿
Unit：100 million t-CO2eequivalent
14.08

2013

13.59

2014

13.20

2015

13.40

2016

12.90

2017

12.47

12.12

2018

2019

11.50

11.70

2020

2021

Figure 5: Changes in Japan's total GHG emissions15——————————————
15

Created by JCR based on the Plan for Global Warming Countermeasures ﴾in October 2021﴿ materials provided by Ministry of
the Environment
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Figure 6: Trends in Japan's CO2 Emissions by Sector16

The reduction targets were established for FY 2030 by GHG and by division for energy-derived CO2 in
the Plan for Global Warming Countermeasures (see Figure 7.) Some examples of measures that are
expected to be taken by the national and local governments for respective emission sources ortargets by division were also set forth with the specific reduction figures in this plan.

——————————————
16

The outline of the 2021 Greenhouse Gas Emissions/Absorption ﴾Final Figures﴿ by National Institute for Environmental Studies
under the jurisdiction of Ministry of the Environment
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(Unit: Mil. t-CO2, (Base year 2013 comparison))
FY2019 FY2030
1,166
760
(▲17%) (▲46%)
Energy oriented CO2
1,235
1,029
677
(▲17%) (▲45%)
Industry
463
384
289
(▲17%) (▲38%)
Busines and others
238
193
116
(▲19%) (▲51%)
Household
208
159
70
(▲23%) (▲66%)
Transport
224
206
146
(▲8%) (▲35%)
Energy transition
106
89.3
56
(▲16%) (▲47%)
Non Energy oriented CO2
82.3
79.2
70.0
(▲4%) (▲15%)
CH4
30.0
28.4
26.7
(▲5%) (▲11%)
N2O
21.4
19.8
17.8
(▲8%) (▲17%)
Alternative
39.1
55.4
21.8
(+42%) (▲44%)
HFCs
32.1
49.7
14.5
(+55%) (▲55%)
PFCs
3.3
3.4
4.2
(+4%)
(+26%)
SF6
2.1
2.0
2.7
(▲4%) (+27%)
NF3
1.6
0.26
0.5
(▲84%) (▲70%)
GHG absorption source
▲45.9
▲47.7
Bilateral credit system (JCM) 0.1 billion t-Co2 reduction

GHG emission/absorption

FY2013
1,408

Figure 7: Japan’s GHG Emission Reduction Targets and guidelines by GHG and other categories17<Strategy for Promoting Transition to Decarbonized Growth-Oriented Economic
Structure (GX Promotion Strategy)>
As shown in Figure 7 above, energy-derived CO2 accounts for a little under 90 per cent of GHG
emissions in Japan. It is therefore important to steadily take concrete measures for
decarbonization in the industry, business, transportation and residential sectors, based on thenational energy basic plan and national energy mix in order to achieve the 2030 target. The
Government of Japan launched "GX" that is to transform the industrial and social structures
mainly from fossil energy-centered since the Industrial Revolution into clean energy-centered in
the 6th Strategic Energy Plan, decided in the cabinet in October 2021. The government has held
the GX Implementation Council, chaired by the Prime Minister and composed of experts fromthe government, private sectors and academia since 2023 and compiled "the Basic Policy for the
Realization of GX." The GX Promotion Act and the GX Decarbonized Power Supply Act were——————————————
17

Source: "Plan for Global Warming Countermeasures" decided in the cabinet in October 22, 2021 athttps://www.env.go.jp/content/900440195.pdf
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enacted in 2023, and a system to promote initiatives toward “Pro-Growth Carbon Pricing
Concept” was established. "GX Promotion Strategy" was decided in the cabinet in July 2023,
based on the GX Promotion Act as a concrete strategy for implementing a series of policies.
Table 2: Overview of GX Promotion Strategy18(1) GX initiatives based on the premise of ensuring a(2) Realization and implementation of the “Pro-Growthstable energy supply
Carbon Pricing Concept” and other initiatives
1. Promotion of thorough energy efficiency improvement
To realize GX investments with over 150 trillion yen by public
・ Energy saving support for small- and medium-sized
and private sectors for the next 10 years.
enterprises
1. Upfront Investment support utilizing GX Economy
・ Housing energy saving support
Transition Bonds
・ Conversion to non-fossil energy and further energy・ Support up-front investment of 20 trillion yen for thesaving support in five major industries ﴾steel, chemical,
next 10 years
cement, paper and automobile﴿2. GX investment incentives through “Pro-Growth Carbon
2. Making renewable energy a mainstay power source
Pricing Concept”
・ Accelerating maintaining grids and realizing revised<Specific example>
direct current ﴾DC﴿ transmission from Hokkaidoi﴿ Full-scale operations of the emissions trading scheme ﴾in・ Introducing renewable energy in harmony with theand after FY 2026﴿
community, social implementation of next generationii﴿ Introducing a carbon tax system for fossil fuels importers
solar power ﴾Perovskite﴿ and floating offshore wind﴾in and after FY 2028﴿
power* GX Promotion Organization was established as the
3. Utilization of nuclear power
aforementioned implementing body・ Materializing next-generation innovation reactors
3. Utilization of new financial instruments
・ Securing an operation period of 40 years + 20 years
・ GX Promotion Organization considers/implements risk
and additional extension on the premise of strict safety
supplement measures, such as debt guarantee
inspection
・ Environment development to promote sustainable
・ Increasing efforts for nuclear fuel cycles/
financedecommissioning and final disposal
4. International strategy, Just Transitions, and GX of small and4. Other important matters
medium enterprises ﴾SMEs﴿ and other businesses
・ Constructing hydrogen/ammonia supply chains・ Asia Zero Emission Community Initiatives
・ Introducing decarbonization power supply auction
・ Promoting smooth labor mobility
・ Strategically securing surplus LNG
・ Stimulating demand for decarbonized products
・ R & D, capital expenditures and demand creation for
・ Promoting efforts throughout the supply chains,
GX, such as carbon recycling, storage batteries,
including SMEs, such as human resources development
resource recycling, next-generation automobiles/
during the SME support period for push-type support
aircraft or zero-emission ships(3) Progress Evaluation and Necessary Reviews: Progress evaluation will be regularly conducted, based on the impacts
on the progress of GX investments, global trends and economy.

The GX Promotion Strategy highly prioritize energy conservation and introducing as much
renewable energy as possible as a main power source, After doing the prioritized policy above,
the government supplements the rest of the electricity demands which cannot be covered byrenewable energy by next-generation clean energy such as hydrogen, ammonia and synthetic
fuels as well as nuclear power to realize zero carbon emission society. It also includes resources
recycling and other important measures. All of these measures are based on technical grounds,
and the combinations of technologies assumed in each cross section by FY 2023, FY 2030, FY
2040 and FY 2050 are compiled as "Future milestones" for all 22 categories. CO2 reduction effects,
economic rationality and probability of social implementation in the sectoral investment
strategies for the next 10 years and the action plan with a five-year lead will be discussed per
sector by experts with academics invited and will be eventually decided in the GX——————————————
18

Summarized/prepares by JCR based on disclosure materials provided by METI.
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Implementation Council, chaired by the Prime Minister as for concrete projects for the measures
set forth in these Pathway.
The "Future milestones" is aligned with the sectoral technology roadmaps ﴾hereinafter referred
to as "sectoral roadmap"﴿ formulated by the METI. The sectoral roadmaps have been preparedsequentially since FY 2021 for industries with relatively large emissions, such as steel, chemicals,
electric power, gas, oil, paper and pulp, cement or automobiles. Low-carbon/decarbonizedtechnologies for achieving the 2050 carbon neutral to be sectorally used are comprehensively
covered, including the existing/future technologies that will be developed, aiming at social
implementation and the routes are shown so as to align with the 2030 goals to limit to keep the
global temperature rise well below 2 °C and to pursue efforts to limit the temperature increase
even further to 1.5 °C and to achieve the 2050 carbon neutral with the combination of thesetechnologies.

<Materiality of Decarbonization Transition Strategies in Japan>
The Government of Japan has positioned the GX initiatives as important measures that willcontribute to the re-increasing Japanese industrial competitiveness by ensuring a stable supply
of clean energy and creating new demand and markets in the decarbonization sector throughshifting from the industrial and social structures on fossil energy-centered since the Industrial
Revolution to clean energy-centered. Acceleration of GX, DX etc. is positioned as one of the fivepillars for increasing investments and implementing economic and social reforms to accelerate
new capitalism in the "Basic Policy on Economic and Fiscal Management and Reform 2023" and"Grand Design and Action Plan for a New Form of Capitalism."
Table 3: Framework of Basic Policies for Economic and Fiscal Management and Reform for 202319
I. Basic Views on Macroeconomic Management
Proceed with bold reforms to overcome the historical and structural changes and challenges facing Japan, both internaland external, which may be referred to as “turning points in the times.”
II. An Accelerating New Form of Capitalism
III. Responding to the Environment Changes
Realization of structural wage increases through the trinity labor Surrounding Japan
market reforms, and strengthening investment in people, and Responding to changes in the international
creating a substantial middle classenvironment
Drastic strengthening of measures to cope with the declining Disaster prevention and mitigation, national resilience,birth rate and child policy
reconstruction from the Great East Japan Earthquake,
Expanding investment and implementing economic and social etc.
reforms
Safety and security of people's lives
1. Increasing domestic investment and strengthening supply
chains through public-private partnerships
2. Acceleration of GX, DX etc.
3. Driving Start-ups and Converting to New Industrial
Structure Promoting Impact Investment
4. Promoting Science, Technology and Innovation throughPublic-Private Partnerships
5. Deploying Inbound Strategies
Creation of an inclusive society——————————————
19

Prepared by JCR, based on the website of Cabinet Office, Basic Policy on Economic and Fiscal Management and Reform 2023
https://www5.cao.go.jp/keizai-shimon/kaigi/cabinet/honebuto/2023/summary_en.pdf
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Revitalization of local communities and small businesses
IV. Medium- and Long-Term Economic and Fiscal Management

V. Policy for Near-term Economic and Fiscal
Management and FY2024 Budget Formulation<Governance>
The directions of policies for GX implementation will be decided in the GX Implementation
Council, chaired by the Prime Minister, with relevant ministers and experts participated. The
Council includes experts in the industrial and financial sectors. The Cabinet Secretariat GX Officeinclude officials sent from the Financial Services Agency, the Ministry of Foreign Affairs, theMinistry of Finance, the Ministry of Health, Labor and Welfare, the Ministry of Agriculture,
Forestry and Fisheries, the METI, the Ministry of Land, Infrastructure, Transport and Tourism andthe Ministry of the Environment, and they will compile proposals, including investment
promotion measures of relevant ministries and agencies and will submit the sectoral investment
strategical proposals, based on considerations in the working group with external experts to the
GX Implementation Council.

Figure 8: Governance Structure20

The current status/measures of GHG emissions/absorptions will be approved in the Global
Warming Prevention Headquarters, in which all ministers annually participate, and then the plan
will be updated/promoted as necessary from the viewpoint of measuring the effects of theaforementioned investment strategies.

——————————————
20

Source: Cabinet Secretariat / Financial Services Agency / Ministry of Finance /Ministry of Economy, Trade and Industry /Ministry of the Environment, "Japan Climate Transition Bonds Framework", November 2023
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2-2. Alignment with Items Required in the Climate Transition FinanceHandbook
Element 1: Issuer's climate transition strategy and governance﴾1﴿ Does the issuer have a transition strategy for climate change mitigation?
The Government of Japan has clarified that it aims to achieve the 2050 carbon neutral for which
it will take necessary measures in the Act on Promotion of Global Warming Countermeasures.
The government set the 2030 target ﴾a 46 per cent reduction from FY 2013﴿ to align with thetarget agreed in the Paris Agreement and established the reduction target per emission source
for FY 2030 from FY 2013 in the Plan for Global Warming Countermeasures revised in 2021.
Specific measures toward the aforementioned goals are compiled in the GX Promotion Strategy
﴾see Table 2 above.﴿ The top priority is to thoroughly promote energy conservation and to makerenewable energy main power source as specific initiatives to be undertaken by the Governmentof Japan, and then it aims to achieve its goals by supporting in respective sectors so as toimplement/achieve next-generation technologies/developments, such as the utilization of
nuclear power or hydrogen/ammonia/carbon recycling in the 22 sectors.
Accordingly, the Government of Japan has strategies for transitioning to mitigate climate change.

﴾2﴿ Is the use of the "transition" label in financing intended to contribute to realizing astrategy for transitioning to a business model in which issuers can effectively address
climate-related risks and contribute to achieving the goals of the Paris Agreement?
The Government of Japan published the Basic Guidelines on Climate Transition Finance in May
2021, shortly after the first edition of CTFH was published by ICMA in December 2020. This basic
guideline aims to encourage efforts to steadily reduce carbon emissions, such as energy saving
in sectors where is difficult to reduce emissions or to accelerate the innovation that contributes
to transitions, including long-term R & D for decarbonization. The Guideline was formulated toachieve carbon neutral in 2050 in Japan and to contribute to realizing the goals of the Paris
Agreement in order to establish the position as a financing tool for transition, in particular, inthe sector where is difficult to reduce emissions and to use more proceeds by early disseminatingclimate transition finance and by ensuring the credibility when financing proceeds under thename of transition finance.
This Bonds was formulated in accordance with the CTFH and its Basic Guidelines, and is intended
to contribute to realizing the strategies to shift to a business model by which Japan as a wholeis contributable to achieving the goals of the Paris Agreement.

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﴾3﴿ Has a governance system been established to ensure the effectiveness of the transition
strategy?
The Government of Japan, as mentioned above, will invite relevant ministries, external academics
and experts in respective sectors required for GX, will eventually formulate the transition strategy
in the GX Implementation Council, chaired by the Prime Minister based on necessary discussions,will report the subsequent progress to the Council and will review them as needed.
Accordingly JCR has evaluated that the Government of Japan has established a system to steadily
implement the transition strategy.

Element 2: Business model environmental materiality
Japan's GHG emissions are the fifth largest in the world, and it is expected for Japan to lead theinternational community to initiatively limit the global temperature rise to the level set by theParis Agreement. Taking into account that carbon prices will be introduced domestically andinternationally hereafter, it is urgent to realize a carbon-neutral society, to decarbonize various
types of products stipulated by the GX Promotion Act and to change the structure of eachbusiness type while many manufacturing industries that is internationally competitive
continuously maintain good performance. Under these circumstances, the Government of Japan
presented a "Grand Design and Action Plan for a New Form of Capitalism" in June 2023 in which
GX in Japan is expected to contribute to re-increasing the industrial competitiveness by making
the best use of its knowledge in these sectors and to accelerating the transition to thedecarbonization in the country as a whole since there are many research decarbonization
technologies in which Japanese companies have technological strength.
Accordingly, JCR has evaluated that the Government of Japan's efforts to achieve carbon neutral
in GX are one of the most important issues for Japan.

Element 3: Climate transition strategy and targets to be science-based
Does the transition roadmap meet the followings?
﴾1﴿ The roadmap is quantitatively measurable and the target covers Scope 1 and Scope 2,
respectively ﴾it is desirable that the Scope 3 target be set to the extent feasible.﴿

As shown in the Plan for Global Warming Countermeasures, Japan's GHG emission reduction
target is aligned with the goals of the Paris Agreement, which are science based targets agreed
upon by the international community; specifically, to limit the global temperature increase towell below 2 °C. JCR has examined this factor according to the definition established by PCAF21
since the Government of Japan does not use the concept of Scope 1, Scope 2 and Scope 3 forthe total amount of emissions. Assuming that the direct business activities of Government ofJapan are Scope 1 and Scope 2, the target setting and specific measures are planned for reducing——————————————
21"Decarbonization practice guidance starting from portfolio carbon analysis for financial institutions" by Ministry ofEnvironment, at https://www.env.go.jp/content/000125696.pdf
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the emission from the central government’s administration activities. The total emissions ofJapan as a whole, which is equivalent to those of Scope 3 are disclosed in the Plan for Global
Warming Countermeasures, by emission sources and by sectors as described in Figure 6 of thisreport.
Accordingly, the Government of Japan's plan appropriately covers the target scopes. And boththe emission reduction results and mid target are disclosed, which shows Japan’s transition
plan’s high transparency.

