Japan
Climate Transition
Bond
Framework

November 2023
Cabinet Secretariat / Financial Services Agency /Ministry of Finance /Ministry of Economy, Trade and Industry /Ministry of the Environment

Table of Contents
1 Introduction ___________________________________________________________________________ 2
1.1 Features and status of Japan as an issuer __________________________________________________ 5
1.2 Japan’s efforts on sustainable finance _____________________________________________________ 6
1.3 Formulation of Japan Climate Transition Bond Framework _____________________________________ 8

2 Disclosure based on the four key elements of Climate Transition Finance Handbook ________________ 10
2.1 Issuer’s climate transition strategy and governance _________________________________________ 11
2.2 Business model environmental materiality ________________________________________________ 18
2.3 Climate transition strategy with Science-Based targets _______________________________________ 18
2.4 Implementation transparency __________________________________________________________ 20

3 Climate Transition Bond Framework _______________________________________________________ 21
3.1 Use of Proceeds _____________________________________________________________________ 22
3.2 Process for Project Evaluation and Selection _______________________________________________ 35
3.3 Management of Proceeds _____________________________________________________________ 36
3.4 Reporting __________________________________________________________________________ 36
3.5 Review of the Framework _____________________________________________________________ 37

4 External Review _______________________________________________________________________ 38
4.1 Second Party Opinion ________________________________________________________________ 39
4.2 Post-issuance External Verification ______________________________________________________ 39

1

1
Introduction

Actions for climate change issues have alreadybecome a common challenge for all humankind
amidst the prevalence of extreme global weather
conditions and an increase in natural disasters. In
the midst of the heightened movement towards
decarbonization globally, with more countries andregions declaring carbon neutral targets, Japandeclared its international pledge to achieve 46%
reduction of greenhouse gas (GHG) emissions byfiscal year (FY) 2030 compared to FY 2013 and willcontinue strenuous efforts in its challenge to meetthe lofty goal of cutting its emission by 50%,aligned with achieving net zero by 2050, its
national target of GHG emissions reduction. Also,
Japan has expressed a strong determination toaddress climate change at the national level by
positioning the goals of the Paris Agreement andthe “2050 Carbon Neutrality Declaration” asfundamental principles of relevant legislature.
Japan has long been advocating for the resolutionof environmental issues, with notable milestones
such as the adoption of the Kyoto Protocol in 1997
and hosting the “G7 Ministers’ Meeting on Climate,
Energy and Environment” in Sapporo as the chair
country during the G7 2023. Japan has beenleading the international community inaccelerating climate change mitigation efforts,
including the formulation of agreements topromote global action. Moving forward, Japan willcontinue to work towards fulfilling international
commitments in alignment with the Paris
Agreement. To grow vigorously towards theambitious targets for FY 2030 by fostering avirtuous cycle of the economy and theenvironment, Japan will promote measures inevery possible field such as thorough energy-saving
practices, maximum deployment of renewableenergy and decarbonization in the public sector
and local communities.

that is leading the country towards potentially oneof the most serious energy crises since the oilshock of 1973. Needless to say, stable energy
supply is the core of the lives of the people andcorporate activities. Through this crisis, Japan
recognized again its vulnerability of its energy
supply system and the challenges on energy
securities.
For Japan, a country which has experienced anumber of energy supply shortages, Green
Transformation (GX), which aims to transform thestructure of industry and society from being thefossil fuel-centric continuing since the Industrial
Revolution to become clean energy-centric, would
drive the biggest shift in industrial and energy
policies since World War II. Western governments
have already accelerated their efforts towards
decarbonization further since Russia’s invasion of
Ukraine by supporting investments in sectors suchas electric power, industry, transportation,
households, etc., that contribute todecarbonization and accelerate efforts on earlytransition towards a decarbonized society. The
European Union (EU), formulated its support plan
which aims to achieve circa.140 trillion yen
investments from public and private sectors in thenext 10 years. Part of EU countries also formulated
an additional several trillion yen-scaled measures.
The US formulated the Inflation Reduction Act1 inAugust 2022 which commits circa.50 trillion yen of
support in the next decade in addition to the
Bipartisan Build Back Better Act2. As the EU and the
US have accelerated decarbonization support andnew initiative on markets and regulations, theworld is entering a new era that decarbonization
investments towards GX will determine thecompetitiveness of corporations and countries.
Surrounded by the sea and with scarce resources,
Japan has led the research and development on
decarbonization technologies where Japanesefirms have their technological strengths across
many fields. Accelerating GX by utilizing thesetechnological areas as much as possible will lead toa stable energy supply and has potential to be a

However, the Russian invasion of Ukraine in
February 2022 has drastically changed the world’s
energy situation. Due to the prominent global
inflation within the energy industry, Japan faces
electric power crunch and higher energy prices,

1 The law enacted in August 2022 in the United States aims to simultaneously curb excessive inflation and expedite energy security and climatechange mitigation efforts quickly.
2 The law enacted in November 2021 in the United States incorporates a policy of $1 trillion in public investment.

3

driving force to help putting the Japanese economy
back towards a path of growth. Utilizing the
cumulated wisdom in private sector, the nation
aims to contribute to achieving carbon neutrality
worldwide and also need to achieve economic
growth through creating new demand and amarket in decarbonization that strengthens thecompetitiveness of Japanese industry once again.
Through GX realization, Japan aims to achieve its
international commitment, i.e., 46% reduction of
GHG emissions by FY 2030 compared to FY 2013and carbon neutrality by 2050, and a society where
all people, including future generations, can livewith hope while transforming energy supplydemand structures that leads to stable andreasonable energy while revolutionizing our
economy and society structure.

