What isGreen Transformation (GX) ?
WHAT IS IT?
Green Transformation, better known as “GX,” is an
initiative led by the Japanese government to supposedly
bring about a shift from an industrial structure centeredon fossil energy to one centered on clean energy.1 It
is a centerpiece of Prime Minister Fumio Kishida’s
government and GX-related legislation is currently
being deliberated in the Diet.
The catch-all term gained wide recognition in February
2022 when the Ministry of Economy, Trade and Industry(METI) announced the “GX League Basic Concept.” 2Also launched was a “GX League” of companies joining
to develop “a new market and socio-economic system
to realize CN (carbon neutrality) in 2050.” 3 (The league
now has more than 670 corporate members and more are
expected to join).4 The prime minister said a few months
later that Japan’ s public and private sector investments
in GX for the next decade would total more than 150 trillion
yen (about $1.1 trillion).5
In February 2023, Kishida’ s cabinet approved the “GX
Basic Policy,” 6 a set of policies to implement the green
transformation, with a roadmap for the next decade.
“Green Transformation signals a major transformationof industrial and energy policies in the post-war Japan,”the government says in the Basic Policy, comprised of twomain parts:1

 overnment of Japan, GX Basic Policy, February 10, 2023 (inGJapanese).

2Ministry of Economy, Trade and Industry, press release, Feb. 1,2022.

3

 ETI, “Establishment of the “GX Business Working Group” to BuildM
a Framework and Promote Evaluation and Disclosure on Climaterelated Opportunities.”

4

METI, “What is the GX League,” February 14, 2023 (in Japanese).

5

 ETI, summary of GX Basic Policy, February 10, 2023 (inMJapanese).

6 overnment of Japan, GX Basic Policy, February 10, 2023 (inGJapanese).

1What is Green Transformation (GX) ?

1) Measures for a stable energy supply• Energy efficiency• Renewables• Nuclear• Other energy sources including hydrogen, ammonia,LNG, batteries, carbon recycling, etc.
2) “Growth-oriented” carbon pricing schemes• Voluntary emission trading starting in FY2026 ?
• Carbon surcharges starting in FY2028
In February, the cabinet also submitted to the Diet twosets of legislation to implement GX measures.7,8W HAT ARE THE ISSUES WITH GX
BASIC PLAN AND LEGISLATION?
The GX initiative has drawn criticism from academics,
environmental organizations and citizens’ groups, andopposition from the Constitutional Democratic Partyof Japan, the largest opposition party.9 They argue that
GX policy and legislation are designed to support false
solutions and are not ambitious enough to achieve key
climate targets such as the Paris Agreement and theG7 agreement to decarbonize the power sectors ofmember countries by 2035.

Overall issues• The focus is on promoting industry rather thandecarbonization. There is no linkage to increase
climate ambition, such as Japan’s nationally
7

METI, press release, February 10, 2023 (in Japanese).

8

METI, press release, February 28, 2023 (in Japanese).

9J iji, “Constitutional Democratic Party of Japan to oppose GX
legislation,” March 23, 2023 (in Japanese).

determined contribution (NDC) under the Paris
Agreement, or renewable energy targets.
• The 150 trillion yen in public-private investments
include nuclear, hydrogen, ammonia, and carbon
capture and storage (CCS).
• There was a lack of public participation in thethe schemes for the redemption of the bonds.
• Emissions tradingo FY2026: Starts as a voluntary program following
a trial starting in FY2023
o FY2033: Auctioning of emissions from power
plants begins

process, including only a short public comment
period for the draft.
• The plan appears designed to lock in METI’s influencein decision making and implementation (METI wasplaced in charge of compiling a GX strategy).10• It aims to expand GX initiatives abroad throughthe Asia Zero Emission Community (AZEC),11 aJapan-led initiative.

• Carbon emission surchargeso Starts in FY2028, targeting fossil fuel importers
o Introduces surcharges, not a carbon tax, making
it easier to designate the use of revenue forindustry efforts• Issue with the schemeso Carbon prices are expected to be set at lowlevels – estimated at 1,500 yen/t-CO212

Measures for a "stable energy supply" focus
more on nuclear and fossil energy thanrenewables

GX IN ESSENCE• GX supports all types of energy sources, including
unproven technologies such as CCS, rather thanfocusing on cost-effective, Paris-aligned measures
to reduce emissions.
• Hydrogen and ammonia co-firing are promoted insupport of fossil fuel power generation.
• The plan includes service life extensions for nuclear
reactors (previously capped at maximum 60 years),
plus development and construction of “nextgeneration” nuclear reactors.
• Targets for floating offshore wind are to be set,
but would be part of the 30-45 GW of project
development targeted for 2040 (already announcedin 2020).

• The Japanese version of “Green Transformation”
is a term with contents that are uniquely definedby the Japanese government. It includes support
for unproven technologies and insufficient carbon
pricing schemes. An endorsement or adoption of
GX by other countries would mean these issues will
be extended abroad.
• GX strongly promotes ammonia and hydrogen cofiring in thermal power generation. However,emission reductions from such technologies areprojected to be minimal in 2030. It is hard topredict the amount of emission reductions that canbe achieved even after 2030 as these technologies
are unproven and very expensive. Co-firing is promoted

Carbon pricing schemes are too little, too late

as an alternative solution to a “coal phaseout,” butit could just prolong the life of coal power plants.
• GX is being promoted through AZEC to ASEAN
countries. Expanding GX in these countries could
undermine efforts under the Just Energy Transition• GX Economy Transition Bondso 20 trillion yen (about $150 billion) worth of“transition bonds” are to be issued to support
the 150 trillion yen public-private investments

Partnership (JETP) to move away from coal.

for GX starting in FY2023 for 10 years.
o Emission trading and surcharges are to be

introduced, with plans to use revenues from1210

 enewable Energy Institute, “The GX Basic Policy Falls Short
Rin Proposing Strategies for Overcoming the Current Crises,”February 28, 2023.

11

 inistry of Foreign Affairs, “Pillar 2: Addressing Challenges inM
an Indo-Pacific Way, New Plan for a “Free and Open Indo-Pacific(FOIP),” March 20, 2023.

 itizens’ Commission on Nuclear Energy, document, March 20,
C2023 (in Japanese).

Clmate Integrate
April 2023
Email: contact@climateintegrate.org
Web: https://climateintegrate.org/

What is Green Transformation (GX) ?

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