﴾2﴿ Whether the GHG emission reduction target aligns with globally recognized science basedtarget or not

The target set by the Government of Japan was established in 2021 on the premise of achieving
the global temperature rise well below 2 °C declared in the Paris Agreement. The sectorial
roadmaps which were formulated especially for high GHG emitted industries to achieve net zero
emission by 2050, align with the IEA22's NZE scenario23 and SDS scenario24. The sectoral pathway
were also taken into consideration of the possible menu of the current and future carbon
reduction technologies.
The target formulated by the Government of Japan ﴾a reduction rate, 2.7 per cent per year﴿ is set
to align with the 1.5 °C level shown in the IPCC 25 's 1.5 °C Special Report 26 ﴾a 45 per centreduction by 2030 from the 2010 level; a reduction rate of 2.25 per cent per year.﴿ Consequently,
JCR has evaluated that the government targets is aligned with the target established, based on
scientific grounds.27——————————————
IEA: International Energy Agency
Net Zero Emissions by 2050 Scenario by IEA
24
Sustainable Development Scenario ﴾Sustainable Development Scenario﴿, which is the path to fully achieve the sustainable
development goals by the IEA
25
IPCC: Intergovernmental Panel on Climate Change
26
IPCC "Global Warming of 1.5°C An IPCC Special Report on the impacts of global warming of 1.5 °C above pre-industrial levels
and related global greenhouse gas emission pathways, in the context of strengthening the global response to the threat ofclimate change, sustainable development, and efforts to eradicate poverty at
https://www.ipcc.ch/site/assets/uploads/sites/2/2022/06/SR15_Full_Report_HR.pdf
27
The IPCC's 1.5 °C Special Report was updated in the IPCC's the 6th Assessment Report ﴾AR6﴿ Integration Report in which the
1.5 °C is targeted to be reduced by roughly 36 – 69 per cent of CO2 from FY 2016 by FY 2030: Reduction Rate: 3.3 – 3.6 percent
per year.
22
23

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For reference, the figure below shows the relative ambition level of goal setting compared tothat of other countries.
Emission Reduction Target by 2030

Country(Base Year 2013)

The U.K.
Switzerland
BrazilJapan
The U.S.A.
Saudi Arabia
EU27
CanadaSouth Africa
South Koriea
UkraineAustralia
MexicoThailandKazakhstan
China
Malaysia
RussiaIndia
Indonesia
Pakistan

Figure 9: GHG emission reduction rate target for FY 2030 (comparison when each country's target is replacedwith figures based on the 2013 standard)28

﴾3﴿ Details must be publicly disclosed ﴾including intermediate milestones﴿

The goal of the Government of Japan to achieve carbon neutral in 2050 is clearly stated in the
Act on Promotion of Global Warming Countermeasures. The goal of reducing the total GHG
emissions by 46 per cent from FY 2013 in FY 2030 was announced in the Plan for Global WarmingCountermeasures as an interim target, and it is also added that the challenge will continue,
aiming for a higher goal, a 50 per cent reduction. Furthermore, the 2030 targets per emission
source are disclosed in the plan, which is highly transparent.

﴾4﴿ Certified/verified by an independent third party

The government received neither certification nor verification from third parties for GHG
emissions unlike other companies due to their particularity. On the other hand, ﴾1﴿ Global
Warming Prevention Headquarters with all cabinet ministers attended are annually held in whichapproval is given, ﴾2﴿ the plans updated/promoted are reported to the GX Implementation
Council, chaired by the Prime Minister and external academics participated as necessary.
Accordingly, JCR has evaluated that domestic and international experts other than departments——————————————
28

Materials of a joint meeting for a clean energy strategy "Materialize political initiatives for realizing GX"
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in charge of calculating GHG emissions thoroughly control the GX emissions and third parties
confirm them as well.

Consequently, JCR has evaluated that the Government of Japan's efforts to achieve carbon
neutral by 2050 are based on scientific evidences and meet the requirements in Element 3.

Element 4: Implementation transparency
The Government of Japan has recognized the need for invest a total amount of 150 trillion yenof public and private investment in the GX Promotion Strategy for the next 10 years. The specificbreakdown is also published by energy supply division and demand division, respectively as
follows:

Figure 10-1: Breakdown of public/private investments for the next 10 years29 (continued on next page)——————————————
29

Sources: Materials for the GX Implementation Conference: Toward the achievement of GX in Japan
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Figure 10-2: Breakdown of public/private investments for the next 10 years27 (continued from previous page)

Of the total investment of 150 trillion yen, 20 trillion yen is expected to be implemented as aninvestment promotion measure through GX Economy Transition Bonds. The Government of

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Japan plans to take the following measures hereafter for this investment promotion measure so
as to increase the predictability of companies and attract investors to the GX investment.
1. Refine/finalize specific "sector-specific investment strategies ﴾roadmaps﴿" for the next 10 years
by the end of 2023.
2. Formulate the "preliminary 5-year action plan" based on the 2050 carbon neutral in theroadmaps described in the above ﴾1﴿.
The specific investment details are to be announced when an annual budget request is madesince the government's budget is to be implemented in a single year.
Accordingly, JCR has evaluated that the government's investment plans were disclosed,
including the government's expenditure plan, investments by both the public and private to bepromoted with the expenditure above and 10-year roadmap and is highly transparent.

The sectoral roadmaps formulated by the METI indicated that there are more than one sectorsthat require business transformation or employment transfer along with the implementation of
the transition strategy in Japan. No consideration is needed for direct and just transition likecompanies' transition strategies since much expenditures through GX economy transition bonds
are used for R & D or subsidy programs for companies. On the other hand, the Government ofJapan recognizes that the realization of just transition is an important issue when considering
Japanese characteristics, which has a high ratio of manufacturing and low mobility of humanresources. For this reason, the government will promote just transition as a whole policy package,
such as the design of CP that ensures predictability and the consideration in the GX
Implementation Council in which academics from the world of labor and the business circle
participated.
The possibility of a lock-in to fossil fuels is lower since both of the sectoral roadmap formulatedby the Government of Japan and the path in the GX Promotion Strategy are designed to achieve
the 2050 carbon neutral, and the roadmap is established not to rely on carbon credit as muchas possible and to realize carbon neutral through the next-generation technological innovation.
Serious negative impacts on the environment are considered to be avoided for the viewpoint of
DNSH ﴾Do No Significant Harm﴿ since the proceeds in this Bonds is much used for R & D funds,
and the criteria for granting subsidies are clarified in the subsidy program.
Accordingly, JCR has evaluated that this Bonds satisfy the four elements required in the
Climate Transition Finance Handbook.

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Chapter 3: Consistency with Green Bond Principles, etc.

Evaluation Phase 1: Greenness/Transition
Evaluation

gt1

I. Use of Proceeds
JCR's Key Consideration on This Factor
In this section, JCR will firstly confirm whether the proceeds financed are allocated togreen/transition projects that bring about clear environmental benefits. Then, in case where
negative impacts on the environment and society is expected with the use of proceeds, theimpacts will be fully examined by an in-house specialized division or external third parties and will
confirm that necessary workarounds and mitigation measures are taken. Lastly, JCR will confirmalignment with the Sustainable Development Goals ﴾hereinafter referred to as "SDGs".﴿

▶▶▶ Current Status of Evaluation Targets and JCR's Evaluation

JCR conducted an evaluation of the Japan Climate Transition Bond Framework developed by theGovernment of Japan and published the evaluation report on November 7, 2023. In this evaluation
report, JCR confirms how each criterion of the Japan Climate Transition Bond Framework contributes tothe realization of a decarbonized society in Japan. All of the uses of proceeds determined by theGovernment of Japan for this Bonds fall under the categories whose eligibility and environmental
improvement effects were confirmed in the framework evaluation. Therefore, JCR evaluates that all of
the planned uses of the proceeds from this Bonds are important projects for Japan's 2030 GHG
reduction goals and Japan's transition to a decarbonized society.

1. Overview of use of proceeds
In the Japan Climate Transition Bond Framework, the Government of Japan determines the use ofproceeds from the areas specified in the GX Promotion Strategy as measures that contribute toJapan's GX, and the basic conditions specified in the strategy ﴾see Chapter 1﴿. Established as
research and development funds and/or subsidy programs for projects that meet therequirements. Table 4 shows the use of proceeds for this Bonds, which is organized according to
the use of proceeds classification in the Japan Climate Transition Bond Framework. In Table 4, theuse of proceeds that fall under multiple eligibility criteria is classified into green categories thatare considered to have a major impact.

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Table 4: Use of proceeds for this Bonds in the classification of the Japan Climate Transition Bond Framework130
Main Category(Green category)Sub-category
Eligibility criteria
Promotion of thorough energy
efficiency improvement

Houses and buildings

Digital investment aimed at
decarbonization

1

Energy efficiency

Battery industry

Making renewable energy amajor power source
2

Renewable energy
Infrastructure

Utilization of nuclear power3

Low-carbon anddecarbonized energy

Establishing electricity and gas
markets to achieve carbon
neutrality
GX in transport sector

4Clean transportation

Infrastructure (repeat)

Use of proceeds for this Bonds-

Energy saving investment promotion/demand
structure transformation support projectsubsidy

Project to promote the introduction ofadvanced equipment to improve theinsulation performance of houses
Among the support projects for strengthening
the supply chain of important materials in
response to changes in the economic
environment, the project supports
strengthening the semiconductor supply chain
to achieve GX by improving energy
performance.
Among the post-5G information andcommunication system infrastructure
reinforcement research and development
projects, research and development of futuretechnologies that are essential for realizing GX
such as optoelectronic convergence
Among the support projects for strengthening
supply chains for important materials in
response to changes in the economic
environment, support for strengthening
supply chains for manufacturing storage
batteries, which are essential for a green
society.
(GI) Development of next-generation solar
cells(GI) Lowering the cost of offshore wind energy
generation
Subsidy for promoting regional
decarbonization (independent line micro gridproject subsidy)
Fast reactor demonstration reactor
development projectHigh temperature gas reactor demonstration
reactor development project((GI)Building a large-scale hydrogen supply chain(Demonstration of hydrogen energy generation
technology (high co-firing) using large gas turbine)
also falls under the relevant criteria)
Subsidy to promote the introduction of clean
energy vehicles (BEV, PHEV, FCV)
Commercial vehicle electrification promotion
project(GI)Development of next-generation aircraft(GI)Development of next-generation ship
(GI)Development of fuel manufacturing
technology using CO2 etc.
Innovative GX technology creation project(No applicable projects in this Bonds)-——————————————
30

Created by JCR from materials provided by the Ministry of Economy, Trade and Industry.
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Restructuring the manufacturingindustry (fuel and feedstocks
transition)

Facilitating introduction ofhydrogen and ammonia

5

Circular economy
adapted products,
production
technologies andprocesses

Carbon Recycling and CCS

Environmentally
sustainable
management of living
natural resources andland use,
Circular economy

Food, agriculture, forestry, andfisheries industry(GI)Achieving carbon neutrality in the waste
and resource recycling field((GI) Development of fuel manufacturing
technology using CO2 etc. also falls under the
relevant criteria)* (GI) indicates that the project is funded by the Green Innovation Fund (GI Fund).
6

Resource circulation(GI)Decarbonization of thermal processes in
the manufacturing sector(GI)Hydrogen utilization in the steelmaking
process (Expansion of demonstration scale ofhydrogen reduction ironmaking technology)(GI) Development of plastic raw material
manufacturing technology using CO2 etc.
((GI) Development of fuel manufacturing
technology using CO2 etc. also falls under the
relevant criteria)(GI)Building a large-scale hydrogen supply
chain (Demonstration of hydrogen energy
generation technology (high co-firing) usinglarge gas turbine)(GI)Building a large-scale hydrogen supply
chain (commercialization demonstration ofliquefied hydrogen/MCH supply chain,research and development ofdehydrogenation technology from ammonia
for large-scale hydrogen transportation)(GI)Hydrogen production through waterelectrolysis using electricity derived fromrenewable energy, etc.
(Innovative GX technology creation project also falls
under the relevant criteria)((GI) Development of plastic raw material
manufacturing technology using CO2 etc. and (GI)
Development of fuel manufacturing technology
using CO2 etc. also fall under the relevant criteria)(No applicable projects in this Bonds)--

The Figure 11, Figure 12 and Table 5 show the planned allocation amount of the proceeds fromthis Bonds and the classification based on CBI's sector standards. Regarding the GI Fund, the total
amount scheduled to be allocated from this Bonds has been determined and it will be scheduled
to be executed to the New Energy and Industrial Technology Development Organization ﴾NEDO﴿,an implementation entity of GI Funds at once. Meanwhile, some R&D projects’ detailed design
and project scale, etc. shall be determined afterwards. Therefore, the amount of appropriation
may be determined from the projects for which the detailed content of projects has been decided.
In addition, the Government of Japan plans to allocate the funds raised from this Bonds from the
projects for which the details of the projects and the scale of the projects have been decided,
including the projects for which the amount has already been stated in Table 5. In other words,
since the funds will be allocated from the projects for which the details of the projects have been
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finalized, if the total amount of the appropriation reaches the planned amount of the GI Fund
﴾756.4 billion yen﴿, the funds will be allocated from this Bonds to the projects of the GI Fund. Thereis a possibility that some projects will not be allocated. The Government of Japan plans to disclose
the results in the post-issuance Reporting on the allocation of proceeds.

Figure 11: The amount-based breakdown of the use of proceeds for the Bonds (type of fund)Figure 12: The amount-based breakdown of the use of proceeds for the Bonds (Use of proceeds)

Table 5: Projects allocated to this Bonds231

(1)GI
Fund

budgetyear

Businesstype

Appropriation projects (including some appropriation
candidate projects)

2022
2023

R &D

1.

Development of next-generation solar cells

Electricity

R &D

2.

Electricity

R &D

3.

Lowering the cost of offshore wind energy
generation
Building a large-scale hydrogen supply chain(Demonstration of hydrogen energy generation
technology (high co-firing) using large gas turbine)

2022

2022

SectorPlannedamount tobeallocated(JPY
billion)15*1

Electricity
15——————————————
31

Created by JCR from materials provided by the Ministry of Economy, Trade and Industry.
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2022
2022
2022

R &D

4.

Development of next-generation aircraft

Transport

R&D

5.

Development of next-generation ship

Transport

R &D

6.

Transport

R &D

7.

Development of fuel manufacturing technology
using CO2 etc.
Hydrogen utilization in the steelmaking process(Expansion of demonstration scale of hydrogen
reduction ironmaking technology)

Heat
Manufacturing

256.4

Decarbonization of thermal processes in the
manufacturing sector

Heat
Manufacturing

32.5

Building a large-scale hydrogen supply chain(commercialization demonstration of liquefiedhydrogen/MCH supply chain, research anddevelopment of dehydrogenation technology fromammonia for large-scale hydrogen transportation)
Hydrogen production through water electrolysis
using electricity derived from renewable energy, etc.

Electricity andheat
Manufacturing

*1

2022
R &D

8.

2022
R &D

9.

2022

R &D

10.

2022
2022

R &D

11.

R &D

12.

2022
2022

R &D

13.

Achieving carbon neutrality in the waste andresource recycling field
Development of plastic raw material manufacturing
technology using CO2 etc.
Promoting carbon recycling using CO2 as a direct
raw material using bio-manufacturing technology

Electricity andheat
Manufacturing
Waste

*1
*1

*1
44.5

Waste
Manufacturing(Chemical)
Manufacturing(Chemical)

Subtotal

*1
*1
756.4

R &D

14.

2022
(2) R&D
other than
GI Funds

30.6

R &D

15.

Among the post-5G information andcommunication system infrastructure reinforcement
research and development projects, research anddevelopment of future technologies that are
essential for realizing GX such as optoelectronic
convergence
Innovative GX technology creation project

2022
2023
2023

R &D

16.

R &D

17.

Fast reactor demonstration reactor development
project
High temperature gas reactor demonstration
reactor development project

ICT
75

Transport
Electricity andheat
Electricity

49.6
7.6

Electricity and
heat

4.8

subtotal137

budgetyear(3)
Subsidy
program2022

Businesstype

Appropriation projects (including some appropriation
candidate projects)

Subsidy

18.

Among the support projects for strengthening the
supply chain of important materials in response tochanges in the economic environment, the project
supports strengthening the semiconductor supply
chain to achieve GX by improving energy
performance.

CBI sector
criteria

Plannedamount tobeallocated(JPY
billion)

1. Solar v2.3
2. Wind v1.3
3. Low carbon
transport(Rev2.2)
4. Electrical
Grids andStorage(March 2022)

152.3

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Subsidy

19.

2022

Subsidy

20.

2022

2022
2022
2023

Subsidy

21.

Subsidy

22.

Subsidy

23.

2023
Subsidy
2023

24.

Among the support projects for strengthening
supply chains for important materials in response tochanges in the economic environment, support forstrengthening supply chains for manufacturingstorage batteries, which are essential for a green
society.
Project to promote the introduction of advanced
equipment to improve the insulation performanceof houses

Energy saving investment promotion/demand
structure transformation support project subsidy
Subsidy to promote the introduction of clean
energy vehicles (BEV, PHEV, FCV)
Commercial vehicle electrification promotion
project
Subsidy for promoting regional decarbonization(independent line micro grid project subsidy)

1. Low Carbon
Transport(Rev2.2)
2. Electrical
Grids andStorage(March 2022)
Buildings(White list for
Low Carbon
Building
Technology
Rev1.0)No CBI criteria
available.
Low Carbon
Transport(Rev.2.2)
Low Carbon
Transport(Rev2.2)
Electrical Grids
and Storage(March 2022)

subtotal

331.6

100

25
90

13.6

3.0
715.5

total

1608.9*1 Detailed plans for these seven projects have not been determined at this time. The actual allocation
results of GI Fund will be disclosed in the post-issuance Reporting on the allocation of proceeds.