4the vulnerability of the existing energy
infrastructure and its risks to people’s lives andeconomic activities. Also, Japan’s energy selfsufficiency rate was 13.3% in FY 2021 in which thecountry has largely depended on imported oil, coaland Liquefied Natural Gas since the Great East
Japan Earthquake in 2011.

1.1 Features and status of Japan as an issuer
In aiming for a society of decarbonization, having
an ambitious vision is important, but it is equallyimportant to consider the surrounding
circumstances of each country and implement
practical measures. Japan has geographicalcharacteristics such as being surrounded by sea on
all sides, lacking international interconnections andpipelines, not being rich in fossil resources, andhaving limited shallow seas and flat land area otherthan forests. As a result, reliable energy
technologies have been developed, forming thebasis for a supply chain. The energy infrastructure(including power transmission lines, gas pipelines,
and gasoline stations) is already well-establishednationwide and energy efficiency is extremely high,especially in energy-intensive industries. On theother hand, the planned power outages and fuelsupply disruptions following the Great East Japan
Earthquake in March 2011 and the large-scale
power outages caused by the Hokkaido Eastern
Iburi earthquake in September 2018 rediscovered

In order to achieve GX, it is necessary to address
sectors with high emissions. Efforts in emission
reduction is essential not only in the energy
transformation sector such as power generation,
but also industrial sectors like steel and chemicalthat contribute significantly to post-distribution
emissions, as well as sectors closely related topeople’s daily lives such as households,
transportation, commercial and educational
facilities. Also, among the technologies that
contribute to reducing emission in each sector
effectively and efficiently, priory would be given to
the technologies particularly effective forenhancing industrial competitiveness andeconomic growth.

Breakdown of emissions
before electricity and heat distribution
Commercial
Industry, etc.

Breakdown of emissions
after electricity and heat distribution

Others (Waste, Indirect CO2, etc.) 7.1%

Energy Transformation

Sectors related topeople’s lives

5.6%

Industrial
sector

7.9%
Others(Waste, Indirect CO2, etc.)

Residential

7.1%

4.8%

Transportation

EnergyTransformation

8.3%
Chemical andAllied Products

Iron and Steel

13.6%

17.9%

Chemical andAllied Products

40.4%

16.7%
Other
Industry

Commercial
Industry, etc.

5.4%
Residential
Other Industry

14.7%

16.1%

Iron and
SteelTransportation

11.7%

17.4%

5.4%

Source: Japan National Institute for Environmental Studies (based on emissions in the fiscal year 2021)

5

In these circumstances, renewable energy
introduction has been largely increasing by the
Feed-in Tariff system (FIT system)3 started in July
2012. Solar power generation in particular has
increased to 8.3% in FY 2021 from 0.4% in FY 2011.
From a renewable energy perspective, it has
increased to 20.3% from 10.4%. According to aninternational agency’s analysis, Japan is placed 6th
in the world for the amount of renewable energy
introduced, and ranked 3rd for solar power. Solar
power has grown fourfold in the past 8 years,
placing among the top tier in terms of growth pacein the world. Japan’s solar power per area of land is
the largest scale in major countries. However, as
mentioned earlier, considering the geographicalconstraints, features in renewable energy andnecessity of stable procurement to reduce damage
in disaster, further efforts are essential. In addition
to existing initiatives, Japan will promotedecarbonization of electricity through maximizing
the adoption of renewable energy, developing
interconnector lines to facilitate inter-regional
power transmission and utilizing nuclear powerand zero-emission thermal power. Furthermore,
Japan also plan to introduce energy-saving
technologies that have been the focus of ourefforts for many years and reduce GHG emissions
from heat demand in manufacturing and processrelated emissions where there are currently no
viable alternatives for decarbonization.

1.2 Japan’s efforts on sustainable finance
The Government of Japan has been proactively
building tan enabling environment on sustainablefinance towards the promotion of efforts toaddress climate change issues through finance.
Specifically, based on the recommendations of theHigh Level Meeting on ESG Finance compiled in2018, Japan has established the “The High-Level
Panel on ESG Finance” as a platform forcollaboration and discussions among top leaders in
the financial and investment sectors, the academia
and related government agencies. The panel isheld annually to facilitate discussions aimed atpromoting ESG finance in the country. Also, Japan
also formulated the Green Bond Guidelines
following international principles in March 2017 forthe promotion of domestic green finance.
Furthermore, Japan revised the guidelines andformulated the Green Loan and Sustainability
Linked Loan Guidelines in March 2020.
In addition, following developments such as theInternational Capital Markets Association (ICMA)’s
revision of its Green Bond Principles in June 2021
and 2022, the Loan Market Association’s revision of
its Sustainability Linked Loan Principles in May
2020 and 2021, March 2022 and February 2023,
international trends in discussion to address theso-called “greenwashing” and various domestic
development of measures, Japan set the“Committee on Green Finance” and formulated the“Green Bond and Sustainability Linked Bond
Guidelines 2022” and the “Green Loan andSustainability Linked Loan Guidelines 2022” in July
2022 with the aim to develop our sustainablefinance market further soundly and appropriately.

The Government of Japan believes the creation ofthese new technologies will also make a significant
contribution to emission reduction in Asia where
over a half of the world’s emission originate.

In addition to further promotion of green
investment in areas such as renewable energy, it isalso important to promote the transition in
decarbonization such as low carbon initiatives in
hard-to-abate sectors (the industrial and energy
conversion sectors where there are no alternative
measures for decarbonization technically andeconomically at this moment) from the viewpoint

3 The system in which the government guarantees that electric power companies will purchase electricity generated from renewable energy at a fixedprice for a certain period.

