April 28, 2023
European Commission
1049 Brussel, Belgium

Japanese Bankers Association

JBA comments on the draft delegated regulation for the EU Taxonomy by theEuropean Commission (EC)Dear Sirs/Madams:
The Japanese Bankers Association 1 (JBA) appreciates the opportunity to comment on the draft delegatedregulation for the EU Taxonomy 2 proposed by the European Commission (EC) on April 5, 2023.
We hope that our comments will contribute to further discussions in the EC.

General Comments
We welcome that the Taxonomy Regulation does not impose any obligation on investors to invest only in thoseeconomic activities that meet specific criteria laid down in that Regulation. The taxonomy should not be used
for penalization purposes that may, for example, result in restricting financing for any non-taxonomy-eligible
projects, but rather, it should be used to foster and support taxonomy-eligible projects. We believe the EU should
avoid creating a trend where only those in the green list are "good" and others that are not in the green list are"bad". Instead, the taxonomy should be used for fostering and supporting taxonomy-eligible projects.
A well-balanced framework should be developed for both developed and emerging countries by sharing auniversal and global principle. Such a framework shall lead to accommodation for a variety of taxonomies
developed in a harmonized way to the extent possible, and these taxonomies should be introduced in ways thatreflect the economic or energy-related situations of each country and jurisdiction.
An excessive and prescriptive taxonomy might impede innovation. In order to create an environment for
fostering creativity and innovations of the private sector, we consider taxonomy to be a flexible framework thatshould be regularly reviewed to reflect current trends.
The EU should guide the real economy sectors on how they can achieve net zero by leveraging transition
technologies currently available in a sufficiently ambitious but realistic way.
In this sense, the EU should clearly indicate how the EU ensured the scientific evidence, economical andoperational viability, and readiness of supply chains regarding the proposed TCSs in the EU taxonomy.
1 The Japanese Bankers Association is the leading trade association for banks, bank holding companies and bankers associations inJapan. As of April 28, 2023, JBA has 114 Full Members (banks), 3 Bank Holding Company Members (bank holding companies), 76
Associate Members (banks & bank holding companies), 51 Special Members (regionally-based bankers associations) and one SubAssociate Member for a total of 245 members. Several of its largest member banks are active participants in the EU financial markets.
2 https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/13237-Sustainable-investment-EU-environmentaltaxonomy_en1Specific Comments
Annex to the Delegated Regulation (EU) 2021/2139
We would like to emphasize again that the taxonomy should not be used for penalization purposes that may, forexample, result in restricting financing for any non-taxonomy-eligible projects, but rather, it should be used for
fostering and supporting taxonomy-eligible projects. The new TSCs introduced in the draft amendment foraviation and shipping appear less realistic and lack transparency in terms of the scientific evidence andeconomical and operational viability, and thus could hamper the flow of capital to projects that are dearly needed
to move towards net zero.
Taking those points into account, the EU should guide the aviation and shipping sectors on how they can achieve
net zero whilst continuing to use some transition technologies available today.
Also, we believe the EU should clearly indicate how the EU ensured the scientific evidence, economical andoperational viability, and readiness of supply chains regarding the proposed TCSs in the EU taxonomy.
In particular, with regard to the shipping sector, we welcome the EU's effort to introduce thresholds for gradualemission reduction until zero direct emission vessels/fuels are developed. However, understanding thedifferences in size and operation between inland water-bound vessels/passenger vessels and outland water(ocean)-bound and coastal freight vessels, we are concerned about the feasibility of applying the same thresholds
for all vessels regardless of their types and operation. We would be grateful for further explanations or references
for the thresholds introduced this time for Section 6.10 in terms of the scientific evidence and economical andoperational viability. As the current TSCs until the end of 2025 (*) are already unrealistic, the new TSCs from2026 (**) continue to be distant from the reality and would leave those companies with good intentions to invest
in a sustainable future without options. If there are no solutions capable of complying with the new thresholds,
the shipping sector may continue to comply with the minimum standards and may give up on accelerating theirefforts towards net zero. The technological development of vessels and fuels with zero direct emissions, suchas those using ammonia and hydrogen, is underway, and methanol-fueled ships are already commercialized.
However, the development of the necessary infrastructure to secure the production and supply of a sufficientamount of green methanol or any zero-emission fuels will still take more time, and this will not to be resolved
by 2026. Freight transportation has a significant impact on the real economy, and the EU should set thosethresholds to guide the sector to achieve net zero using the transition technologies available today in a
sufficiently ambitious but realistic way. Also, the EU should clearly indicate how the EU ensured the scientificevidence, economical and operational viability, and readiness of supply chains regarding the proposed TCSs inthe EU taxonomy.
*Extracted from the Delegated Regulation:
The activity complies with one or more of the following criteria:(c) where technologically and economically not feasible to comply with the criterion in point (a), until 31
December 2025, and only where it can be proved that the vessels are used exclusively for operating coastal andshort sea services designed to enable modal shift of freight currently transported by land to sea, the vessels have2

direct (tailpipe) CO2 emissions, calculated using the International Maritime Organization (IMO) Energy
Efficiency Design Index (EEDI), 50 % lower than the average reference CO2 emissions value defined for heavy
duty vehicles (vehicle sub group 5-LH) in accordance with Article 11 of Regulation 2019/1242;(d) where technologically and economically not feasible to comply with the criterion in point (a), until 31
December 2025, the vessels have an attained Energy Efficiency Design Index (EEDI) value 10 % below theEEDI requirements applicable on 1 April 2022 if the vessels are able to run on zero direct (tailpipe) CO2emission fuels or on fuels from renewable sources.
**Extracted from the draft Delegated Regulation:
Section 6.10. is amended as follows:in Subsection ‘Technical screening criteria’, subsection ‘Substantial contribution to climate change mitigation’,points (e) and (f) are added:(e) where technologically and economically not feasible to comply with point (a), from 1 January 2026, thevessels that are able to run on zero direct (tailpipe) CO2 emission fuels or on fuels from renewable sources havean attained Energy Efficiency Design Index (EEDI) value equivalent to reducing the EEDI reference line by atleast 20 percentage points below the EEDI requirements applicable on 1 April 2022, and have the ability toplug-in at berth;(f) where technologically and economically not feasible to comply with the criterion in point (a), from 1 January2026, in addition to an attained Energy Efficiency Existing Ship Index (EEXI) value equivalent to reducing theEEDI reference line by at least 10 percentage points below the EEXI requirements applicable on 1 January2023, the yearly average greenhouse gas intensity of the energy used on-board by a ship during a reporting
period does not exceed the following limits:(i) 76,4 g CO2e/MJ from 1 January 2026 until 31 December 2029;(ii) 61,1 g CO2e/MJ from 1 January 2030 until 31 December 2034;(iii) 45,8 g CO2e/MJ from 1 January 2035 until 31 December 2039;(iv) 30,6 g CO2e/MJ from 1 January 2040 until 31 December 2044;(v) 15,3 g CO2e/MJ from 1 January 2045.
***

We thank the EC for the opportunity to comment on the draft delegated regulation for EU Taxonomy and hope
our comments will contribute to further discussions in the EC.
Yours faithfully,
Japanese Bankers Association3