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2. Project overview and impact (environmental improvement effect)
The use of proceeds from this Bonds consists of ﴾1﴿ R&D funding provided by the GI Fund, ﴾2﴿
R&D funding other than the GI Fund, and ﴾3﴿ subsidy programs. The outline and environmental
improvement effects of each project are detailed below, and it confirm that the use of proceedsfrom this Bonds falls under the eligibility criteria, whose eligibility and environmental
improvement effects were also confirmed in the JCR’s framework evaluation report. Therefore,
JCR evaluates that all of the planned uses of the proceeds from this Bonds are important projects
for Japan's 2030 GHG reduction goals and Japan's transition to a decarbonized society.
﴾1﴿ Research and development projects provided by the GI FundThe GI Fund was established in 2021 to provide continuous support for 10 years, from researchand development and demonstration to social implementation, to companies that are committed
to ambitious goals in order to achieve carbon neutrality in 2050. The total amount of funds createdis JPY 2.8 trillion. An overview of the GI Fund is shown below32.
[The goal]
Setting ambitious 2030 targets for each project ﴾performance, cost, etc.﴿
⇒ Cross-sectional indicator setting and monitoring for the entire fund project, international
competitiveness, practical application stage ﴾TRL, etc.﴿, private investment inducement
amount33⇒As a result, the following items are estimated and confirmed at the planning stage, CO2
reduction effect, economic ripple effect[Support target]
Priority areas for which action plans have been formulated in the Green Growth Strategy, or key
areas where the future path is indicated based on the "Basic Policy for Realizing GX"5Areas where policy effects are large and require long-term continuous support with an eye
toward social implementation.
[Efforts to maximize results]
It ask corporate managers to make a commitment to persistently tackle long-term management
issues.
① Business suspension, partial refund of outsourcing fees, etc., if efforts are insufficient② Introduction of a system ﴾incentive measures﴿ that allows the country to pay more dependingon the degree of goal achievement——————————————"Basic policy of Green Innovation Fund"
https://www.meti.go.jp/policy/energy_environment/global_warming/gifund/pdf/basicpolicies_230627.pdf
33
A metric created by NASA that is used to assess the maturity level of a particular technology. Technology maturity levels of
TRL1~9 are set depending on the stage of commercialization of the technology. 1 is the closest to basic research, and 9 is theclosest to commercialization.
32

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Use of proceeds 1: (GI) Development of next-generation solar cells (expansion of demonstration
scale of perovskite solar cells)
ICMA GBP
classification
GB guidelines
SectorIssue recognition

Business summary

development
goalsTechnology
maturity goals
impactRelated Links"Renewable energy""Projects for renewable energy"
Electricity
In Japan, where there is little flat land, it is already number one among major countries in theamount of solar energy generation per unit of land area, but there is a lack of suitable land forsolar energy generation where projects can be carried out at low cost while coexisting with thelocal community. Concerns have been voiced by energy generation companies and other parties
about the fact that the use of renewable energy is increasing, and securing suitable land is one of
the major challenges for expanding its introduction. As a mean to overcome this issue, it isexpected that solar energy generation will be introduced in places where existing technology
cannot be installed (factory roofs with low load capacity, building walls, etc.). However, to achievethis, it will be necessary to develop next-generation solar cells that are light, flexible enough to
be installed on curved surfaces such as walls, and comparable in performance (conversion
efficiency, durability, etc.) to existing batteries is necessary.
1) Improving efficiency at laboratory size:[Research and development details 1]
Development of optimal material composition to further improve conversion efficiency, etc.
Development of elemental technology related to crystal structure, etc. necessary to establish
durability that maintains stable performance over a long period of time Establishment oftechnical methods to appropriately evaluate battery performance, etc.
2) Larger size/improved durability:[Research and development details 2]
Development of material application and solvent sealing technologies necessary to increase
product size and modularize while maintaining performance. Development of elemental
technology to realize a manufacturing process that utilizes the above developed technology3) Implementation and practical application:[Research and development content 3]
Adjustment and development according to the specifications of user companies, etc., including
the development of building material-integrated modules that take into account improved
design as a building material and efficient construction methods. Development of technology
necessary to maintain quality and reduce costs during mass production
Achieve an energy generation cost of 14 yen/kWh or less under certain conditions (solar
radiation conditions, etc.) by 2030.
TRL6-7 (2023-2030)■CO2 reduction effect (number of global sales ■Economic ripple effect (number of global
by Japanese companies)
sales by Japanese companies)
2030: approximately 0.6 million t-CO2e/year
2030: 12.5 billion yen
2050: approximately 100 million t-CO2e/year
2050: 1.25 trillion yen
https://www.meti.go.jp/policy/energy_environment/global_warming/gifund/pdf/gif_02_randd_r.p
df

Use of proceeds 2: (GI) Cost reduction of offshore wind energy generation (development ofcommon infrastructure related to integration of wind turbines, floating bodies, etc. in floating
offshore wind energy, floating offshore wind energy demonstration project)
ICMA GBP
classification
GB guidelines
Sector"Renewable energy""Projects for renewable energy"
Electricity

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Issue recognition

Business summary

development
goals

Aiming for the large-scale introduction of offshore wind energy in Japan, the "Act on the
Promotion of Sea Area Utilization for the Development of Marine Renewable Energy Generation
Facilities" (hereinafter referred to as the "Renewable Energy Sea Area Utilization Act") was
enacted in April 2019. Public recruitment of business operators began in 2020. However, themaximum bid price for ground-mounted systems is 29 yen/kWh, and the maximum bid price forfloating systems is 36 yen/kWh, which is higher than in other countries. Furthermore, in Japan,
there are no wind turbine manufacturers or wind turbine manufacturing bases in the country,
and the potential of domestic parts manufacturers, which have technical capabilities based on
experience in onshore wind energy, cannot be fully utilized.
・ In light of this situation, in order to achieve a virtuous cycle of expanding the introduction of
offshore wind energy and strengthening industrial competitiveness in Japan, the "Offshore
Wind Industry Vision (1st Phase)" and the "Green Growth Strategy for Carbon Neutrality in
2050" have been formulated. ``First, by committing as a government to creating an attractive
domestic market, it will attract domestic and foreign investment, and by promoting
investment through measures such as improving the business environment, it will build acompetitive and resilient domestic supply chain. Furthermore, with an eye on expansion into
Asia, Japan will work on next-generation technology development and international
collaboration to create next-generation industries that can survive international
competition.''・ Unlike Europe, in order to achieve the high goal of ``forming projects of 30 to 45 million kW
by 2040'' in Japan, where there are few shallow waters, the cost of floating structures, whichhave a lot of room for introduction even in deep waters, is particularly important. , it isnecessary to significantly reduce it in the future through technological development andmass production. This project aims to reduce the cost of offshore wind energy generation,
mainly floating type, at an early stage and expand its introduction, based on the knowledge
gained from the demonstration projects that it have undertaken so far.
A design method for integrally designing wind turbines, floating bodies, etc. in a form suitable
for mass production in order to achieve cost reduction ahead of overseas competition in order tocapture the globally expanding market for floating offshore wind energy generation. Develop
and standardize etc. In the demonstration phase, consideration will be given to negative impacts
on the environment and society, such as requiring businesses to implement impact assessments
and consultation systems for local communities and stakeholders, as well as appropriate
environmental impact assessments and countermeasures in the public recruitment guidelines.
By 2030, achieve the following goals
Establish technology to commercialize floating offshore wind energy at an internationallycompetitive cost level under certain conditions (wind conditions, etc.)

Technology
maturity goals

TRL6 (2023-2030)

impact■CO2 reduction effect (Japanese market)
2030: Approximately 3 to 7 million t-CO2e/year
2050: Approximately 90 million t-CO2e/year

Related URL

https://www.nedo.go.jp/content/100937771.pdf■Economic ripple effect ﴾world market size﴿
2030: Approximately 1 trillion yen
2050: Approximately 2 trillion yen

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Use of proceeds 3: (GI) Construction of large-scale hydrogen supply chain (demonstration ofhydrogen energy generation technology (high co-firing) using large gas turbines)
ICMA GBP
classification"Circular economy adapted products, production technologies and processes and/or certified
eco-efficient products"

GB guidelines“Projects concerning eco-efficient products, production technologies, and processes”

SectorElectricity
Hydrogen energy generation using large gas turbines is a zero-emission energy source that does
not emit CO2 even when burned, and is thought to play an important role in supplying energy,
regulating energy, and inertia for the grid in the carbon-neutral era. , in its green growth strategy,
envisages that hydrogen and ammonia will cover approximately 10 per cent of energy generationin 2050. Regarding large-scale hydrogen gas turbine energy generation, Japan has completed thedevelopment of a 30 per cent mixed combustion combustor and are currently developing higher
dedicated combustion system. Currently, since the early stages of the GI Fund project, actual
demonstrations of co-firing and single-firing have been underway with the aim ofcommercialization. For reference, the European Taxonomy has established a threshold value forgas-fired energy generation with a CO2 emission coefficient of less than 270g/kWh, and efforts
are underway to develop combustors that meet the standard by more than 30 per cent. In thisresearch and development, in parallel with the actual demonstration of 30 per cent vol. co-firingand single-firing, it will proceed with the actual demonstration of a high co-firing device
exceeding 30 per cent, thereby improving the effectiveness of thermal energy generation fieldwith the aim of achieving carbon neutrality in 2050. By providing a gradual range of conversion
rates from fossil fuels, the aim is to provide a wide range of options and gain an advantage in theinternational market.

Issue recognition

In order to socially implement highly co-firing energy generation equipment that meets thestandards of the European Taxonomy by 2030, combustion stability will be verified throughdemonstration using actual equipment, and continuous operation will be achieved while varying
the output.
development
goals*Please note that this project is research and development on the stable combustibility of gas
turbines, and is not research and development on hydrogen production, so JCR does not request
this project to calculate the carbon intensity of the hydrogen used in the research stage. For
reference, in accordance with the Basic Hydrogen Strategy, the Government of Japan isconducting research and development and support programs to reduce the carbon intensity ofhydrogen used to 3.4kg-CO2e/kg-H2 by 2030 and zero by 2050, and to build a supply chain toscale up the demand and supply to lower the cost. When commercializing this technology of

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hydrogen gas-turbine system, it is assumed that low-carbon and/or decarbonized hydrogen inline with the basic hydrogen strategy will be used.
Technology
maturity goals

TRL6 or higher (2026-2030)

impact■CO2 reduction effect (world market)
2030: approximately 7 million t-CO2e/year
2050: approximately 400 million t-CO2e/year

Related URL■Economic ripple effect (world market size)
2050: Maximum of approximately 23 trillion
yen (Hydrogen power generation turbine
market, cumulative)

https://www.meti.go.jp/shingikai/sankoshin/green_innovation/energy_structure/pdf/015_04_00.pdf
https://www.nedo.go.jp/content/100932374.pdf

Use of proceeds 4: (GI) Development of next-generation aircraft (development of electric aircraft)
ICMA GBP
classification
GB guidelines
SectorCharacteristics ofelectric aircraft

Issue recognition

development
goals"Clean transportation"“Projects for clean transportation”
Transport
Several measures are envisaged for the development of aircraft bodies and engines todecarbonize aircraft, but they should be used appropriately depending on payload weight,
cruising range, etc., taking into account the characteristics of each technology. Electric aircraft areconsidered to be suitable for small and short-distance flights (about 1,000 km), as there are limits
to the performance of batteries and motors. In addition, electric aircraft are expected tosignificantly reduce noise by replacing the propulsion system with an electric system, and in
addition to eliminating noise originating from the combustor and turbine in the engine,compared to existing engines. There is a high possibility that the exhaust noise will be reduced
because the exhaust speed is reduced. In fact, in the recent development of small electric aircraft
overseas, noise reductions of around 20-30 per cent have been confirmed. Japan is also actively
aiming to reduce noise through technology development related to storage batteries and electricmotors. It will continue to contribute to the realization of passenger aircraft.
Currently, the range of applications for aircraft electrification is limited, such as installing storage
batteries for auxiliary energy and energy supply while on the ground, but in the future, it will be
used for energy during flight and for internal system operation. It is expected that the use will
expand to include other uses. In order to achieve this, it is necessary to dramatically improve theperformance of batteries, motors, etc. In addition, international competition in technology
development related to these fields has become active and is expected to intensify in the future,so there is a need to strengthen Japan's international competitiveness.
In order to establish aircraft electrification technology, aircraft-related manufacturers andelectronics-related manufacturers will continue to conduct research in collaboration, utilizing theknowledge of national research and development agencies such as the Japan Aerospace
Exploration Agency (JAXA). The proposers will promote development and aim to have domestic
manufacturers meet the required technological level by the time the technology to be installed infuture aircraft is selected. Specifically, it will accelerate research and development of coretechnologies for aircraft energy, such as batteries for aircraft, motors, inverters, etc., with the aimof gradually introducing the technology from 2030 onwards.
By the end of the project, TRL6 or higher (technical level set by NASA. Note: IEA (equivalent to
TRL 6 or higher). In addition, the aim is to achieve the following target values for eachtechnology. The numerical targets will be revisited as appropriate in response to futureinternational regulatory trends.
Energy control and heat/air management systems:
With regard to the energy control and heat/air management systems that will support the
future electrification of aircraft, it has established a concept that improves fuel efficiency
by more than 5 per cent compared to conventional aircraft, and it has developed a singleaisle aircraft (100 to 250 seats, same applies hereafter). It will demonstrate the feasibilityof the aircraft size and operating conditions based on the evaluation.

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Energy control system core technology: Achieve a generator with an output of 1 MW or
more that is compatible with hybrid electric propulsion systems, and an energy densitythat is more than twice that of conventional aircraft.
Heat and air management system core technology: Realize an electric turbomachine
equipped with a motor with the world's largest output (over 55kW) for aircraft.
Technology to improve the electrification rate: For major functions that consume large
amounts of fuel such as aircraft taxiing (ground driving). This R&D aims to: (1) improve fuelefficiency by approximately 3 per cent from existing functions to the entire aircraft level,
improve impact resistance and reach TRL 6 or above level while satisfying safety standards.
-

Technology
maturity goals

TRL6 or higher (2030)

impact■CO2 reduction effect (potential estimation)
2050: 680 million t-CO2e34

Related URL■Economic ripple effects ﴾including the global
market size and the effects of other nextgeneration aircraft such as hydrogen aircraft)
2050: 2.1 trillion yen
https://www.meti.go.jp/policy/energy_environment/global_warming/gifund/pdf/gif_16_randd_r.p
df

Use of proceeds 5: (GI) Development of next-generation ships (development of zero-emission
ships)ICMA GBP
classification
GB guidelines
SectorBusiness summary

Issue recognition"Clean transportation"“Projects for clean transportation”
Transport
In order to achieve carbon neutrality, it is expected that the industrial and supply chain structuresof both small and large ships have to be changed. For short-distance and small ships, hydrogenfuel cell ships and battery-propelled ships are in the demonstration stage for commercialization,
while for long-distance and large ships, there are limitations such as output, weight, size, etc. offuel cells and storage batteries. Therefore, it is necessary to develop an engine that can directly
burn hydrogen and ammonia. Therefore, this project aims to acquire technological capabilities
and international competitiveness related to the development of next-generation ships in orderto fully popularize zero-emission ships in 2050 in order to achieve zero emissions in international
shipping.
It is uncertain whether an international fuel supply infrastructure for hydrogen and ammonia will
be built in the 2030s, when zero-emission ships will be introduced in earnest. There are two
scenarios in which hydrogen, ammonia and methane/methanol It is not clear which fuel (bio or
carbon recycled) will be the mainstream. For this reason, there is a problem that it is difficult for
private businesses to start development, and in order to reduce this uncertainty, it is necessary toproceed with the development of each of the multiple options that are candidates for zeroemission ships.
In order to achieve zero emissions in international shipping, it is necessary to develop enginescompatible with CO2-free fuel and establish technology that can be used on all types of oceangoing ships. Japan's marine industry boasts approximately 20 per cent of the world's share of 2stroke diesel engines (3rd place in the world) and 20 per cent of the world's share of 4-stroke
diesel engines (2nd place in the world), with its high technological capabilities.
Therefore, it is necessary to maintain and strengthen competitiveness by acquiring technologicalcapabilities related to the development of hydrogen, ammonia, LNG, and other gas-fueled
vessels, which are essential to achieving zero emissions, and establishing a production base.
Ships are larger than cars, so they require high output, and load fluctuations are large due to the
influence of waves, and it is also necessary to deal with problems unique to ships, such as salt
damage. In the development of next-generation ships, there are marine manufacturers withsuperior domestic technologies such as stratified injection technology for engines, and the fund——————————————
34

Calculated by JCR from the R&D and Social Implementation Plan for the GI Fund Project "Development of Next-Generation
Aircraft" Project p.16-17.
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development
goalsTechnology
maturity goals

will support the technological development of ships together with the shipbuilding industry,
which has excellent technological capabilities worldwide. By doing so, Japan could gain
experience for the social implementation of next-generation ships.
It is believed that this will enable early acquisition and lead the international competition.
There is a high possibility that hydrogen infrastructure will be established in Japan earlier than in
the rest of the world, and in addition to already having a supply chain for ammonia for fertilizer,
the fund is also considering building an ammonia fuel supply chain. It is assumed that the social
implementation of hydrogen and ammonia fueled ships will become possible earlier than the restof the world, and from this point of view as well, it is thought that Japan will be able to lead theinternational competition.
Furthermore, by developing technology related to infrastructure such as bunkering ships aheadof the rest of the world, it hope to capture overseas markets in the future.
1. Develop hydrogen-fueled engines, fuel tanks, and fuel supply systems, and complete
demonstration operations of hydrogen-fueled ships by 2030 (TRL8 or above (IEA TRL (11 levels);
note: equivalent to HORIZON 2020 TRL7))
2. Development of ammonia fuel engines, fuel tanks and fuel supply systems, and marine
ammonia fuelBy building a supply system, achieve commercial operation12 as early as possible by 2028 (TRL9or higher (Note: equivalent to TRL8 in HORIZON 2020))
Hydrogen fuel engine TRL 8 or higher (2030), ammonia fuel engine TRL 9 or higher (2028)■CO2 reduction effect (potential estimation)■Economic ripple effect ﴾world market size﴿
2030: approximately 330,000 t-CO2e/year
2030: approximately 0.17 trillion yen
2050: approximately 560 million t-CO2e
2050: approximately 6.8 trillion yen/year35https://www.meti.go.jp/policy/energy_environment/global_warming/gifund/pdf/gif_17_randd_r.p
df

impactRelated URL

Use of proceeds 6: (GI) Development of fuel manufacturing technology using CO2, etc.
(Development and demonstration of control technology that responds to raw material
fluctuations in synthetic fuel (transportation fuel) production)
ICMA GBP
classification
GB guidelines
SectorIssue recognition"Clean transportation"“Projects for clean transportation”
Transport
Although it is possible to produce e-fuel from CO₂ and hydrogen on a trial basis by combining
existing technologies (chemical reactions), it is difficult to create e-fuels from both an academic(science) and engineering perspective. There are many R&D elements. In order to enable massproduction of it in Japan, it also has the advantage of being a liquid at room temperature andpressure, making it possible to store it for long periods of time compared to hydrogen and otherfuels. Producing fuel domestically is also an advantage in the perspective of ensuring energy
security. Technology development related to improving the yield of synthetic liquid fuels isalready being undertaken as part of the GI Fund project. On the other hand, in the public-private
council aimed at promoting the introduction of synthetic fuel (e-fuel), the current goal of"commercialization by 2040" has been set by the government, which aims to have 100 per centelectric vehicles in new passenger car sales by 2035. Based on opinions from various quarters thatthe commercialization target should be brought forward due to the inconsistency with thetimeline. In order to achieve this goal, it will be necessary to add efforts to acceleratecommercialization in the technology development undertaken in the GI Fund project, so thisproject aims to implement the following: i. Establishment of integrated predictive modeltechnology that takes into account raw material fluctuations ii. Establishment of upgrading——————————————
35

Calculated by JCR from the R&D and Social Implementation Plan for the GI Fund Project "Development of Next-Generation
Aircraft" Project p.16-17.
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technology compatible with commercial scale

development
goals

1 By 2028, achieve a liquid fuel yield of 80 per cent at pilot scale (assuming 300 BPD scale).
2 While responding to changes in the composition of synthetic fuels, reduce CO₂ emissions
during the fuel usage stage of passenger cars (in the evaluation, the low-carbon effects ofsynthetic fuels are excluded) from the current level (110kg-CO₂/km﴿. By 2027, it will establish
fundamental technologies to achieve net thermal efficiency (maximum) of 55 per cent or more
for internal combustion engines (heavy vehicles).