6

of steady reduction of GHG emissions around theworld to achieve the Paris Agreement’s goal.
For this reason, there is a need to actively provide
financing for energy efficiency and other initiatives
for the decarbonization of hard-to-abate sectors
and for initiatives that contribute to its
decarbonization transition, such as long-term
research and development.
Singapore, Australia, Canada and other countries
are proceeding with initiatives that take into
account the characteristics specific to theirrespective region. Giving due consideration to thedevelopments of these countries, with the aim toshare a globally uniform approach, ICMA publishedthe “Climate Transition Finance Handbook” inDecember 2020.
In Japan, in line with the handbook, the Financial
Services Agency (FSA), the Ministry of Economy,
Trade and Industry (METI) and the Ministry of theEnvironment (MOE) announced the “Basic
Guidelines on Climate Transition Finance4” in May
2021. The guidelines and sector specific roadmaps,
which are described later, led to the market growthof transition finance in the private sector (JPY 1
trillion as of March 20235). Building this enabling
environment contributed to securing the credibilityon the ‘transition finance’ label and started toestablish this as funding measure towards climatetransition especially in hard-to-abate sectors.
Furthermore, at the G7 Hiroshima Summit in May
2023, where Japan held a Presidency, the leaders“highlight[ed] that transition finance […] has asignificant role in advancing the decarbonization of
the economy as a whole”, representing theimportance of transition finance increasing
globally. Japan will deepen its relationship withother Asian countries to disseminate the transitionin Asia where highly depends on fossil fuel like
Japan.

4 Basic Guidelines on Climate Transition Finance
5 Based on information from the Ministry of the Environment's “Green Finance Portal”, the Ministry of Economy, Trade and Industry's “Transition
Finance” and other publicly available sources. This also includes undisclosed loan amounts obtained through interviews and other means71.3 Formulation of Japan Climate Transition
Bond Framework

1.3.2
Concept of GX Economy Transition BondFirstly, Japan’s GX Economy Transition Bond will
support those who proactively challenge
decarbonization (support for first movers) with
future CP scheme as its redemption resource.
Future CP introduction has been legally designatedby “Act for Promoting a Smooth Transition to a
Decarbonized Growth-Oriented Industrial
Structure” (GX Promotion Act). Therefore, entities
who emit CO2 are incentivized to change theiractivity to avoid the future CP burden by making
early decarbonization investments.

1.3.1 Concept of GX
According to the International Energy Agency(IEA)6, roughly half of CO2 emission cannot be
reduced by existing technologies. The IEA
highlights the importance of innovation support
through sovereign (i.e., national governments andgovernment agencies) bonds from the viewpoint ofutilizing national credit, as there is a risk private
firms cannot resolve entirely on their own.
In these circumstances, Japan is in a leading
position on new technologies and businessdevelopment to solve challenges such as thelimitation of available renewable energy, heat
demand and demand of raw material within theindustrial sector. Funding these technologies andbusinesses will lead to innovation and significantly
contribute to decarbonization in areas where
existing technologies are not sufficient.

Secondly, as one of its purposes, the GX Economy
Transition Bond includes projects which aims totransition towards decarbonization. By includingthese projects in its use of proceeds, it aims toencourage transition investments from private
firms and promote transition finance from private
financial institutions.
Thirdly, by issuing the GX Economy Transition Bond
as individual securities (Japan Climate Transition
Bond), Japan will establish the structure to
implement measures towards steadydecarbonization through conversation withinvestors and markets and periodical reporting, etc.

In addition, keeping in mind of geopolitical risks
such as the Ukraine crisis, middle-to-long term
steady decarbonization by securing energy supply
and security is necessary. Furthermore, considering
Japan’s high manufacturing industry ratio and low
job mobility, just transition7 is an important
challenge where it is essential to promote acomprehensive policy package such as design ofcarbon pricing (CP) with predictability andconsideration at GX Implementation Council8 withexperts from labor and economic community.

As described above, Japan formulated the Climate
Transition Bond Framework (the Framework) toraise the necessary funds for promoting GX in
Japan. Issuing climate transition bonds based on
the Framework, Japan will implement 20 trillion
yen scale of bold upfront investment to increase
policy predictability and will achieve GX withpublic-private cooperation.
In addition, Japan expect the Framework will be
one of the milestones of transition finance and acatalyst for further transition finance promotion
and funding by private sectors.

6 The International Energy Agency (IEA) was established in 1974 as an autonomous agency within the framework of the Organization for Economic Cooperation and Development (OECD).
7 Support for industries, workers, and regions that will face a relatively large burden as a result of implementing climate change measures.
8 The meeting held in the Cabinet Secretariat to achieve the overall transformation of the economic and social system, known as GX. The Prime
Minister serves as the chairperson of the meeting.

8The Framework is aligned with the principles andguidelines below.
⚫ Green Bond and Sustainability Linked Bond
Guidelines 2022 (MOE)⚫ Green Bond Principles 2021 (ICMA)⚫ Climate Transition Finance Handbook (ICMA)9⚫ Basic Guidelines on Climate Transition Finance(FSA, METI and MOE)

9 On page 3 of the Climate Transition Finance Handbook issued by the International Capital Market Association (ICMA), it defines bonds with specified
use of proceeds as being aligned with Green Bond Principles.