Technology
maturity goals

TRL8-9 (2040)

Impact■CO2 reduction effect (potential
estimation)
2030: Approximately 45,000 t-CO2e/year
2050: Approximately 120million t-CO2e/year

Related URL

https://www.meti.go.jp/press/2021/01/20220120005/20220120005-2.pdf■Economic ripple effect ﴾Japanese market﴿
2050: Approximately 7.1 trillion yen/year

Use of proceeds 7: (GI) Utilization of hydrogen in the steelmaking process (expansion ofdemonstration scale of hydrogen reduction steelmaking technology)
ICMA GBP
classification
GB guidelines
SectorIssue recognition"Energy efficiency", " Circular economy adapted products, production technologies and processes
and/or certified eco-efficient products ""Projects for energy efficiency", " Projects concerning eco-efficient products, production
technologies, and processes"
Heat, Manufacturing
CO2 emitted by the steel industry accounts for 40 per cent of Japan's entire industrial sector. In
order to achieve carbon neutrality in the steel manufacturing process by 2050, it is necessary to
specifically develop the following technologies. Taking into consideration the status of efforts byoverseas companies and the uncertainty of future technology and market trends, this project willdevelop both technologies in parallel, and will respond flexibly to changes in the domestic andinternational environment.
i. Hydrogen reduction technology using a blast furnace (blast furnace hydrogen reduction
technology)
ii. Technology that directly reduces low-grade iron ore with hydrogen (direct hydrogen reduction
technology)
In i., while building on COURSE50 technology, it will utilize external hydrogen to increase thehydrogen reduction ratio in order to further reduce CO2 emissions in the blast furnace method.
Furthermore, by developing technology that separates and captures CO2 and converts therecovered CO2 into a reducing agent for use in blast furnaces, it will be possible to achievesignificant reductions in CO2 emissions while making use of existing blast furnaces.
ii. is a technology that directly reduces iron ore with hydrogen, and although the technicalhurdles are high, it does not physically emit CO2 because it does not use a blast furnace or coke.
In order to produce high-grade steel using this method, it is necessary to develop direct
reduction furnace heat compensation technology necessary for iron ore reduction, direct
reduction furnace operation stabilization technology based on the use of low-grade iron ore,
impurity removal technology, reduced iron It is necessary to develop advanced electric furnacetechnology such as melting technology.
*Please note that this project is research and development to increase the hydrogen reduction
ratio of blast furnaces, and is not research and development related to hydrogen production, so
there is no question about the carbon intensity of the hydrogen used at the research stage.
However, in accordance with the Basic Hydrogen Strategy, the Government of Japan isconducting research and development to reduce the carbon intensity of hydrogen used to 3.4kgCO2e/kg-H2 by 2030 and zero by 2050, and to build a supply chain. Separate measures are being
taken.

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Subproject 1 Establishment of blast furnace hydrogen reduction technology that reduces CO2 emissions by more than
50 per centi. By 2030, it will confirm the technical elements of hydrogen reduction technology in blast
furnaces that utilize in-house hydrogen, etc., and the utilization of CO2 after separation anddevelopment
capture.
goals
ii. By 2030, demonstrate technology that will reduce CO2 emissions from the steelmaking process
by 50 per cent or more in a medium-scale test blast furnace (more than 1/5 scale of an actual
furnace).
Technology
TRL6-7 (2030)
maturity goals
Subproject 2 Establishment of direct hydrogen reduction technology that reduces CO2 emissions by more than 50 per
cent
i. By 2030, technology that directly reduces low-grade iron ore with hydrogen will reduce CO2
emissions by 50 per cent or more in medium-scale direct reduction furnaces (more than 1/5 scaleof actual furnaces) compared to the current blast furnace method. Demonstrated technology todevelopment
achieve reduction.
goals
ii. By 2030, it will use a large-scale experimental electric furnace (approximately 300 tons capacity)
to produce high-grade steel that can be used for automobile exterior panels, etc. through an
integrated process of hydrogen direct reduction of low-grade iron ore and an electric furnace.
Demonstrated technology to control impurity concentration on par with blast furnace method.
Technology
TRL6-7 (2030)
maturity goals■CO2 reduction effect (potential
estimation)■Economic ripple effect ﴾world market size﴿
impact2030: Approximately 2 million t-CO2e/year
2030: approximately 320 billion yen/year(in Japan)
2050: approximately 40 trillion yen/year
2050: Approximately 1.3 billion tCO2e/year (Global)
https://www.meti.go.jp/policy/energy_environment/global_warming/gifund/pdf/gif_05_randd_r.p
Related URL
df

Use of proceeds 8: (GI) Decarbonization of thermal processes in the manufacturing sector
ICMA GBP
classification
GB guidelines
SectorIssue recognition"Energy efficiency", " Circular economy adapted products, production technologies and processes
and/or certified eco-efficient products ""Projects for energy efficiency", " Projects concerning eco-efficient products, production
technologies, and processes"
Heat, Manufacturing
Domestic shipments in the material and formed materials industry, which occupies the midstreamof the supply chain, essential metal parts supply to Japan's core industries such as automobiles
and industrial machinery, such as pig iron casting manufacturing, forging manufacturing, and39/68
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metal heat treatment. 16 trillion yen and 710,000 employees, which greatly contributes to the
local economy and employment. However, a lot of CO2 is emitted from the industrial furnaces
used to heat metals, and many of them are small and medium-sized enterprises (51,000
businesses). As a result, consideration and response to decarbonization are delayed. There are
37,000 industrial furnaces in Japan used for thermal processes, mainly in these industries, and theCO2 emitted exceeds 40 per cent of the industrial sector (approximately 154 million tons as of FY2019). Therefore, it is necessary to carry out research and development as soon as possible
toward the commercialization of carbon-neutral industrial furnaces.
To decarbonize thermal processes that handle metals, it is essential to decarbonize the fuel andelectricity used in industrial furnaces. Currently, combustion furnaces that use natural gas as fuelare converted to ammonia or other fuels that do not emit CO2 during combustion. The use ofzero-emission fuels such as hydrogen is promising. On the other hand, ammonia and hydrogen
have the property of causing chemical changes in metal products, such as nitriding (hardening of
the surface layer by nitrogen) and hydrogen embrittlement (decreasing toughness), and areimportant for combustion technology such as combustion stability and NOx reduction. In
Business summary
addition, it is necessary to clarify the impact on metal products, furnace materials, etc., and takemeasures accordingly. When converting a combustion furnace to an electric furnace, additional
capital investment is required to install a new furnace, and a contract for special high-voltage
energy and the installation of energy receiving equipment are required. It may be difficult to
introduce the electric furnace 100 per cent to these industrial processes, the challenge remains tominimize the energy receiving capacity and improve the efficiency of the electric furnace as awhole.
Subproject 1 Development of common basic technology for carbon neutral industrial furnaces
By FY2026, it will establish common platform technologies necessary to achieve the R&D goals
listed in subproject 2 to subproject 4 below, and ensure that the common platform technologies
will be used to achieve each R&D goal by FY2031. The goal is to be develop technology that
achieves the same level or higher quality of existing industrial furnaces in terms of quality ofdevelopment
metal products, NOx emissions reductions, combustion stability/control accuracy, and long-term
goals
operational stability, etc. In order to realize the goal of high percentage of ammonia/hydrogen
combustion, general-purpose simulation/digital twin technology that enables optimal design andoperational efficiency, hybrid operation technology that combines ammonia/hydrogen
combustion technology and electric heating, etc.
Technology
TRL6 or higher (2031)
maturity goals
Subproject 2 Establishment of technology for ammonia-burning industrial furnaces that handle metal productsi. By 2031, establish an industrial furnace that co-fires 50 per cent ammonia with existing fuelssuch as natural gas. Specifically, it will develop technology that achieves the same level or higher
compared to existing industrial furnaces in terms of quality of metal products, NOx emissions,combustion stability/control accuracy, long-term operational stability, etc. When applied toindustrial furnaces, establish general-purpose simulation and digital twin technologies thatdevelopment
enable prediction of impacts, optimal design, and operational efficiency.
goals
ii. By FY2031, 100 per cent ammonia combustion technology that achieves the same level orhigher of metal product quality, NOx emissions, combustion stability/control accuracy, long-term
operation stability, etc. when compared with existing industrial furnaces will be approved for
TRL6. Achieve the above (conduct demonstrations in an environment equivalent to IEA TRL 6 orhigher: system model or prototype (assuming a scale of a fraction of the actual machine; thesame applies hereinafter)).
Technology
TRL6 or higher (2031)
maturity goals
Subproject 3 Establishment of technology for hydrogen-burning industrial furnaces that handle metal productsi. By 2031, establish an industrial furnace that co-fires 50 per cent hydrogen with existing fuelssuch as natural gas. Specifically, it will develop technology that achieves the same level or higher
compared to existing industrial furnaces in terms of quality of metal products, NOx emissions,development
combustion stability/control accuracy, long-term operational stability, etc., and It will establish
goals
general-purpose simulation and digital twin technologies that enable impact prediction, optimal
design, and operational efficiency when applied to industrial furnaces.
ii. By FY 2031, 100 per cent hydrogen combustion technology that achieves the same or higher
quality of metal products, NOx emissions, combustion stability/control accuracy, long-term

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operation stability, etc. when compared with existing industrial furnaces will be approved for
TRL6. Achieve the above (equivalent to IEA TRL 6 or higher: carry out demonstration in an
equivalent environment of system model or prototype).
Technology
TRL6 or higher (2031)
maturity goals
Subproject 4 Establishment of technology to reduce electric furnace energy receiving equipment capacity and improve
efficiency
i. By 2031, by establishing hybrid operation technology that combines ammonia/hydrogen
combustion technology and electric heating, general-purpose thermal process simulation, digitaltwin technology, etc., compared to replacing combustion furnaces with existing electric furnaces.
development
Establish technology to reduce peak energy consumption and energy receiving equipment
goals
capacity by 30 per cent or more.
ii. By FY2028, establish energy saving technology of 15 per cent or more compared to existing
electric furnaces by establishing technology to utilize waste heat from electric furnaces, highoutput heaters, and technology to prevent deterioration and extend the life of resistors.
Technology
TRL6 or higher (2031)
maturity goals
The main technological development resultscovered in this project are aimed at social
implementation and gradual dissemination after
The main technological development
2032, so they are calculated as targets for 2040
results covered by this project are aimed atand 2050.
social implementation and gradual
2040: approximately 4.2 trillion yen (world market
dissemination after 2032, so they are
size, cumulative total)
calculated as targets for 2040 and 2050.
*Economic effects due to metal products, etc.
Impact
2040: Approximately 20 million t-CO2e/year produced from carbon-neutral industrial furnaces(domestic)
is approximately 46 trillion yen
2050: Approximately 80 million t-CO2e/year(domestic)
2050: approximately 10.0 trillion yen (world market
size, cumulative total)*Economic effects due to metal products, etc.
produced from carbon-neutral industrial furnaces
is approximately 205 trillion yen
Related URL
https://www.nedo.go.jp/content/100958684.pdf

Use of proceeds 9: (GI) Building a large-scale hydrogen supply chain (commercialization
demonstration of liquefied hydrogen/MCH supply chain, research and41/68
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development/demonstration of dehydrogenation technology from ammonia
related to large-scale hydrogen transportation)
ICMA GBP"Circular economy adapted products, production technologies and processes and/or certifiedclassification
eco-efficient products"
GB guidelines"Projects concerning eco-efficient products, production technologies, and processes"
SectorElectricity and heat, Manufacturing
Subproject 1. Liquefied hydrogen/MCH supply chain commercialization demonstration
In order to achieve a hydrogen supply cost that is sufficiently competitive with fossil fuels (lessthan 20 yen/Nm3), it will commercialize the construction of a large-scale hydrogen supply chain
using hydrogen carriers’ liquefied hydrogen and MCH (methylcyclohexane). It will develop
innovative liquefaction technology and direct MCH electrolytic synthesis technology that willcontribute to the reduction of hydrogen supply costs. The target cost for 2030 (30 yen/Nm3) is
set as the minimum value required at that time in order to reduce the price of hydrogen to a
Issue recognitionlevel that is sufficiently competitive with fossil fuels (20 yen/Nm3 or less) in 2050. Liquefiedhydrogen has high hydrogen purity and can be used in fuel cells that require high purity without
additional equipment on the demand side, while MCH is a liquid at room temperature andpressure and has excellent stockpiling properties. Since hydrogen carriers are available and the
expected uses are different, it is thought that long-term differentiation will take place, so thetechnology method will not be narrowed down midway.
development
goals

Marine transportation technology to achieve hydrogen supply cost of 30 yen/Nm3 in 2030,
infrastructure development and innovative hydrogen transportation technology to aim for 20
yen/Nm3 or less in 2050

Technology
TRL6 or higher (2030)
maturity goals
Subproject 2. Development and demonstration of dehydrogenation technology from ammonia for large-scalehydrogen transportation(As this project has not officially completed the formalities as a GI project, the following details
are based on current assumptions and may change in the future.) From the beginning of the GI
Fund project, it have supported the development of technologies related to hydrogen carriers
such as liquefied hydrogen and MCH, with the aim of creating a large-scale hydrogen supply
chain. On the other hand, ammonia, for which production and transportation technology has
been established, is promising as a hydrogen carrier once dehydrogenation technology (cracking
technology) is established, and competition among hydrogen carriers is expected, providing
Issue recognition
incentives for reducing hydrogen procurement costs. Additionally, if it establish ammonia
cracking technology ahead of the rest of the world, it may be able to export the cracking
technology to countries where ammonia supply chains are established (Europe, America andAsia); The movement is becoming more active. Currently, large-scale ammonia cracking
technology is still under development, and there have been no confirmed cases of it reaching thestage of demonstration, so the aim is to advance demonstrations toward large-scale expansion
as soon as possible and capture the international market for ammonia cracking.
Currently, there are two cracking technologies that are being considered for large-scale
development
expansion in Japan: (1) external heating method, and (2) ATR (auto thermal reaction) method.
goals
Proceed with early demonstration of cracking technology and achieve social implementation of
cracking technology by 2030.
Technology
TRL6 or higher (2030)
maturity goals■Economic ripple effect ﴾world market size﴿■CO2 reduction effect (worldwide,
2030: approximately 0.3 trillion yen
throughout the project)
Impact2050: approximately 5.5 trillion yen
2030: approximately 7 million t-CO2e/year
2050: approximately 400 million t-CO2e/year

Related URL

https://www.nedo.go.jp/content/100932374.pdf

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Use of proceeds 10: (GI) Hydrogen production through water electrolysis using electricity derived
from renewable energy, etc.
ICMA GBP
classification
GB guidelines
SectorIssue recognition"Circular economy adapted products, production technologies and processes and/or certified
eco-efficient products""Projects concerning eco-efficient products, production technologies, and processes"
Electricity and heat, Manufacturing
In order to promote the social implementation of hydrogen, it is necessary to simultaneously
create large-scale demand for hydrogen by reducing supply costs by increasing the size of
supply facilities, etc.
Since it is the early stages of hydrogen-based decarbonization technologies development, thelong-term demand for hydrogen is uncertain, making it difficult for private businesses to makelarge-scale infrastructure investments. It is necessary to build a social implementation modelthat makes it possible to maximize hydrogen supply and create hydrogen demand. In thisproject, it will build such a model, solve the technical issues of each element, and aim todevelop future infrastructure and achieve efficient nationwide dissemination of hydrogen.
Specific measures
The core of the project will be the use of water electrolysis equipment for domestic hydrogenproduction.
Regarding the types of equipment, two types, ``alkaline type'' and ``PEM type,'' are at atechnological level close to commercialization. (TRL5 at the time of business start). It havealready demonstrated a maximum output of 10MW for the alkaline type and 2.3MW for the
PEM type. However, costs remain high, so it is necessary to aim for cost reduction.
This project will carry out the following three activities.
i. Research and development aimed at reducing costs of water electrolysis equipment, such asincreasing size
ii. Establishment of evaluation infrastructure for water electrolysis equipment with an eye on
overseas markets
iii. Demonstration of utilization of hydrogen produced through decarbonization of heat
demand and production of basic chemicals such as ammonia

development goals

Realization of technology that allows equipment costs to be reduced by 2030 to 52,000 yen/kW
for alkaline water electrolysis equipment and 65,000 yen/kW for PEM water electrolysis
equipment
A performance evaluation board for water electrolysis equipment will be prepared by 2025.

Technology maturity
goals

TRL6 or higher (2030)

Impact■CO2 reduction effect (world)
2030: 40 million t-CO2e/year
2050: 1.52 billion t-CO2e/year

Related URL

https://www.meti.go.jp/policy/energy_environment/global_warming/gifund/pdf/gif_04_summar
y_r.pdf■Economic ripple effect ﴾world market size﴿
2030: Approximately 0.4 trillion yen (cumulative
total)
2050: Approximately 4.4 trillion yen/year

Use of proceeds 11: (GI) Achieving carbon neutrality in the waste and resource circulation field
ITRLCMA GBP
classification
GB guidelines
Sector"Prevention and control of pollution"“Projects for pollution prevention and control”
Waste
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Approximately 40 million tons (3.4 per cent) of Japan's GHG emissions come from the waste
sector, making it the third largest sector after the energy sector and industrial processes andproduct use. Approximately 80 per cent of GHG emissions in Japan's waste sector come fromwaste incineration, etc. (simple incineration, heat recovery, and use of raw materials and fuels).
Japan has a small land area, and in order to secure the remaining capacity of final disposal sites(landfills), it is necessary to reduce the amount of waste.
In addition, if organic waste is disposed of as is in landfills, methane, whose global warming
Issue recognition
potential is 25 times of CO2 will be emitted due to biodegradation. In addition, there are
infectious and other hazardous wastes, and from the perspective of proper disposal, heat
treatment (incineration treatment and pyrolysis treatment) is necessary, and the 3Rs (reduce,reuse, recycle) are necessary. Even after further promotion, emissions from this sector cannot
be reduced to zero. In order to reduce emissions from this sector to net zero, it is consideredessential to shift to CN-type treatment, which replaces conventional incineration methods that
emit CO2 into the atmosphere.
Subproject 1 Development of waste incineration treatment facility based on CO2 separation and recovery
In order to increase the carbon recovery rate while suppressing the increased cost when CO2
separation and recovery is assumed, in addition to the development of new elemental
technologies (component equipment including separation and recovery equipment) that need
to be introduced into incineration facilities. In order to develop the technological base for theBusiness summary
entire incineration facility (equipment process technology, operation technology, etc.), this R&D
will address the following two themes.
Subproject 1 CN type waste incineration facility based on chemical absorption method
Subproject 2 CN type waste incineration facility based on oxygen enrichment (combustion)
By 2030, a waste incineration facility with CO2 separation and recovery that meets the following
requirements: Established technology to realize
・Stable recovery rate of carbon contained in waste of 90 per cent or more*development goals* Facility size is approximately 300t/day (150t/day x 2 furnaces), net processing cost increase
within approximately 10,000 yen/t-waste from conventional incineration treatment (assuming
waste energy generation, same applies below)
Technology maturity
TRL6-7 (2027-2030)
goals
Subproject 2 Large-scale demonstration of high-efficiency pyrolysis treatment facility
In order to utilize carbon in waste that cannot be utilized with the current state of technology, it
will develop innovative pyrolysis technologies that are compatible with each pyrolysis treatment
method, and also reduce processing costs, which remain high (particularly in order to reduce
Business summarythem). It will also develop the necessary elemental technologies, such as the establishment of athermal decomposition process that prevents facility deterioration, leading to reductions inmaintenance costs).
By 2030, demonstrate large-scale effectiveness in real environments for waste pyrolysis
treatment facilities that meet any of the following requirements*
・In the case of gasification: Maximizing the effective carbon utilization rate (while expecting autilization rate of 80 per cent or more of the carbon contained in the waste for the entire
system. It is also possible to convert the carbon in the waste into commercialized carbon suchas ethanol). (utilization rate is 27 per cent or more)development goals
・In the case of conversion to oil: Maximize the recovery rate of calorific value (while expecting
a utilization rate of 80 per cent or more of the carbon contained in the waste as a whole, 48 percent or more of the calorific value recovered with oil)*For both gasification and oil conversion, the facility scale is approximately 300t/day (150t/day
x 2 furnaces), and the net processing cost from conventional incineration treatment isapproximately 10,000 yen/t. numerical value
Technology maturity
TRL6-7 (2027-2030)
goals
Subproject 3 Development and processing of highly efficient biomethane conversion technology
In order to convert target organic waste into biomethane and other fuels at a high rate andwith excellent energy efficiency, it will develop new reactors that are optimal for improving
Business summaryhydrogen reaction efficiency and the quantity and quality of biogas. It will develop elemental
technologies such as processes that can respond to fluctuations in methane fermentation,
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development goals

Technology maturity
goals
ImpactRelated URL

technology to improve the decomposition rate in methane fermentation, technology to
improve the methane/hydrogen ratio in generated gas, and technology to convert methane
fermentation residue into fuel, etc. It will conduct demonstrations as a series of systems ranging
from waste reception to the use of biomethane, etc.
By 2030, establish technology to realize a regionally distributed treatment system that converts
organic waste into biomethane, etc. that satisfies the following two points.
・Demonstration of direct methanation of methane fermentation biogas on pilot scale(methane concentration of 97 per cent or more including purification)
・Methane production rate by methanation is 50NL/Lr・d or more under low temperature(several tens of degrees) and low pressure (~0.8MPa) conditions
TRL6-7 (2028-2030)■CO2 reduction effect (domestic)■Economic ripple effect ﴾world market size﴿
2030: Approximately 10.5million t-CO2e/year
2030: Approximately 0.5 trillion yen/year
2050: Approximately 1,244milliont-CO2e/year 2050: Approximately 5.2 trillion yen/year
https://www.nedo.go.jp/content/100966165.pdf

Use of proceeds 12: (GI) Development of technology for manufacturing plastic raw materials
using CO2, etc.
ICMA GBP
classification"Energy efficiency", " Circular economy adapted products, production technologies andprocesses and/or certified eco-efficient products ""Projects for energy efficiency", " Projects concerning eco-efficient products, production
GB guidelines
technologies, and processes"
SectorWaste, Manufacturing (Chemical)
Of Japan's CO2 emissions by sector, the industrial sector and industrial processes account for29.3 per cent of the total (2019). Of this, 18.6 per cent (60.18 million tons per year) is emitted
from the chemical industry, and drastic measures are needed to achieve carbon neutrality in
2050. Currently, most plastics are made from naphtha (crude gasoline) obtained throughpetroleum refining (12.4per cent of petroleum products are naphtha for petrochemical use). As
demand for petroleum products declines, consumption of naphtha, a raw material for plastics,
remains flat. Since carbon components are essential to plastics, it is expected that a certain
amount of naphtha will continue to be used for the time being. Basic chemicals (olefins) such as
ethylene, propylene, and butadiene, which are raw materials for plastics and rubber, areproduced by thermally decomposing naphtha at a high temperature of approximately 850°C,
Issue recognition
and the manufacturing process produces 31 million tons of CO2 is emitted annually and drastic
measures are required, especially regarding the heat source of naphtha cracking furnaces. For
example, if CO2, etc. can be effectively used as a resource during the production of basic
chemicals and functional chemicals (oxygen-containing compounds) such as polycarbonate andpolyurethane, CO2 emissions can be significantly reduced. Expectations are high. Approximately
84 per cent of the 8.91 million tons of waste plastic produced each year is recycled, and 57 percent of this is used as a heat source for waste incineration energy generation and cement
manufacturing (thermal recycling). As approximately 16 million tons of CO2 is emitted per year,
including simple incineration, there is a need to establish technologies such as chemical
recycling that returns waste plastic to its original plastic raw material.
Subproject 1 Heat source conversion
When naphtha is cracked, in addition to olefins such as ethylene, propylene, and butadiene, offgases such as methane are generated, which are used as a heat source in the cracking furnace,
but are ultimately emitted in large quantities as CO2. It is important to focus on carbon-freefuels such as ammonia and hydrogen as a heat source for naphtha cracking furnaces to replace
Business summary
off-gas, and to reduce CO2 emissions by switching the heat source. It will develop advanced
naphtha cracking furnace technology (equivalent to current TRL6-4) using carbon-free fuel andretrofit it to domestic facilities. In addition, it will aim to expand Japan's advanced technology
overseas by licensing it to emerging countries such as China and ASEAN, which have new plans.
By 2030, it will develop burners and furnaces that thermally decompose naphtha using CO2-freedevelopment goals
heat sources such as ammonia (hydrogen), and achieve yields of basic chemicals such as
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ethylene and propylene and energy consumption during production that are the same ascurrent naphtha cracking furnaces. Achieved technology to reduce the level of Expect toachieve production costs comparable to current levels using a tens of thousands of tons/year
scale test reactor
Technology maturity
TRL7 (2027-2030)
goals
Subproject 2 Raw material circulation
Chemical recycling of waste plastics and waste rubber includes a method of gasifying it in thepresence of oxygen to produce basic chemicals from synthesis gas, and a method of thermallydecomposing it under oxygen-free conditions to synthesize olefins or convert it into oil. The
proportion of chemical recycling remains at around 4 per cent, and its uses are limited, so it isBusiness summary
important to increase this proportion in order to reduce CO2 emissions. It will aim to establish
and socially implement promising chemical recycling technology (equivalent to current TRL4) inwhich Japan can demonstrate its strengths, and ensure Japan's superiority over other countries
through international standardization of recycled plastics.
By 2030, it will produce basic chemicals such as ethylene, propylene, and butadiene from waste
plastics and waste rubber at a yield of 60 to 80 per cent, and reduce CO2 emissions during
production to 0.8 and 1.2 kg-CO2/kg, respectively. Established technology to make it less thandevelopment goals
olefin. Aiming to reduce manufacturing costs by 20 per cent compared to current chemicallyrecycled plastics through demonstration on a scale of several thousand to tens of thousands of
tons/year
Technology maturity
TRL6 (2028-2030)
goals
Subproject 3 Raw material conversion
Technology to produce plastic raw materials from CO2 is a key to significantly reducing CO2
emissions, and is also important from the perspective of moving away from petroleum
resources. Oxygen-containing compounds10 such as polycarbonate and polyurethane arefunctional chemicals that do not require hydrogen and can be synthesized using CO2 as a raw
material (equivalent to current TRL5). In addition to reducing CO2 emissions, it will also work to
Business summary
further improve functionality, such as electrical, optical, and mechanical properties, which willlead to expanded applications, and develop new markets. Japanese companies are currently
developing artificial photosynthesis technology that uses photocatalysts to produce plastic raw
materials from water and CO2. It has already been successful at the basic research (laboratory)
level (equivalent to the current TRL4), and in the future it aim to achieve both higher efficiency
and improved mass production for social implementation.
By 2030, reduce CO2 emissions during the production of toxic raw materials by improving thefunctionality of polycarbonate, polyurethane, etc. and eliminating the need for toxic raw
materials such as phosgene, and further reduce CO2 emissions of 0.3 kg-CO2/kg* or more as
raw materials. Achieving technology that can It aim to achieve the same price as ready-madeproducts through demonstration on a scale of hundreds to thousands of tons/year. (*Varies
depending on the target.)By 2030, it aim to establish technology for manufacturing chemicals from alcohol that has thefollowing efficiency and durability.
development goals○Developing a photocatalyst with a conversion efficiency of 10 per cent or more anddemonstrating artificial photosynthesis on a scale of several hectares will bring the hydrogenproduction cost to 30 yen/Nm3 or less.
○After establishing a technology to produce basic chemicals such as ethylene and propylene
from hydrogen and CO2 via alcohols, etc. with a yield of 80-90 per cent, and to eliminate CO2
emitted during production, it will be able to produce products from several thousand toThrough demonstration on a scale of tens of thousands of tons per year, it will have a durabilityof over 10,000 hours and will reduce manufacturing costs by 20 per cent compared to current
methanol to olefin (MTO) products.
Technology maturity
TRL6-7 (2025-2030)
goals■CO2 reduction effect (world)■Economic ripple effect (world market size)
Impact2030: 40 million t-CO2e/year
2030: 10 trillion yen/year
2050: 1.1 billion t-CO2e/year
2050: 360 trillion yen/year

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Related URL

https://green-innovation.nedo.go.jp/project/development-plastic-raw-materialmanufacturing/summary/Use of proceeds 13: (GI) Promotion of carbon recycling using CO2 as a direct raw material using
bio-manufacturing technology
ICMA GBP
classification
GB guidelines
SectorIssue recognition

development
goals"Circular economy adapted products, production technologies and processes and/or certified
eco-efficient products ""Projects concerning eco-efficient products, production technologies, and processes"
Manufacturing (Chemical)
1) Sophistication of microorganism modification platform technology to accelerate thedevelopment of useful microorganisms, etc.
By supporting the development of platform technology for modifying microorganisms that
integrates basic biotechnology, digital technology such as IT/AI, and automation technology suchas robotics, it can rotate the DBTL cycle36 faster and absorb and absorb CO2 with high efficiency.
It aims to expand the variety of useful micro-organisms that can be immobilized and produce
substances, and to contribute to reducing the time and cost required for modification.
2) Development and improvement of useful microorganisms that can produce substances using
CO2 as raw material
In this R&D item, it will promote joint development between microorganism modification
platform operators, who play a central role in bio-manufacturing, and businesses in other fields
such as innovative materials and fuels. First, it will develop microbial strains with improved
productivity by optimizing the metabolic pathways for substance production.
3) Development and demonstration of manufacturing technology using microorganisms that can
produce substances using CO2 as raw material
In order to produce substances using CO2 as a carbon raw material, it is necessary to cultivate a
microbial strain that uses carbon raw materials and reducing energy that are supplied in adifferent way from conventional methods. Additionally, it is necessary to develop separation andpurification technologies that are optimized for each substance produced. In order to use theproduced substances industrially, it is also necessary to develop material processing technology
and quality evaluation methods that also take into account the final product.
1) By 2030, it will develop technology to shorten the time per DBTL cycle, and also establish
technology to reduce the number of cycles and reduce costs, reducing the development period
for useful microorganisms to up to 1/10th. Established technology to shorten the time.
2) By 2030, increase the ability to produce substances or fix CO2 compared to general natural
strains.
Develop a microorganism (commercial strain) that can produce substances at a commercial levelby improving the production capacity by about 5 times, or perform genome editing on
microorganisms that already have a high substance production function or CO2 fixation ability,
and maintain the production function while maintaining production functions. Developed
microorganisms (commercial strains) that can use different raw materials and target substances.

——————————————
36

DBTL cycle: Refers to the workflow of Design, Build, Test, and Learn.
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3) By 2030, it will develop technology that uses microorganisms, etc. to make the manufacturing
cost of substances produced from CO2 as raw materials less than 1.2 times that of alternative
candidate products in 2030.
Technology
maturity goals

TRL7-9 (2040)

ImpactSince the results of this project are intended to be
put into practical use from around 2040, theoutcome goals are CO2 reduction effects andeconomic ripple effects in 2040 and 2050.
CO2 reduction effect (potential estimation)
2040: approximately 1.35 billion t-CO2e/year
2050: approximately 4.21 billion t-CO2e/year

Related URL

https://www.meti.go.jp/policy/energy_environment/global_warming/gifund/pdf/gif_19_randd.pdf■Economic ripple effect ﴾world market size﴿
2040: approximately 65.4 trillion yen/year
2050: approximately 199.4 trillion yen/year(2) Research and development support other than GI Fund
Use of proceeds 14: Research and development of future technologies essential for realizing GX
such as optoelectronic convergence among the post-5G information and communication systeminfrastructure reinforcement research and development projects
ICMA GBP
classification
GB guidelines"Energy efficiency"

SectorICT

Issue recognition

Optoelectronic convergence technology is a technology that combines circuits that handle
electrical signals and circuits that handle optical signals. Traditional computers perform
calculations using binary numbers by turning electricity on and off. When electricity flows
through a circuit, it generates unnecessary heat, and when electricity is generated, the resistanceof the path through which the electricity flows increases, leading to a decrease in calculation
speed. Therefore, research is underway to replace calculations that used to be performed using
electricity with processes that use light. By connecting the internal circuits of a computer withlight and minimizing heat usage, it achieves energy savings and low latency. The first goal is toestablish technology for optically connecting chips used for calculations and peripheral
components by 2024. By 2025, it will be possible to connect chips using light, and at the final
stage in 2030, it will be possible to connect chips using light. Next, it aims to commercialize
optoelectronic integrated chips for calculation. By 2030, the widespread adoption of
optoelectronic convergence technologies will result in energy savings of more than 40 per centcompared to today's state-of-the-art data centers, by some estimates.
Development of implementation technology and deterministic delay computing platform
technology related to optoelectronic convergence technologies necessary to realize newarchitectures such as semiconductor devices in which multiple circuit chips are opticallyconnected within a package and optical disaggregated computing, as well as software that can
reduce latency and improve delay determinism. Development of computational infrastructuretechnology.
Band density must be 1Tbps/mm or more. In addition, the energy usage per unit communication
volume of semiconductor devices developed using optical chiplet mounting technology shall be
reduced by more than 40 per cent compared to equivalent technologies or products.