92Disclosure based on thefour key elements of
Climate Transition FinanceHandbook

will be transformed from fossil fuel-centered since
the Industrial Revolution towards a clean energycentered structure. Since 2022, the GX
Implementation Council, chaired by the Prime
Minister has been held to facilitate discussions withexperts, and the “Basic Policy for the Realization of
GX” was established in February 2023. In the 211th
Ordinary Session of the Diet, the “GX Promotion
Act” and the “GX Decarbonization Electricity Act”13
were established and the “Pro-Growth Carbon
Pricing Concept” was materialized. In July 2023, toimplement decarbonization policies, “The Strategy
for Promoting Structural Transition based on
Decarbonization (GX Promotion Strategy)” wasapproved by the cabinet based on GX Promotion
Act.

2.1 Issuer’s climate transition strategy andgovernance
Climate transition strategy of Japan
2.1.1
Japan’s strategies for realizing
Carbon Neutrality by 2050 and
46% GHG reduction in FY 2030
In October 2020, the Government of Japandeclared its commitment to achieve net zero by2050 in line with the Paris Agreement (to hold theincrease in the global temperature to well below
2°C above and pursuing efforts to limit thetemperature increase to 1.5°C). The Act on
Promotion of Global Warming Countermeasures
was amended to establish a legislative frameworkin the following year.
Moreover, in April 2021, Japan stated its intention
to reduce its GHG emissions by 46% in FY 2030
(compared to FY 2013 levels) and continue
strenuous efforts in its challenge to meet their
aspirational goal of cutting emission by 50%. In
October 2021, based on the new GHG emission
reduction goal, the “Plan for Global WarmingCountermeasures”10 was amended. This plan
covers all greenhouse gases including those otherthan CO2 and outlines countermeasures andpolicies that support the new targets for the FY
2030. Additionally, the “Long-term Strategy under
the Paris Agreement” was also amended to show
basic concepts and the vision for carbon neutrality
by 2050. Japan’s NDC (Nationally Determined
Contributions)11 was decided and submitted to
UNFCCC. In order to show the roadmap forachieving new GHG emission reduction goal, theSixth Strategic Energy Plan12 was approved by thecabinet in October 2021. Furthermore, by
proposing GX, the industrial and social structure

10 The government’s comprehensive plan based on the Act on Promotion of Global Warming Countermeasures was decided by the Cabinet on May 13,
2016, and was revised for the first time in five years in October 2021. It outlines the measures and policies that support the FY 2030 targets andprovides a roadmap towards achieving the new goal.
11 Abbreviation of Nationally Determined Contribution. Under the Paris Agreement (adopted in December 2015, effective from November 2016), allcountries are obligated to submit and update their greenhouse gas emission reduction targets every five years as their “nationally determined
contributions”.
12 The plan stipulated in the Energy Policy Basic Act enacted in 2022. The Sixth Strategic Energy Plan was decided by the Cabinet in October 2021.
13 The law named “Act for Partial Revision of the Electricity Business Act and Other Acts for Establishing Electricity Supply Systems for Realizing a
Decarbonized Society”.

11Strategies towards achieving carbon neutrality (CN) in 2050 and a 46% reduction in GHG emission by 2030
Declared realization of “Carbon Neutrality by 2050” (October 26)

2020

Formulated “Green Growth Strategy” (December 25, METI in collaboration with other ministries and agencies)⚫

Technological and Industrial strategies for future energy and environmental innovation (14 fields) with a focus
on social implementation towards CN by 2050

Announced GHG reduction target for FY2030 aiming to reduce GHG emissions by 46% (April 22)
Updated “Green Growth Strategy” (June 18, METI in collaboration with other ministries and agencies)⚫

In order to trigger a spiral of innovation, the detailed strategy formulated for this effort focuses on thefollowing two points: 1) updating policy measures and goals to be achieved in each area, and2) presenting benefits to people’s lives, in addition to decarbonization effects.

Formulated the Sixth Strategic Energy Plan (October 22, Cabinet Decision)⚫

2021

Specific policies for energy policy towards a 46% reduction in 2030 and the major direction of energy policy
towards CN by 2050 with a focus on the supply side.

The Plan for Global Warming Countermeasures (October 22, Cabinet Decision)⚫

Presenting new measures and policies to support the new GHG reduction targets for FY2030.

Long-term Strategy (October 22, Cabinet Decision)⚫

Presenting sector-specific long-term visions towards CN by 2050 as part of the long-term low emission
development strategy based on the provisions of the Paris Agreement.

Submitted the NDC reflecting new targets for FY2030 to UNFCCC (October 22)
Prime Minister Kishida delivered a keynote speech (May 5) : Aims to achieve over 150 trillion yen of publicprivate investments and referenced “Growth-oriented Carbon Pricing”
Compiled the “Clean Energy Strategy Interim Report” (May 19)⚫

Organize policy responses to a concrete roadmap for each industry that is expected to grow, energy transitionon the demand side, clean-energy-centered transition in the economy and society , transformation of theindustrial structure, decarbonization of local communities and people’s lives, as well as ensuring energy security.

2022

Cabinet Decision made on the “Basic Policy on Economic and Fiscal Management and Reform 2022” (June 7)⚫ Presenting the plan to establish a “GX Implementation Council” at the Prime Minister's Office, in order toconcretize the 10-year roadmap based on the “Clean Energy Strategy” and to support upfront investment
through the issuance of GX Economy Transition Bonds.
* GX : Green Transformation

Discussions and considerations by experts at the “GX Implementation Council” at the Prime Minister’s OfficeCompiled the “The Basic Policies for Realization of GX -A roadmap for the next 10 years-” (December 22)⚫

Based on the achievements of previous discussions at the GX Implementation Council, a roadmap outlining thedirection of future initiatives over the next 10 years was compiled, with the secure supply of energy as afundamental premise for realizing GX.

Cabinet Decision made on the “The Basic Policies for Realization of GX” (February 10) and “GX
Promotion Act” (May 12) and “GX Decarbonized Power Source Act” (May 31) was approved
Formulation and implementation of GX promotion strategies, issuance of GX Economy Transition Bonds,
introduction of the Growth-oriented Carbon Pricing, establishment of the “GX Promotion Organization” andprogress evaluation and necessary revisions⚫ Maximum introduction of renewable energy with regional coexistence and utilization of nuclear power with theutmost priority on ensuring safety⚫

2023

Cabinet Decision made on the “GX Promotion Strategy” (July 28)⚫

Based on the GX Promotion Act, the Government of Japan compiles efforts to address climate change through
NDC (the 46% reduction in GHG emission in FY2030 and continuously strenuous efforts in its challenge to meettheir aspirational goal of cutting emission by 50% and Net-Zero achievement by 2050) and initiatives toenhance the competitiveness of Japanese industry and lead to future economic growth122.1.2 Strategic Energy Plan
Based on following two perspectives, addressing
climate change and overcoming issues in theenergy supply-demand structure, the Sixth
Strategic Energy Plan was formulated in October
2021. The Plan consists of a long-term outlook
towards achieving carbon neutrality by 2050 andpolicy measures for 2030. It outlines the path for
future energy policies.
The GHG emission reduction targets for FY 2030
are ambitious and aligned with the goal of carbon
neutrality by 2050. All the various measures andtechnological developments in the energy sector
that will be pursued towards 2030 will contributeto achieving carbon neutrality by 2050.
To achieve the ambitious reduction targets for FY
2030, existing technologies will be maximized.
Additionally, towards carbon neutrality by 2050,
these efforts will be expanded and deepened toadvance decarbonization of energy and to develop
and disseminate decarbonization technologies thatare not currently implemented in society.
However, it is unrealistic to accurately predict thesuccess or failure of various technologicaldevelopments and innovations towards 2050. It isnecessary to continuously determine the prioritiesof policies and technological developments basedon the latest information while setting theambitions goal of achieving carbon neutrality by
2050.
It is fundamentally essential to ensure safety whilepursuing a stable and affordable energy supply
when aiming for carbon neutrality by 2050, where
implementing decarbonization measures without
excluding various opportunities that engage intechnological development for innovation. Basedon the principle of S + 3E14, the basic strategy offuture energy policies will be based on the idea ofutilizing all available technologies, with the aim toachieve the reduction targets for FY 2030 and theambitious goal of carbon neutrality by 2050.

14 S + 3E stands for Safety, Energy security, Economic Efficiency, and Environment, S + 3E is the principle of energy policy in Japan.

13

1. To ensure a stable energy supply, transition
towards decarbonization should be promoted
thorough measures such as energy conservationand transformation of power sources that
contribute to improving energy self-sufficiency,
including renewable energy and nuclear power.

2.1.3 GX Promotion Strategy
As mentioned above, Japan set international
commitments to reduce GHG emissions by 46% in
FY 2030 (compared to FY 2013) and achieve carbon
neutrality by 2050. In order to contribute to thesegoals, Japan has formulated “The Basic Policy for
the Realization of GX” as a transition strategy(approved by the Cabinet in February 2023), and in
July 2023, the “Strategy for Promoting Transition toa Decarbonized, Growth-Oriented Economic
Structure” (hereinafter “GX Promotion Strategy”)
was approved by the Cabinet based on the GX
Promotion Act.

2. To achieve GX, it is necessary to implement andexecute the “Growth-oriented Carbon Pricing
Concept,” which includes bold upfront
investment support utilizing instruments such as“GX Economy Transition Bonds,” incentives for
GX investment through carbon pricing, and theutilization of new financial mechanisms.

In the GX promotion strategy, the following two key
initiatives are established for achieving the above
international commitments, ensuring energy stablesupply, and realizing economic growth.

Based on these strategies, new policy initiatives
will be promptly implemented and following“Roadmap for next 10 years” will be formulated
and executed.

Amount ofmoney
GX Economy
Transition Bonds“Growth-oriented
Carbon Pricing”

Financing Resources

Introduce “CP” after
setting a period to work
towards GX⚫ Introduce it with a low
burden at first andgradually increasing it⚫ By showing the policy inadvance, make early GX
investments⚫

Realization of over 150 trillion yen
in GX investments
Investment
Promotion

Investment
Promotion

Investment Scale (BAU)

2022

Time

14

Overview of the roadmap for the next 10 years
2023

2024

2025

2026

2027

2028

2029

2030

2030s

2050

Investment promotion measures that combine regulatory and fiscal support to
attract public and private investment.

SupportSupporting businesses that invest in advanceSupport for new technologies

Promotion of decarbonization and generation of new industries by strengtheningof regulations and the development of various systems(e.g. Strengthening standards, expanding the scope of coverage and introducing public
procurement, etc., in the Act of Rationalizing Energy Use, the Energy Supply Sophistication
Act and Building Energy Efficiency Act.)
Gradual tightening of regulations based on the technology phase, etc.

Trial phase (FY2023~)⚫

GX-ETS

Companies agreed toparticipate the trial
account for more than
40% of Japan’s CO2
emissions

Full-scale operation of the emissions
trading market (FY2026~)

Furtherdevelopment⚫ Gradual introduction
Implementation of measures to further increase
participation rateof paid auction⚫ Emission targets based on the government guidelines,
system from FY2033
requirements for private third-party certification⚫ Strengthening disciplines (Supervision, compliance obligations, etc.)⚫

GX-Surcharge(Fossil fuel levy)

GX Investment ahead incentive
through carbon pricing

GX Economy
Transition Bond

Issuance of “GX Economy Transition Bond”

GX-Surcharge (Fossil fuel levy) (FY2028~)⚫

Domestic only
Domestic andInternational

Utilization of
New Financial Instruments

Developmentof blended
finance

Introduction of a GX-Surcharge system forcompanies such as fossil fuel importers

Establishment and implementation of blended finance

Establishment a market environment
and international dissemination ofStrengthen the supply of risk capitalgreen/transition finance, etc.
through a combination of public andprivate financing for industrial transition
and innovation
Establishment a friendly market
environment of sustainablefinance market, etc.