Business summary

Development
goals/impact“Projects for energy efficiency”

The optical communication speed of the memory module using the photoelectric conversion
device as an interface must be a band of 512 Gbps or higher (physical speed). In addition, theenergy consumption must be reduced by 30 per cent or more compared to the equivalenttechnology or product that was in use at the time the research and development began.

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Technology
maturity goals
Related URL

TRL6 (2030)
https://www.meti.go.jp/policy/mono_info_service/joho/post5g/pdf/20230925001.pdf

Use of proceeds 15: Innovative GX technology creation project
ICMA GBP
classification
GB guidelines
SectorIssue recognition

development
goalsTechnology
maturity goals

Impact*Since all of thisresearch is basic
research, it showsthe effects ofsocialimplementation of
the results of thisproject.

"Clean transportation", "Energy efficiency", "Renewable energy", "Circular economy adapted
products, production technologies and processes and/or certified eco-efficient products""Projects for clean transportation", "Projects for energy efficiency", "Projects for renewableenergy", "Projects concerning eco-efficient products, production technologies, and processes"
Transport
Electricity and heat
It will make full use of the high potential and accumulation of basic research capabilities inJapanese academia, support R&D and human resource development at universities, national
research institutes, etc., and work towards realizing GX from the perspective of creating
innovative technology seeds and producing human resources. It aims to contribute to create
innovative technologies that will lead to the realization of GX, it is necessary not only to conduct
basic research on elemental technologies, but also to break down the silos of research, such as
materials development, engineering, evaluation and analysis, data operation and analysis, etc. It
is essential to build a system in which various laboratories and researchers come together to
conduct research and development in an integrated manner as a "team" in order to achieve
research and development goals. Therefore, it has set ``Storage Batteries'', ``Hydrogen'', and ``Biomanufacturing'' as areas that are connected to the 14 fields specified in the Green Growth
Strategy of the government and where it can expect great future contributions from Japanese
academia. This fund supports research and development carried out in an all-Japan, integrated"team-type" manner. Furthermore, the development goals of this research and development
include content that will contribute to resolving issues faced by similar research and developmentthat has been conducted by the GI Fund, etc. In addition, the same development goals are set forthe same areas as the GI Fund.
The storage battery is assumed to be for renewable energy electricity or EV vehicles. For
hydrogen, it assumes "hydrogen production technology," "hydrogen storage technology(including storage technology that contributes to transportation)," and "fuel cell technology."
Bio-manufacturing is aimed at applying bio-manufacturing technology to a wide range ofindustries such as chemicals, textiles, and food and beverage manufacturing, which emit 80.9
million t-CO2e annually. Aiming to improve the types and production efficiency, diversify, andexpand the functions of next-generation fuels such as SAF (Sustainable Aviation Fuel) and othernext-generation fuels (raw materials for chemical fibers, etc.), and improve CO2 fixation ability. ,promoting research that will lead to the foundation of next-generation bio-manufacturingsystems using microorganisms and plants.
Storage battery: TRL6 or higher (2040)
Hydrogen: TRL6 or higher (2030)
Bio-manufacturing: TRL6 or higher (2040)
Economic ripple effect (world market size
estimation)
Innovative storage battery
Storage batteries
2030: Approximately 33 trillion yen■CO2Reduction effect of (domestic)
2050: Approximately 53 trillion yen (7,546GWh
2042: Approximately 10 million t-CO2e/year
on a capacity basis)2047: Approximately 15 million t-CO2e/year
Stationary storage battery
2050: Approximately 47 trillion yen (3,400GWh
on a capacity basis)
Hydrogen■CO2 reduction effect

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Related URL

2030: approximately 5 million t-CO2e/year (domestic)
2050: approximately 400 million t-CO2e/year (world)37
Bio manufacturing■ CO2 reduction effect (potential estimation)
2040: Approximately 1.35 billion t-CO2e/year
2050: Approximately 4.21 billion t-CO2e/year
https://www.jst.go.jp/gtex/index.html

Use of proceeds 16: Fast reactor demonstration reactor development project
ICMA GBP
classification38
GB guidelines"Low carbon/decarbonized energy"

SectorElectricity

Issue recognition

A fast reactor is a nuclear reactor in which the fission chain reaction is sustained by high-energy
neutrons (fast neutrons). Since fast neutrons cause nuclear fission of the fuel, in order to avoid
deceleration of fast neutrons as much as possible, moderators like those in light water reactors
are not required, and fuel with increased fuel density in the fuel assembly is used. Fast reactors
utilize fast neutrons to further enhance the effectiveness of the nuclear fuel cycle by reducing thevolume and toxicity of such high-level radioactive waste and making effective use of resources.
Fast reactors do not require moderators, but use liquid metals, mainly sodium, as coolants forfuel assemblies. Furthermore, after a light water reactor finishes generating electricity, the spent
fuel contains resources that can be recycled, such as uranium and plutonium. By collecting andreprocessing these and reusing them as fuel for fast reactors, a long-term stable supply of energy
becomes possible.
When reprocessed fuel is used in light water reactors (light water reactors pullthermal), the lessflammable plutonium (high-grade plutonium) gradually increases, so it can be reused as fuel only
a few times, whereas fast reactors also burn the less flammable plutonium. It plays an extremely
important role in the effective use of resources.
In addition, fast reactors are expected to further enhance the effectiveness of the nuclear fuelcycle in reducing the volume and potential toxicity of radioactive waste and in effectively utilizing
resources.
A sodium-cooled fast reactor (SFR) is a moderator-less fast reactor that uses liquid metal sodium
as a coolant.
In the fast reactor strategic roadmap revised in December 2022, a fast reactor technology
evaluation committee was established under the strategic working group established by thegovernment, manufacturers, electric energy companies, and research institutions. As a result of
the committee's consideration of sodium-cooled reactors, light water-cooled fast reactors, andmolten salt fast reactors as candidates, sodium was selected as the coolant that should beprioritized for development. The liquid metal sodium used as a coolant reacts violently with waterand burns, so it must be handled with great care.

Business summary

N.A.

The milestones for this project are as follows.
1) Summer 2023: Select specifications for the reactor concept and core companies forconceptual design from 2024 onwards
Based on the coolants that should be prioritized for development in FY2022, and based on the
results of subsequent technical studies, the international situation, and domestic market needs,
from among the sodium-cooled reactors, conceptual design will begin in FY2024. In addition to
selecting the specifications for the new reactor concept, it will also reselect a core company thatwill be responsible for the design of the concept, associated technological development, and——————————————The value for 2050 is the value of the GI Fund "Building a large-scale hydrogen supply chain" because the assumed hydrogensociety is same.
38
Since there is no example of the green project classification for the use of this fund in ICMA's GBP, it was established at thetime of formulating Japan Climate Transition Framework.
37

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development
goals

future manufacturing and construction, and clarify the development system. In addition,measures to maintain human resources, technology, and supply chains will be implemented.
2) FY2024 to FY2028: Conceptual design of demonstration reactor and necessary research anddevelopment
The core companies will conduct the conceptual design of the demonstration reactor. First, it will
carry out the conceptual design of the plant, while conducting necessary research anddevelopment (evaluation of a decay heat removal system that can respond to various situations,evaluation of the conclusion of a core meltdown accident inside the reactor vessel, irradiation
tests for advanced fuel, standards for new materials) It will carry out data maintenance, etc.) andgain knowledge through research and development results and international cooperation around2026.Based on this, it will conduct specific studies on fuel technology and develop the system as
a whole, including plants and fuel. The conceptual design will be carried out by around 2028.
3) Around FY2028: Decision to move to Step 3 based on the results of the reactor conceptual
design and the status of system development, etc.
In moving to Step 3, in addition to creating a common understanding among related parties tobuild a system, it will fulfill its accountability to ensure that the technology is accepted by society,and it will also take specific measures regarding location measures and regulatory responses. It isnecessary to consider how to respond. It is also essential that an appropriate business
management system be established.
If the market mechanism does not work properly, it is necessary to verify that the long-term
interests of the people can be secured, and then, as with other energy sources, appropriate
institutional measures to supplement the market are needed. It is appropriate that various
adjustments with the location area should be carried out by the established business
management system, in collaboration with the government and electric utilities with experiencein locating light water reactors.
The government will provide institutional support in cooperation with electric utilities and thelocation regions.
In addition, it is important to build a mechanism that can raise development funds in an
appropriate business management system in collaboration with electric utilities, who are the final
users of nuclear energy generation technology, and the government is creating an environment
in which such a mechanism can function.
Based on the status of these considerations, it will make a decision to move to Step 3 around
FY2028, and proceed with the outlook and consideration of activities from around FY2030
onwards.
Goals by 2028
a. Technology maturity level (TRL)・Present an evaluation plan that will contribute to licensing regarding the safe design of fast
reactors. In addition, the technological maturity of the elemental technologies for fast reactors
and fast reactor cycles shall be at the technology demonstration stage (TRL6) or higher.
b. Economical aspects
・In a cost evaluation assuming a plant that is a large reactor and takes into account learning
effects, etc., it is considered to be equivalent to a light water reactor. - Continuous operation
period of 13 months or more, availability rate of 80 per cent or more, net energy efficiency of 35
per cent or more, and plant life of 60 years.
・At a breeding ratio of 1.03, the average extraction burnup of the entire core will be 80 GWd/t.
c. Reducing the volume of radioactive waste and reducing its potential toxicity
・The average MA content in the core is approximately 3wtper cent (the maximum MA content
in the fuel assembly is 5 per cent or less).
d. sustainability
・While ensuring a breeding ratio of 1.03, taking into account the uncertainty of Pu supply anddemand, secure the potential to operate a core configuration with a breeding ratio of 1.1 to 1.2.
e. flexibility - Flexibly respond to output scale and location conditions.
・Consider specific operational methods (heat storage, etc.) that can coexist with variable
renewable energy such as solar and wind energy.
f. In preparation for regulatory compliance and consultation with regulations, clarify important
issues, begin exchanging opinions, and present research and development plans for Step 3 andbeyond.

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Technology
maturity goals
ImpactRelated URL

TRL6 or higher (2028)
・Technology maturity level at which transition to Step 3 can be determined.
・It expect to rebuild the supply chain through the development of fast reactors and fast reactor
cycles in the conceptual design, and to cultivate skills and promote employment in the industrial
world after Step 3.
・Obtain permit data and present an acquisition plan so that the business management systemfrom Step 3 onward can make construction decisions.
https://www.meti.go.jp/shingikai/enecho/denryoku_gas/genshiryoku/kakushinro_wg/pdf/007_01_
00.pdf

Use of proceeds 17: High-temperature gas reactor demonstration reactor development project
ICMA GBP classification
GB guidelines
CBI Criteria
Issue recognition

Businessoverview/development
goals"Low carbon/decarbonized energy"“Projects concerning eco-efficient products, production technologies, and processes”
Electricity and heat
A high-temperature gas reactor is a nuclear reactor that uses ceramic materials, mainly
graphite, as the main constituent material of the reactor core, and uses helium gas as acoolant to extract the heat generated by nuclear fission. A high-temperature gas furnacewith an outlet coolant temperature of 700°C to 950°C is called a high-temperature gas
furnace. By using a ceramic material with excellent heat resistance, it is possible to extractenergy from high-temperature heat of over 700°C, which has the potential to be used forenergy generation or to produce hydrogen using a high-temperature gas furnace. Regardinghydrogen production, which is attracting attention for decarbonization in industrial fields
including steelmaking and chemicals, it has the potential to decarbonize a shaft furnace thatcan perform complete hydrogen reduction steelmaking with a single high-temperature gas
furnace. There is. Comparing hydrogen production using a high-temperature gas furnaceand solar energy generation, the required site area is approximately 1/1,600th.
In Japan, JAEA owns the High Temperature Engineering Test and Research Reactor (HTTR).
The test research reactor HTTR achieved 50 days of continuous high-temperature operation
at the world's highest temperature of 950°C, and conducted tests simulating an accident inwhich coolant was lost, similar to the TEPCO Fukushima Daiichi Nuclear Energy Plant
accident. It has the world's leading technology, including ensuring that water cools naturally.
Utilizing the test and research reactor HTTR, in addition to international demonstrations ofsafety, it plan to develop the technology necessary to produce large quantities of carbonfree hydrogen at low cost by 2030. It also plan to conduct research and development on
carbon-free hydrogen production methods that utilize ultra-high temperature heat,including the IS method and methane thermal decomposition method.
In order to achieve the government's goal of carbon neutrality in 2050, it is essential toreduce emissions from the industrial sector, including steel and chemicals, which account for
approximately 25 per cent of total domestic emissions. As mentioned above, hightemperature gas reactors are expected to be used for high-temperature heat utilization of
800°C or higher, which is higher than conventional light water reactors, and for industrial
applications such as hydrogen production. In Japan, the aforementioned test and research
reactor HTTR has been restarted, and it are now at the stage where it can develop ademonstration reactor with the aim of commercialization as a means of decarbonizing heat
demand and hydrogen production. Through this project, it aim to provide a stable supply oflarge amounts of hydrogen at approximately 12 yen/Nm3 by 2050 using decarbonized hightemperature heat over 800°C and carbon-free hydrogen production methods. The ultimate
goal is to connect it to industrial use.
This project will conduct a feasibility study of carbon-free hydrogen production methods
that utilize high temperatures of 800°C or higher (IS method, methane pyrolysis method,high-temperature steam electrolysis, etc.) by 2030. The goal is to establish connection
technology and evaluation methods that achieve high safety using a decarbonized hightemperature heat source and hydrogen production technology using the commerciallyavailable methane steam reforming method. At that time, in order to develop hydrogenproduction evaluation technology, hydrogen production tests will be conducted using the
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High Temperature Gas Reactor Test and Research Reactor HTTR, which has achieved theworld's highest temperature of 950°C as a high-temperature heat source. In addition, it will
design and construct a high-temperature gas reactor demonstration reactor, developelemental technologies, and consider supply chains such as fuel production. In FY2020, it will
prepare the manufacturer's system and design work for the conceptual design of thedemonstration reactor, basic design of the hydrogen plant connected to the HTTR,
equipment development, and elemental technology development for carbon-free hydrogen.
It will conduct procurement feasibility studies for ultra-high temperature materials that havebeen found to be impossible to procure.
Technology maturity
goals
impactRelated URL

TRL6 or higher (2030)
By 2030, it will establish connection technology between high-temperature heat sources andhydrogen production plants and demonstrate that hydrogen production is possible. It will
also gain an outlook on the technological feasibility of carbon-free hydrogen production
methods (IS method, methane pyrolysis method, high-temperature steam electrolysis, etc.).
・Achieve the tasks set for each FY year to confirm the connection technology between
ultra-high temperature heat sources and hydrogen production facilities.
・By the end of the project in FY2022, technology for evaluating hydrogen production
should be established, and the design tolerance should be within ±10 per cent of the error
between predicted and measured values.
https://www.meti.go.jp/main/yosan/yosan_fy2023/pr/gx/gx_denga_02.pdf

﴾3﴿ Subsidy program
Use of proceeds 18: Support project for strengthening the semiconductor supply chain to realize
GX by improving energy performance, part of the support for strengthening the supply chain ofimportant materials in response to changes in the economic environment.
ICMA GBP
classification"Clean transportation", "Renewable energy"

GB guidelines“Projects for clean transportation”, “Projects for renewable energy”

SectorPurpose of subsidy

Business details
eligible for subsidies

CBI sector criteria:
1. Solar v2.3
2. Wind v1.3
3. Low carbon transport (Rev2.2)
4. Electrical Grids and Storage (March 2022)
As the functions played by semiconductors in people's lives are increasing due to digitalizationand green innovation, energy semiconductors, which control current and voltage, are being
used as energy control devices for all kinds of equipment, including EVs and wind energy
generation. It is essential for achieving neutrality and is also extremely important for economic
security.
The semiconductor companies in Japan have to survive intensifying international competition,leverage the technological advantages of individual companies, support the strengthening ofdomestic production capacity for energy semiconductors, etc., proceed with steady investment
toward the realization of GX, and strengthen the supply chain.
Based on the Economic Security Promotion Act, a company who intends to get a subsidy fromthis funds and to secure a stable supply of semiconductors must prepare a plan to secure astable supply of semiconductors, etc. (supply security plan) and submit it to the Minister of
Economy, Trade and Industry.
The projects eligible for this subsidy system are as follows.
<Energy semiconductors>
It must be a significant investment (as a general rule, business size of 200 billion yen or more)that is considered necessary to maintain international competitiveness into the future, mainly in
SiC energy semiconductors. In addition, when making certifications, consideration will be given
to the content of initiatives aimed at procuring important parts and materials.