(e.g. Accelerated deployment of AETI, promotion of JCM,
energy cooperation with other countries (bilateral, multilateral, etc.))

Asia

AZEC
Ministerial
Meeting
G7
in JapanContinue AZEC Ministerial Meeting(Promoting the expansion of new technologies and cost reduction through robust support in termsof technology, funding, and talent, along with policy coordination to facilitate market expansion)

Global expansion of practical transition innovations

Formation of clean market, leading innovation cooperation

GlobalInternational Expansion Strategy

Supporting realistic energy transitions through the realization of AZEC concept(e.g. Establishing internationally recognized evaluation methodologies for green products,
constructing new value axes to assess the reduction contributions of companies, etc.)
Driving global rulemaking by utilizing international frameworks such as G7, thereby spreading
Japan technologies

15

Over 150 trillion yen in public-private investment over the next 10 years

Regulations
and Systems

Integrated Regulation and Support
Investment Promotion Measures(e.g. long-term and multi-year, targeting sectors that realize “enhancement of industrial
competitiveness and economic growth” x “emission reduction”, etc.)

Furthermore, reducing emissions in hard-to-abate
sectors will be focused in order to achieve GX.
Specifically, in addition to the energy sector (suchas power generation), measures to reduce
emissions will be implemented in industrial sectors
such as iron and chemical industries, which
account for a significant portion of post-electricity
and heat distribution emissions, as well as sectors
closely related to the lives of the population, suchas households, transportation, and educational
facilities. Especially, priority will be given tomeasures that are highly effective in enhancing
industrial competitiveness and economic growth,aiming for a balance between the environment andthe economy.

(For ensuring Just Transition)
The GX promotion strategy aims to enhance
Japan's industrial competitiveness by transitioning
to clean energy and decarbonizing, leading tofuture economic growth, expanded employment,
and increased income. It also contributes to a justtransition. Supporting smooth labor migration fromfossil fuel-related industries to low-carbon
industries not only ensures the livelihoods andemployment of nations but also contributes to theeconomic growth of our country. Therefore,
considering the realities of each industry,necessary support will be provided at the national
level, including talent development in universities
and other institutions. Additionally, Article 3 of the
GX Promotion Act stipulates that, as a basic
principle of the Act, close collaboration between
the government and businesses will be established,taking into account the perspective of a justtransition.

16

Moreover, regarding the current status grasp andmeasures for GHG emissions and absorption in
Japan, annual follow-ups are conducted in various
fields such as energy transition, industry,transportation and household according to thePlan for Global Warming Countermeasuresformulated based on Act on Promotion of Global
Warming Countermeasures. The result of followups is approved by Global Warming Prevention
Headquarters, which involves all ministers.

2.1.4 Governance
The GX Implementation Council, chaired by Prime
Minister has been held since July 2022 for the
implementation of Japan’s GX. In the council, thedirection of the policy is determined through thediscussion among ministers from relevant
ministries and experts. Furthermore, as stated in
section 3.2, the Ministries and Agencies Liaison
Conference has been established to discuss GX
Economy Transition Bonds under the GX
Implementation Conference.

As mentioned above, each strategy is appropriately
and timely reviewed according to the necessity andchange of the circumstances.

GX Implementation Council

The “Sector-specific Investment Strategies” proposals will be refined,
consulted with specialists and reported to the GX Implementation Council

Cabinet Secretariat GX Office
The proposals from various ministries
FSA

MOFA

MOF

MHLW

MAFF

METI

MLIT

MOE

Specialist
Insights

Sector-specific investment strategy proposals, including investment
promotion measures, will be presented

Relevant Ministries and Agencies

FSA ：Financial Services Agency
MOFA ：Ministry of Foreign Affairs
MOF ：Ministry of Finance
MHLW：Ministry of Health, Labour and Welfare

MAFF：Ministry of Agriculture, Forestry and Fisheries
METI ：Ministry of Economy, Trade and Industry
MLIT ：Ministry of Land, Infrastructure, Transport and Tourism
MOE ：Ministry of the Environment17

2.2 Business model environmental
materiality

2.3 Climate transition strategy with
Science-Based targets

GX in Japan is to transform the structure ofindustry and society from being fossil fuel-centric
since the Industrial Revolution to a clean energycentric. This means a major transition in industrial
and energy policies.

2.3.1
Sector-Specific Roadmaps for promoting
Transition Finance
The target of reducing GHG emissions by 46% in FY
2030 (compared to FY 2013) and achieving carbon
neutrality by 2050 is the mid and long term
strategy set by Japan as a transition pathway, whichis aligned with the goals of the Paris Agreement. All
GHGs outlined in the IPCC15 guidelines arecovered, with a coverage rate of 100% for absolute
GHG emissions.

While there are a lot of research fields related todecarbonization technologies in which Japanesecompanies have technological strength, leveraging
this knowledge to accelerate GX can contribute not
only to ensuring a stable energy supply but also to
re-strengthening Japan's industrial competitivenessby creating new demand and markets in the
decarbonization sector. This aspect is alsomentioned in the “Basic Policy on Economic andFiscal Management and Reform” established inJune 2022, “The Basic Policies for Realization of
GX” set in February 2023, the “Grand Design andAction Plan for a New Form of Capitalism”
formulated in June 2023, and the “GX Promotion
Strategy” approved by the Cabinet in July 2023.