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The performance of the equipment and equipment to be introduced must be cutting-edge.
Characteristics ofenergysemiconductors and
SiC semiconductors

Subsidy rate
Related URL●About power semiconductors
Power semiconductors are semiconductors used to control and supply electrical energy, such as
converting alternating current to direct current or dropping voltage. It has a wide range ofapplications, including in-vehicle storage batteries, energy transmission and distribution,
electrical trains, and home appliances (air conditioner inverters), and has the effect of reducing
electricity loss and improving energy efficiency in products. The switching function of energy
semiconductors is primarily used for energy conversion. The market size of energy
semiconductors is expected to continue to steadily expand. One of the factors contributing to
the market expansion is the shift to electric vehicles. Energy semiconductors are often used for
input and output of electric energy such as batteries and motor drives. In addition, large
amounts of energy semiconductors will be needed for data centers, solar energy generation,wind energy generation, stationary storage batteries, etc., where investment is increasing.
Anticipating this demand, energy semiconductor manufacturers are increasing capital
investment and hastening development.
●About SiC semiconductors Energy semiconductors handle large voltages and currents, so“loss'', where electricity is turned into heat internally, becomes a problem. SiC semiconductors
are expected to be a technology that eliminates this loss. SiC semiconductor refers to a 1:1
compound of Si (silicon) and carbon, and is made by solidifying silicon and black smoke in anelectric furnace and carbonizing it. SiC, a next-generation energy semiconductor material, haslower energy loss than traditional silicon (Si) materials. For example, research results haveshown that energy semiconductors using SiC materials have succeeded in reducing energy loss
(on-resistance) by approximately 70 per cent compared to types using conventional siliconmaterials at the prototype stage.
Subsidy for 1/3 of the procurement plan for components and materials for SiC energy
semiconductors.
https://www.meti.go.jp/policy/economy/economic_security/semicon/index.html

Use of proceeds 19: Support project to strengthen the manufacturing supply chain of storage
batteries, which are essential for a green society, as part of the support for strengthening the
supply chain of important materials in response to changes in the economic environment
ICMA GBP
classification
GB guidelines
SectorPurpose of subsidy

Business details
eligible for subsidies"Energy efficiency", "Renewable energy", "Clean transportation""Projects for energy efficiency", "Projects for renewable energy", "Projects for cleantransportation"
CBI sector criteria:
1. Low Carbon Transport (Rev2.2)
2. Electrical Grids and Storage (March 2022)
Storage batteries will be used to maintain the foundations of the future electrified anddigitalized society by electrifying mobility such as cars, adjusting supply and demand ofelectricity with the aim of making renewable energy the main energy source, and as a backup
energy source for 5G communication base stations, etc. essential to.
Based on this background, this project aims to strengthen the domestic storage battery
manufacturing supply chain, including small and medium-sized enterprises, by providing
support for capital investment and technological development of storage batteries, parts andmaterials, etc. do.
In order to strengthen the storage battery manufacturing supply chain and ensure stablesupply, it will take the following initiatives.
(1) Support for capital investment in storage batteries, parts and materials, etc.
Businesses that develop large-scale manufacturing bases, manufacturing bases for parts andmaterials whose production is currently limited in Japan, manufacturing bases using unique
technologies, etc., in order to strengthen the domestic manufacturing base for storage
batteries, parts and materials, etc. Subsidization will be provided for this purpose.
(2) Support for technological development of storage batteries, parts and materials, etc.
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Subsidy rate
Related URL

Development of technologies to establish the superiority and indispensability of storage
batteries, component materials, etc., technologies to decarbonize manufacturing processes,
and digital technologies to manage data in manufacturing processes and improve productivity.
Subsidies will be provided to businesses that carry out such activities.
Manufacturing equipment investment for automotive storage batteries and stationary storage
batteries, R&D support equipment investment = 1/3, R&D = 1/2
https://www.meti.go.jp/policy/economy/economic_security/battery/Use of proceeds 20: Project to promote the introduction of advanced equipment to improve theinsulation performance of houses
ICMA GBP
classification
GB guidelines"Energy efficiency"

Sector

CBI sector criteria: Buildings (White list for Low Carbon Building Technology Rev1.0)

Purpose of subsidy

The Plan for Global Warming Countermeasures sets a goal for the residential sector to reduce
GHG emissions by 66 per cent by FY 2030, but approximately 90 per cent of existing homes do
not meet current energy-saving standards, and energy-saving measures for homes are urgently
needed. In particular, insulation renovations that reduce the transfer of heat inside and outside
the home directly lead to improved operational efficiency of heating and cooling systems,
which account for the majority of CO2 emissions in the residential sector, and contributesignificantly to reducing energy consumption.

Business details
eligible for subsidies“Projects for energy efficiency”

By improving the insulation performance of windows in existing homes, which have a large
amount of heat loss (70 per cent of the heat loss in the entire home comes from windows), theburden on heating and cooling costs will be reduced, reducing the burden on the home. It aims
to reduce the total CO2 emissions of existing homes by approximately 70 per cent (compared
to 2013) and ensure energy-saving performance at the 2050 stock average ZEH standard*1
level.
Subsidy criteria
Renovation of insulation windows in existing houses to meet ZEH*1 exterior skin standards
・Subsidy amount: Fixed amount depending on the construction details
・Target: Window (glass/sash) insulation repair work
(Those that exceed the Building Materials Top Runner System 2030 target standard value *2
and meet certain standards such as heat transmission coefficient (Uw value) of 1.9 or less)*1 Definition of ZEH
ZEH is a system that "significantly improves the insulation performance of the outer skin,
maintains the quality of the indoor environment by introducing highly efficient equipment
systems, achieves significant energy savings, and then introduces renewable energy, etc."
This refers to a house that meets the following four conditions and aims to achieve zero annual
primary energy consumption.
1) After clearing the ZEH reinforced outer skin standards (*2016 energy saving standards forregions 1 to 8 (pay attention to ensuring ηAC value, airtightness, dew-proofing performance,etc.)), UA value [W/m2K] 1.2 regions: 0.40 3rd area: 0.50 equivalent or less, 4th to 7th area: 0.60
equivalent or less)2) Reduce primary energy consumption excluding renewable energy, etc. by 20 per cent ormore from the standard primary energy consumption.
3) Introduction of renewable energy (regardless of capacity)4) Reduce primary energy consumption by 100 per cent or more from standard primary energy
consumption by adding renewable energy, etc.
*ZEH reinforced outer skin standard

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Averageheattransfercoefficientof theouter skin
Window
heat
transfer
limitsArea 1
Area 2(Asahikawa (Sapporo
City)
City)

Area 3(MoriokaCity)

Area 4(SendaiCity)

Area 5(Niigata
City)

Area 6(Tokyo)Area 7(Miyazaki
City)

0.4

0,4

0.5

0.6

0.6

0.6

0.6

1.9

1.9

1.9

2.33

2.33

2.33

2.33

*2 Standards for insulation repair
glass

Detached
houses/low-riseapartments
Mid-to-high riseapartment

inner window

outside window(cover method)

outside window(Chisel method)

Uw1.9 or lessUw1.9 or lessUw1.9 or lessUw1.9 or lessUw1.9 or lessUw1.9 or lessUw2.3 or lessUw1.9 or lessSubsidy rate

Subsidy equivalent to 1/2 (up to 2 million yen) for individuals

Related URL

https://www.meti.go.jp/policy/mono_info_service/mono/jyutaku/dannetsujigyou.html

Use of proceeds 21: Energy saving investment promotion/demand structure transformation
support project subsidy
ICMA GBP
classification
GB guidelines"Energy efficiency"

Sector

No CBI criteria available

Purpose of subsidy

The 6th Strategic Energy Plan set a goal of reducing energy consumption by approximately 62
million kl by 2030 through energy conservation. Recognizing that it is necessary to further dig
deeper into energy conservation in these two sectors, the ``Technology Evaluation Committee
for Advanced Energy Conservation Technologies, etc.'' established by the Agency for Natural
Resources and Energy in FY2020 concluded that high energy conservation potential is
expected. The government announced a policy to discover advanced technologies in themarket and provide intensive support through subsidies and other means. This project will
support the upgrading of equipment and equipment with high energy-saving performance infactories and workplaces, cooperation among multiple businesses, and the introduction ofequipment and equipment related to more advanced energy-saving technology. The aim is tocontribute to achieving the "Outlook of Supply and Demand".

“Projects for energy efficiency”

Provide support in response to companies' multi-year investment plans and cultivate demandfor energy-saving investments, especially among small and medium-sized enterprises.
Furthermore, by promoting the upgrading of facilities and equipment with high energy-saving
performance in factories, etc., it will both reduce greenhouse gas emissions and strengthen
Japan's industrial competitiveness. As a goal, it plans to promote the implementation of
measures centered on energy-saving equipment investment among the energy-saving
measures (approximately 27 million kl) in the industrial and business sectors based on the
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energy supply and demand outlook for FY2030, and will include the effects of this budget
project. , aiming to achieve energy savings of 21.55 million kl.

Subsidy target
classification(A) Supporting the introduction of advanced
equipment that can achieve significant energy
savings at advanced business factories andworkplaces(B) Support for updating energy-saving
equipment and process renovations, including
the introduction of custom-made equipmentthat requires individual design.

Business details
eligible for subsidies

For each application, equipment costs, design
costs, and construction costs for projects thatmeet any of the following requirements on acrude oil equivalent basis (1) Energy savingrate + non-fossil ratio increase rate: 30per
cent or more (2) Energy saving amount +non-fossil use Amount: 1,000kl or more (3)Energy consumption unit improvement rate:
15per cent or more

For each application, equipment costs, design
costs, and construction costs for projects thatmeet any of the following requirements on acrude oil equivalent basis (1) Energy savingrate + non-fossil ratio increase rate: 10percent or more (2) Energy saving amount +non-fossil use Amount: 700kl or more (3)Energy consumption unit improvement rate:
7per cent or more

Subsidy rate

SMEs, etc.: within 2/3
Large companies and others: within 1/2

SMEs, etc.: within 1/2
Large companies and others: within 1/3[Subsidy limit per FY year]
Upper limit(energy saving) 1.5 billion yen(non-fossil) 2 billion yen
Lower limit 1 million yen
https://sii.or.jp/senshin04r/overview4.html[Subsidy limit per year]
Upper limit(energy saving) 1.5 billion yen(non-fossil) 2 billion yen
Lower limit 1 million yen

Related URL

Use of proceeds 22: Subsidy to promote the introduction of clean energy vehicles (BEV, PHEV,FCV)ICMA GBP classification
GB guidelines
SectorPurpose of subsidy

Business details eligible
for subsidies"Clean transportation"“Projects for clean transportation”
CBI sector criteria: Low Carbon Transport (Rev.2.2)
The transportation sector accounts for about 20per cent of Japan's carbon dioxide emissions.
The automobile sector accounts for approximately 90per cent of the transportation sector,
and in order to achieve carbon neutrality in 2050, it is important to popularize clean energy
vehicles with excellent environmental performance. It is also important to capture overseas
markets by strengthening the competitiveness of the automobile industry while leveraging
the spread of electric vehicles in the domestic market. The aim is to strengthen industrial
competitiveness and reduce carbon dioxide emissions by supporting the cost of introducing
electric vehicles, etc.
Based on the purpose of GX support, and from the perspective of integrating regulations
and systems with support, in addition to having an external energy supply function as arequirement for adding on the upper limit of the subsidy amount, EV/PHEV passenger carsmust be top runners under the Energy Saving Act. Added that the vehicle is subject to thesystem's 2030 fuel economy standards (type-designated vehicle). – From the perspective ofpromoting price reduction, for high-priced vehicles (8.4 million yen or more excluding tax),
the calculated subsidy amount is multiplied by a price coefficient of 0.8.
For PHEVs that directly emit CO2, CBI has set a tank-to-wheel (fuel tank to tire drive)
threshold of 50g-CO2/km/vehicle/person. JCR has confirmed that none of the vehicles
eligible for this subsidy program under this Bonds exceeds the threshold of GHG emission.

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Subsidy rate

Related URL

Individuals, corporations, local governments, etc. who purchase eligible vehicles will receive
subsidies for each of the following items.
EV Upper limit: 650,000 yen /Upper limit(Conventional): 850,000 yen
Light EV Upper limit: 450,000 yen /Upper limit(Conventional): 550,000 yen
PHEV Upper limit: 450,000 yen /Upper limit(Conventional): 550,000 yen
FCV Upper limit: 2.3 million yen /Upper limit(Conventional): 2.55 million yen
https://www.meti.go.jp/policy/mono_info_service/mono/automobile/cev/r4hosei_cev.html

Use of proceeds 23: Commercial vehicle electrification promotion project
ICMA GBP
classification
GB guidelines
SectorPurpose of
subsidy

Contents of thesubsidy project

Subsidy rate

"Clean transportation"“Projects for clean transportation”
CBI sector criteria: Low Carbon Transport (Rev.2.2)
The transportation sector accounts for approximately 20per cent of Japan's total CO2 emissions,of which emissions from commercial vehicles such as trucks account for approximately 40per
cent. ), the electrification of commercial vehicles (BEV, PHEV, FCV, etc.) is essential. For thisreason, this project will provide subsidies for the electrification of commercial vehicles (trucks,
taxis, and buses) and support the acceleration of its introduction in the early stages ofwidespread use, thereby strengthening industrial competitiveness through lower prices,
promoting economic growth, and reducing greenhouse gas emissions. Together it can reduce
emissions. This project aims to increase domestic investment over the next 10 years by providing
subsidies for the introduction of vehicles and charging equipment for the electrification (BEV,
PHEV, FCV, etc.) of commercial vehicles (trucks, taxis, buses). 2030 target for commercial vehicles:
less than 8 tons: electric vehicles will account for 20-30per cent of new car sales; over 8 tons:
advance introduction of a cumulative 5,000 electric vehicles; support will be provided for the
introduction of passenger cars, etc. At the same time, it will promote decarbonization of thetransportation sector as a whole.
In addition, it will improve price competitiveness by reducing vehicle prices and accelerating
innovation.
Introduction of vehicles and charging equipment for electrification (BEV, PHEV, FCV, etc.*) ofcommercial vehicles (trucks, taxis, buses) for the following businesses that have plans to
introduce non-fossil energy vehicles. Provide assistance to ① Truck transportation business
operators ② Persons who use private commercial vehicles (trucks, etc.) for business (limited tovehicles with a gross vehicle weight of over 2.5 tons) ③ Persons whose business is to rent out
commercial vehicles (trucks, etc.) (① , ②) ④ Local governments ⑤ Others with the approval of
the Minister of the Environment and as deemed appropriate by the executive body. For PHEVs
that directly emit CO2, CBI has set a tank-to-wheel (fuel tank to tire drive) threshold of 50gCO2/km/vehicle/person. JCR has confirmed that none of the vehicles eligible for subsidy forwhich the proceeds of this Bonds exceeds the threshold of the emission.
[Trucks] EV trucks/vans FCV trucks Subsidy rate: 2/3 of the difference from standard fuelefficiency vehicles, etc.
[Taxi] EV taxi/FCV taxi/PHEV taxi Subsidy rate: 1/4 of the vehicle price, etc.
[Bus] EV bus/FCV bus Subsidy rate: 2/3 of the difference from standard fuel efficiency vehicle, etc.

Related URL[Charging equipment] Subsidy rate: 1/2 etc.
*As a general rule, limited to those that are installed integrally with the vehicles mentioned
above.
(Truck) https://www.levo.or.jp/fukyu/evhojo/2023/ev_index.html(Taxi) https://ataj.or.jp/efv-f_taxi_r5/

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Use of proceeds 24: Grant for promoting regional decarbonization (independent line micro gridproject grant)
ICMA GBP classification"Renewable energy"

GB guidelines"Projects for renewable energy"

Sector

CBI sector criteria: Electrical Grids and Storage (March 2022)

Purpose of subsidy“Regional Decarbonization Roadmap” (decided on the 3rd National/Local
Decarbonization Realization Conference on June 9, 2021), Plan for Global WarmingCountermeasures (Cabinet decision on October 22, 2021), and Basic Policy for the
Realization of GX (determined by the GX Implementation Council on December 22,2021), etc., it will provide local governments, etc. that are actively working on
decarbonization in collaboration with the private sector as an investment in the
decarbonization transition of the region. This grant will be provided to provide
continuous and comprehensive support over multiple years. As a result, in
conjunction with the Act on Promotion of Global Warming Countermeasures,proactive efforts will be carried out in at least 100 "decarbonization leading regions"according to regional characteristics, etc. toward decarbonization, and It will
implement key measures that will serve as a foundation nationwide, and promotedecarbonization efforts in local areas under national and local cooperation.
Local governments in which private line micro grids have been constructed tobenefit private operators in decarbonization-leading regions are eligible forsubsidies. In Japan, a private line micro grid is a project that aims to build a micro
grid with a view to entering the energy distribution business. Targeting businesses
looking to enter the electricity distribution business, etc., who meet conditions suchas planning to construct a micro grid that can operate even during long-term energy
outages due to disasters etc.

Contents of the subsidy project

Subsidy rate

2/3

Related URL

https://wwitnv.go.jp/content/000098973.pdf

2. Negative Impacts on the Environment
Among the uses of funds covered by this Bonds, for research and development funds, it will checkfor potential negative impacts on the environment and society during the project selection andevaluation process at the time of review when contributing to each R&D expense. It will also confirm
mitigation measures as necessary. In addition, when implementing subsidy programs, individual
business operators identify negative impacts on the environment and society based on laws andregulations such as environmental impact assessment, and ensure that necessary mitigation
measures are taken. It is guaranteed.
As stated in Chapter 2 of this report, avoidance of lock-in to fossil fuels, consideration for a fairtransition, and consideration of DNSH will be appropriately considered, and additional measures andmitigation measures will be considered as necessary.
In consideration of the impact on the environment and society, the Climate Transition Bond
Framework has established the following exclusion criteria. JCR has confirmed that the use ofproceeds from this Bonds does not fall under these exclusion criteria.