Moreover, specific policy implementation isoutlined in the future pathway of Plan for Global
Warming carbonization for each of the 22
mentioned sectors (see section 2.3.2 Policy
roadmap). These policies are in alignment with theroadmaps below (Technology Roadmaps)
developed by the METI and related ministries.
These Technology Roadmaps cover so called hardto-abate sectors such as Iron and Steel, Chemical,
Power, Gas, Oil, Pulp and Paper, Cement, andAutomobile sectors. Each sector-specific roadmap
presents a pathway for reducing CO2 emissions
with the introduction of low-carbon anddecarbonization technologies, aiming to achievecarbon neutrality by 2050. The sector-specificroadmaps demonstrate the phased conversion,
decommissioning, and discontinuation oftechnologies and facilities towards emission
reduction, providing a clear plan and timeline.
Implementation of upfront investments towards
these goals leads to avoiding lock-in during thetransition.

Considering these perspectives, GX can be seen as
an initiative that contributes to the transformationof core business activities in Japan, which are
crucial for the environment, both now and in the
future.

15 Intergovernmental Panel on Climate Change. The organization was established by World Meteorological Organization(WMO) and United Nations
Environment Programme(UNEP) in 1988.

18

⚫ Technology Roadmap for “Transition Finance” inIron and Steel Sector

2.3.2 Policy roadmap
Although the overall roadmap for the next 10 years
is as outlined in “2.1.3 GX Promotion Strategy”,
reference material of “The Basic Policy for the
Realization of GX”, which is the basis of GX
Promotion Strategy, also compiles the pathway ofdecarbonization for each of the 22 sectors(hydrogen and ammonia, battery industry, iron andsteel industry, chemical industry, cement industry,
pulp and paper industry, automotive industry,
resource circulation industry, housing andbuildings, digital investments for decarbonization
purposes, aviation industry, zero-emission vessels,
bio-based manufacturing, renewable energy, nextgeneration IT networks, next-generation innovative
reactors, transportation sector, infrastructure
sector, carbon recycling fuels, CCS (Carbon Captureand Storage), food, agriculture, forestry andfisheries, and regional development and lifestyle)16.
Regarding these pathways, concrete “sectorspecific investment strategies (roadmaps)” for the
next 10 years will be further developed andfinalized. Within these roadmaps, a “preliminary 5year action plan” with a focus on achieving carbon
neutrality by 2050 will be formulated. The detailed
content of these strategies and action plans will be
determined through the GX Implementation
Council, taking into account objective indicatorsand expert knowledge.

⚫ Technology Roadmap for “Transition Finance” in
Chemical Sector⚫ Technology Roadmap for “Transition Finance” inPower Sector⚫ Technology Roadmap for “Transition Finance” in
Gas Sector⚫ Technology Roadmap for “Transition Finance” in
Oil Sector⚫ Technology Roadmap for “Transition Finance” inPulp and Paper Sector⚫ Technology Roadmap for “Transition Finance” inCement Sector⚫ Technology Roadmap for “Transition Finance” inAutomobile Sector⚫ Roadmap to Zero Emission from International
Shipping⚫ Domestic Marine Transport/Summary of theStudy Group for Promoting Carbon Neutral
Domestic Marine Transport⚫ Aviation Sector/Procedure Chart for the
Promotion of Decarbonization of Aviation

16 The Basic Policy for the Realization of GX : Reference document

19

supply side, especially in the manufacturing sector
such as steel and chemical, promotion ofsubstantial energy conservation, and theinvestment in research and development of
resource circulation, carbon capture, and othertechnologies.

2.4 Implementation transparency
Japan aims to achieve over 150 trillion yen of
public-private investments in next decade via
attracting private companies’ investment by
providing regulations and supports in an
appropriate manner according to business risks
and business environment of each sector.

Furthermore, based on the “GX Promotion
Strategy” outlined in section 2.1.3, CP will be
introduced as part of the Pro-Growth Carbon
Pricing Concept. The CP will be initially
implemented with a low burden, and the burden
will be gradually increased. By demonstrating thisfrom the outset, it leads to encourage upfront GX
investments from both the public and private
sectors. As outlined in Section 2.1.3, these policies
take a just transition into account and support thesmooth transition of labor from fossil fuel-relatedindustries to low-carbon industries.

In the global competition for GX investments,
Japan will provide government support of sufficientscale and term, taking into account the trends ininvestment support in other countries and past
support achievements.
Starting from the FY 2023, Japan will implement
approximately 20 trillion yen upfront investment
support over the following 10 years. The image ofthe government’s support is as follows. Based on
the GX Promotion Strategy and each roadmap
outlined in 2.3, upfront investment support will be
implemented for the transition to non-fossil energy
sources such as in our country, features in andstructures through the effort of both demand andBreakdown of government support
over the next decade

Overall public and private investment
over the next decade

20 trillion yen

150 trillion yen

ExampleSupport for demand
expansion of hydrogen andammonia⚫ Research and developmentof new technologies related
to renewable energy
etc.

Expansion of
non-fossil
energyTransformation ofindustrial structure
on both supply anddemand sides&
Drastic
reinforcementof energy saving
Resource recycling
andcarbon fixation
technologies etc.

6~8
trillionyen

9~12
trillionyen

Example⚫ Energy conservation andfuel conversion for structuralreform and improving
profitability in the
manufacturing industry⚫ Nationwide measures
addressing domestic energy
demands⚫ Achieve drastic energy
savingsetc.