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Businesses aimed at manufacturing, selling, or distributing weapons of mass destruction such as
nuclear weapons, chemical weapons, or biological weapons, or inhumane weapons such as antipersonnel landmines; Businesses that manufacture products and provide services that support the
manufacture or sale of non-human weapons
Businesses related to coal mining, refining, and transportation
Business related to owning or operating gambling facilities/businesses
Businesses related to forced labor that do not comply with the laws and regulations of thecountry where the business is located and involve inappropriate relationships such as bribery,corruption, extortion, embezzlement, etc.
Businesses related to transactions that may cause social issues such as human rights and theenvironment
Based on the above, JCR evaluates that the negative impact on the environment and society has beentaken into account and appropriate measures have been taken regarding the use of the proceeds ofthis Bonds.

3. Consistency with SDGs
JCR evaluated the use of proceeds contributes to the following SDGs’ goals and targets inreference to ICMA's SDGs mapping.
Goal 7: Affordable and clean energy
Target 7.2: By 2030, increase substantially the share of renewable energy in the global energy mix
Target 7.3: By 2030, double the global rate of improvement in energy efficiency
Goal 8: Decent work and economic growthTarget 8.2: Achieve higher levels of economic productivity through diversification, technologicalupgrading and innovation, including through a focus on high-value added and labour-intensive
sectors
Target 8.4: Improve progressively, through 2030, global resource efficiency in consumption andproduction and endeavour to decouple economic growth from environmental degradation, in
accordance with the 10-Year Framework of Programmes on Sustainable Consumption and
Production, with developed countries taking the lead
Goal 9: Industry, innovation and infrastructure
Target 9.1: Develop quality, reliable, sustainable and resilient infrastructure, including regional andtransborder infrastructure, to support economic development and human well-being, with a focus
on affordable and equitable access for all
Target 9.2: Promote inclusive and sustainable industrialization and, by 2030, significantly raiseindustry’s share of employment and gross domestic product, in line with national circumstances, anddouble its share in least developed countries
Target 9.4: By 2030, upgrade infrastructure and retrofit industries to make them sustainable, withincreased resource-use efficiency and greater adoption of clean and environmentally soundtechnologies and industrial processes, with all countries taking action in accordance with theirrespective capabilities
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Target 9.5: Enhance scientific research, upgrade the technological capabilities of industrial sectors inall countries, in particular developing countries, including, by 2030, encouraging innovation andsubstantially increasing the number of research and development workers per 1 million people andpublic and private research and development spending
Goal 11: Sustainable cities and communities
Target 11.6: By 2030, reduce the adverse per capita environmental impact of cities, including by
paying special attention to air quality and municipal and other waste management
Goal 12: Responsible consumption and production
Target 12.5: By 2030, substantially reduce waste generation through prevention, reduction, recycling
and reuse
Goal 13: Climate action
Target 13.1: Strengthen resilience and adaptive capacity to climate-related hazards and natural
disasters in all countries
Goal 15: Life on land
Target 15.2: By 2020, promote the implementation of sustainable management of all types of forests,
halt deforestation, restore degraded forests and substantially increase afforestation andreforestation globally
Goal 17: Partnerships for the goals
Target 17.17: Encourage and promote effective public, public-private and civil society partnerships,building on the experience and resourcing strategies of partnerships

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Evaluation Phase 2: Management, Operation andTransparency Evaluation

m1

I. Selection Criteria and Processes of the Use of Proceeds
JCR's Key Consideration in This Factor
In this section, JCR will confirm the objectives to be achieved through this evaluation target, theadequacy of the green project selection criteria and processes, and whether a series ofprocesses will be appropriately disclosed to investors.
▶▶▶ Current Status of Evaluation Targets and JCR Evaluation

An organization was established with cross-ministerial expertise for the goals, green project selection
criteria and processes in this Bonds and the GX Implementation Council, chaired by the Prime Minister
under the leadership of the Cabinet Office is appropriately involved, and all disclosures were made about
these conference bodies and their operations; therefore, JCR has evaluated that the transparency is also
ensured.

1. Goal
Basic Policy for the Realization of GX 39
The main plans and laws and regulations to achieve carbon neutral in 2050 and a 46 per cent reduction in GHG
emissions in 2030 (from FY 2013) are as follows:-

Plan for Global Warming Countermeasures-

The 6th Strategic Energy Plan-

Basic Policy for the Realization of GX (GX Implementation Council)-

Act for Promoting a Smooth Transition to a Decarbonized Growth-Oriented Industrial Structure(GX Promotion Act)-Act for Partial Revision of the Electricity Business Act and Other Acts for Establishing Electricity
Supply Systems for Realizing a Decarbonized Society (GX Decarbonization Electricity Act)-

Strategy for Promoting Transition to a Decarbonized, Growth-Oriented Economic Structure (GX
Promotion Strategy, included sector-specific investment strategies (roadmaps))

It is important for the Government of Japan to reduce CO2 emissions from energy sources, which
account for roughly 90 per cent of GHG reductions. The Government of Japan discussed its
specific reduction efforts in the GX Implementation Council, and the GX Promotion Act wasenacted. The issuance of Japan Climate Transition Bonds, including this Bonds, is a measure
stipulated in Article 7 of the GX Promotion Act, and is clearly positioned as part of the Governmentof Japan's policy toward the realization of decarbonized society.

——————————————
39

Created by JCR from the basic policy for the realization of GX
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2. Selection Criteria
In the framework evaluation published in the evaluation report on November 7, 2023, JCR
confirmed that the selection criteria set by the Government of Japan in the Japan Climate
Transition Bond Framework are consistent with the content stipulated in the GX Promotion
Strategy. The project is evaluated as being appropriate and has an environmental improvement
effect.
The use of proceeds set out in this Bonds was included in the sector-specific investment strategies
﴾roadmaps﴿ however, the individual eligibility criteria ﴾environmental benefits﴿ will be examined in
the working group with experts invited hereafter. JCR has evaluated that the project selection
criteria are appropriate.

3. Process
In selecting projects for which the proceeds of this Bonds, the alignment is to be confirmed in
the liaison meeting with relevant ministries and agencies; therefore, JCR has evaluated that theprocess is appropriate.
The Government of Japan's goals, selection criteria and processes for this Bonds are disclosed in
the Japan Climate Transition Framework and this evaluation report. The Government of Japanplans to disclose the target projects on its website when issuing this Bonds based on the Japan
Climate Transition Framework. Therefore, JCR has evaluated that transparency to investors is
ensured.

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II. Management of proceeds
JCR's Key Consideration in This Factor
It is usually assumed that the method of managing the proceeds financed widely varies
depending upon the finance raisers. JCR will confirm that the proceeds financed based on thisevaluation target are surely allocated to green projects, and that mechanisms and internal
systems are in place so that the allocation can be easily tracked and managed.
JCR will emphasize whether the proceeds financed by this evaluation target are scheduled to beearly used for green projects and it will also give importance to the evaluation of the
management/operation methods of unallocated proceeds.
▶▶▶ Current Status of Evaluation Targets and JCR's Evaluation

JCR has evaluated that the Government of Japan's proceeds management system has been properly
established and is highly transparent since the method of managing the proceeds financed will be
disclosed in this evaluation report and the framework has been already disclosed on its website.
The proceeds financed by this Bonds are managed separately from other accounts in the energy
supply and demand account of the special account for energy measures. Of the use of proceeds,
the GI Fund will be transferred from the special account for energy measures to NEDO, which is
the implementing entity. At this point, the appropriation of funds for the GI Fund will becompleted. After that, the GI Fund will be allocated to the projects listed as candidate projects insequence, depending on the adoption status of the R & D projects. In the case of other R & D
projects and the allocation of funds to the fund, the allocation method is the same as that of the
GI Fund. The subsidy program will be implemented from the special account for energy measures
each time the project is finalized. All management of the fund allocation status is carried out inthe accounting system dedicated to GX economy transition bonds, and the execution status iscarried out in the Cabinet GX Office established in the Cabinet Office.
The plan for proceeds allocation is, in principle, subject to projects whose operations will begin
in and after the fiscal period concerned or proceeds was already allocated and all proceeds willbe allocated in the fiscal period in question and in cases where unallocated proceeds are
generated, they shall be managed in cash. Accordingly, JCR has evaluated the plan as adequate.
The management of proceeds financed will be inspected by the Audit Office, an independent
body, in the same way as the normal budget process. The decision on the use of proceeds andthe allocation will be confirmed in the liaison meeting with relevant ministries and agencies. The
ledger on the management of proceeds financed will be retained until the repayment of thetarget Bonds and the retention period based on laws and regulations.
Consequently, JCR has evaluated that the Government of Japan's proceeds management system
has been properly established, and that the management method of the proceeds financed will
be disclosed in this evaluation report; therefore, it is highly transparent.

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III. Reporting
JCR's Key Consideration in This Factor
JCR will evaluate whether the disclosure system to investors before and after financing based on
this evaluation target is planned in a detailed and effective manner in this section.

▶▶▶ Current Status of Evaluation Targets and JCR Evaluation

JCR has evaluated that the Government of Japan's reporting will be appropriately disclosed for both theallocation of proceeds and the environmental benefits to investors.
Reporting on the allocation of proceeds
The Government of Japan will annually disclose the contents set out in Japan Climate Transition
Framework regarding the allocation of proceeds financed by Climate Transition Bonds on its
website. In cases where any significant change is made in the financial situation after the fullamount of the proceeds financed were allocated, the disclosure shall be made in a timely manner.
Reporting on environmental benefits
The Government of Japan plans to annually disclose the contents set forth in Japan Climate
Transition Framework on its website as reporting on the environmental benefits of eligible projects.
These disclosure items will quantity the progress and the expected CO2 reduction effects for R &D and the environmental benefits, such as the expected CO2 reduction effects by implementing
the subsidy program for the program in refining sectorial investment strategy and the disclosure
will be made within the realm of possibility. The progress and environmental benefits for impact
reporting will be updated at least until the end of the individual projects, and the information will
be disclosed on the website for the repayment period.
Accordingly, JCR has evaluated that the reporting system by the Government of Japan isadequate.

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IV. Efforts to Address Organizational Environmental Issues
JCR's Key Consideration in This Factor
JCR will evaluate whether the top finance raiser positions environmental issues as important
issues with high management priority, or whether policies/processes/criteria for selecting
eligible projects are clearly positioned by establishing divisions that specialize in environmental
sectors or collaborating with external organizations in this section.

▶▶▶ Current Status of Evaluation Targets and JCR Evaluation

JCR has confirmed that the Government of Japan has positioned the realization of decarbonized society
as one of Japan's important issues and has stipulated laws and regulations for the decarbonization of GX
and energy sources, and is working on it as an important priority issue for the government. JCR has
evaluated in practical that a liaison meeting with relevant ministries and agencies has been establishedunder the initiative of the GX Implementation Council, headed by the Prime Minister, and thegovernment as a whole is working on it, and the GX Implementation Council and the working groupresponsible for the concrete examination of sector-specific investment strategies has invited experts fromacademic, financial and industrial sectors to build a system for repeated multifaceted examinations.

Please refer to Chapter 2 2.1 and 2.2 in this evaluation report for details on the current status of
this evaluation target.

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Evaluation Phase 3: Evaluation Result(Conclusion)

Green 1(T)JCR assigned "gt1" to the "Greenness/Transition Evaluation ﴾Use of Proceeds,﴿" "m1" to the"Management, Operation and Transparency Evaluation" based on JCR Green Finance Evaluation
Methodology. As a result, JCR assigned "Green 1﴾T﴿" to the "JCR Climate Transition Bond
Evaluation" for this Bonds. This Bonds meet the criteria for the items required in the Green Bond
Principles, the Green Bond Guidelines, the Climate Transition Finance Handbook, and the Basic
Guidelines on Climate Transition Finance.

Management/operation/transparency evaluation

Greenness/ Transition

Evaluation

m1

m2

m3

m4

m5

gt1

Green 1(T)Green 2(T)Green 3(T)Green 4(T)Green 5(T)gt2

Green 2(T)Green 2(T)Green 3(T)Green 4(T)Green 5(T)gt3

Green 3(T)Green 3(T)Green 4(T)Green 5(T)

N/A

gt4

Green 4(T)Green 4(T)Green 5(T)

N/A

N/A

gt5

Green 5(T)Green 5(T)

N/A

N/A

N/A

Responsible Analyst: Atsuko Kajiwara, Kosuke Kajiwara, Tomohiko Inamura, Takuto Toda, Haruna Goto

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Important Explanation on this Evaluation
1. Assumptions, Significance, and Limitations of JCR Climate Transition Finance Evaluation
JCR Climate Transition Finance Evaluation provided by Japan Credit Rating Agency (hereinafter referred to as "JCR")
covers the policies set out in the JCR Climate Transition Finance Evaluation as an evaluation target and states JCR's
comprehensive opinion on the extent to which allocation is made to the Green/Transition Project defined by JCR andon the degree to which the efforts to ensure the management, operation and transparency on the use of proceeds atpresent. It is therefore not intended to evaluate the specific environmental benefits and the management/operation
system/transparency on the use of proceeds, such as individual bonds or borrowings implemented based on the policies.

JCR, in principle, does not directly measure the environmental benefits of proceeds financed through the green/transition
finance although JCR confirms that the environmental benefits are quantitatively and qualitatively measured by an issuer orborrower (hereinafter the issuer and borrower are collectively referred to as a "finance raiser") or the third parties requestedby the finance raiser.

2. Methodology Used in this Evaluation
The methodology used to make this evaluation is posted as JCR Green Finance Evaluation Methodology in the Sustainable
Finance/ESG section on the JCR's website at https://www.jcr.co.jp/
3. Relation with Conduct for Credit Rating Business
The conduct of assigning and providing JCR Green Finance evaluation is performed by JCR as its related business and isdifferent from the conduct for the credit rating business.
4. Relation with Credit RatingThis evaluation is different from a credit rating and does not commit to providing a predetermined credit rating or makeavailable for inspection.
5. Impartiality when Evaluating JCR Green Finance
There are no capital or personnel relationships that could create a conflict of interest between this evaluation target and JCR.
Points to Consider

The information contained in this document was obtained by JCR from finance raisers and accurate and reliable sources. Such information however may be mistaken
for artificial, mechanical or other reasons. Therefore, JCR makes neither representation nor warranty, express or implied, as to the accuracy, result, eligibility, timeliness,completeness, merchantability, or fitness for any particular purpose of such information, and JCR assumes no responsibility for any errors, omissions or consequencesof using such information. JCR shall not be liable for any loss of opportunity and extraordinary, indirect, incidental or consequential damage of any kind, including any
loss of money, which result from any use of such information under any circumstances, whether contractual liability, tort liability, negligence or other causes of liability,
and whether such damage is foreseeable or unforeseeable. JCR Green Finance Evaluation does not express any opinion on various risks (credit risk, price fluctuation
risk or market liquidity risk) on the green finance that is the subject of evaluation. JCR Green Finance Evaluation is a comprehensive opinion of JCR at present and does
neither represent facts nor make any recommendation regarding risk assessments or decisions on the purchase, sale or holding of individual bonds or commercial paper.
JCR Green Finance Evaluation may be modified, suspended or withdrawn due to changes in information or lack of information. All rights pertaining to this document,
including data from the JCR Green Finance Evaluation is prohibited from being reproduced, modified or otherwise altered without the permission of JCR.

Terminology

JCR Climate Transition Finance Evaluation: The assessment of the extent to which proceeds financed by the Climate Transition Finance are allocated to green/transition
finance defined by JCR and the degree of management, operation and transparency related to the use of proceeds for the green/transition finance. The evaluation is madeon a scale of five in the order from top to bottom with evaluation symbols, Green 1 (T), Green 2 (T), Green 3 (T), Green 4 (T), Green 5 (T)Status of Registration as External Evaluator of Sustainability Finance・Ministry of the Environment: Registered as External Reviewer of Green Finance・ICMA (observer registration as an external evaluator with the International Capital Market Association)
・UNEP FI Positive Impact Financial Principles Working Group Member
・Climate Bonds Initiative Approved Verifier

Other Registration Status as Credit Rating Agency
・Credit Rating Agency: the Commissioner of the Financial Services Agency (Credit Rating) No. 1
・EU Certified Credit Rating Agency
・NRSRO: JCR registered with the following four of the five credit rating classes of the Nationally Recognized Statistical Rating Organization ("NRSRO") as defined by
the U.S. Securities and Exchange Commission: (1) financial institutions, broker/dealers, (2) insurance companies, (3) general business corporations and (4) national/
local governments. In cases where disclosure is required based on Rule 17g-7(a) of the Securities Exchange Act, such disclosure is attached to News Release on the
JCR webpage at https://www.jcr.co.jp/en/.

For inquiries, please contact us below
TEL: 03-3544-7013 FAX: 03-3544-7026
Information Service Department

Japan Credit Rating Agency, Ltd.
Jiji Press Building, 5-15-8 Ginza, Chuo-ku, Tokyo 104-0061, Japan
Tel. +81 3 3544 7013, Fax. +81 3 3544 7026

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