2~4
trillionyen⚫

ExampleR&D and implementation of
new technologies
etc.

20

Massive introduction ofrenewables⚫ Nuclear energy⚫

⚫

60
trillionyen~(R&D of innovative reactors, etc.)⚫

Hydrogen and ammonia⚫

Energy saving and fuelconversion in the
manufacturing industry

etc.

(e.g., steel, chemicals, cement)

80
trillionyen~
Attracting
privateinvestment
in conjunction
withregulations,etc

10trillionyen~

Digital investment for
decarbonization⚫ Establishment of battery
industry⚫ Structural transformation ofship and aircraft industries⚫ Next-generation automobiles⚫ Housing and Buildingsetc.
⚫

Resource recycling industry
Bio manufacturing
⚫ CCS
etc.
⚫
⚫

3
Climate Transition Bond
Frameworkbusiness risks (such as technological and market
risks) in each field and technology from researchand development to social implementation toenhance the predictability of private businesses bylong term and multiple years governmental
support measures.

3.1 Use of Proceeds
The proceeds will be allocated towards initiatives
aligned with the “GX Promotion Strategy”
described in 2.1.3, aiming to achieve theinternationally committed goal of carbon neutrality
by FY 2050 and a 46% reduction (compared to FY2013) in 2030 in line with the Paris Agreement. The
Government of Japan will allocate the proceeds tothe projects described in the “GX Promotion
Strategy”. Priority is given to investments in sectorsthat contribute to emission reduction, enhanceindustrial competitiveness and economic growthwhich are truly difficult for the private sector alone
to make investment judgment on, taking into
account the benefits and burdens associated with
future CP (fossil fuel surcharge and specificbusiness operator burden in the power sector)17
that will be a redemption source of the GX
Budget18. The basic concept will be explained in
3.1.1.

In the “GX Promotion Strategy”, there are 14“Future Actions” initiatives listed under the“Decarbonization initiatives towards GX based on
the premise of ensuring a stable energy supply” forachieving decarbonization by both public andprivate. These initiatives are categorized as shownin Table 1. Going forward, these initiatives will beorganized as eligible criteria for climate transition
bonds.
Each initiative may fall under multiple categories of
eligibility criteria, such as energy conservation
promotion, and there are also policies that crosscut multiple eligibility criteria, such as research anddevelopment projects, startup support, andpromoting just transition.

The implementing entities of the projects primarily
include companies in hard-to-abate sectors
participating in the “GX-ETS”19. Furthermore, basedon the concept of a regulation-and-support
integrated investment promotion policy, The
Government of Japan will consider integrating
support measures to promote active engagement
in emission reduction of companies in hard-toabate sectors that join in GX League20 through the
GX Economy Transition Bonds during the gradualdevelopment of the GX League.
For the achievement of GX investments throughpublic-private collaboration, Government of Japan
will allocate the proceeds for subsidies, equity
investments and debt guarantees21 considering

17 Regarding GX Economy Transition Bonds, it is legally mandated under Article 8 of the GX Promotion Act to repay them by FY 2050, using the revenue
from fossil fuel levies and specific business operator contributions. Specifically, starting from FY 2028, the Minister of Economy, Trade and Industry
will levy a fossil fuel levy on importers of fossil fuels based on the amount of CO2 derived from the imported fuels. Additionally, starting from FY
2033, power generation operators will be allocated a partially paid CO2 emission quota and will be required to pay a specific business operator
contribution based on the allocated quota.
18 The GX League consists of approximately 600 companies covering over 40% of Japan's total emissions and will be developed further. From FY 2026,
an emissions trading system, “GX-ETS”, will be fully implemented, leading to a gradual introduction of paid auctions in the future.
19 The emissions trading system is a mechanism that sets a cap on greenhouse gas emissions and allows business operators to buy and sell emission
allowance.
20 Companies participating in the GX League are actively practicing carbon credits trading, etc., towards carbon neutrality by 2050 and the ambitious
NDCs. Support measures through GX Economy Transition Bonds are designed to be integrated with the concept of “regulation and support
integration”.
21 Japan anticipate financial support such as debt guarantees and equity investments through GX Promotion Organization within eligible projects.

22

Table 1: The approach for classifying eligibility criteria based on energy supply and demand
Classification ofenergy supply anddemandEnergysupply side

Sectorclassification

Eligibility criteria

GX in energy
transition⚫ Making renewable energy
a major power source⚫ Utilization of nuclear power⚫ Facilitating introduction ofhydrogen and ammonia⚫ Establish electricity and gas
markets to achieve carbon
neutrality⚫ Battery industry

GX in daily life

⚫ Promotion of thorough energy
efficiency improvement andrestructuring the manufacturingindustry (through fuel andfeedstocks transition)⚫ Battery industry⚫ GX in transport sector⚫ Digital investment aimed at
decarbonization⚫ Houses and buildings⚫ Infrastructure

GX in industry⚫ Promotion of thorough energy
efficiency improvement andrestructuring the manufacturingindustry (through fuel andfeedstocks transition)⚫ Facilitating introduction ofhydrogen and ammonia⚫ Battery industry⚫ Resource circulation⚫ GX in transport sector⚫ Digital investment aimed at
decarbonization⚫ Houses and buildings⚫ Infrastructure⚫ Carbon Recycling and CCS⚫ Food, agriculture, forestry, andfisheries industry

Energydemand side

3.1.1 “Basic conditions” in the selection of the use of proceeds
Under the Framework, the selection of the use of proceeds will be made based on the “basic conditions” forinvestment promotion measures based on the basic concept of GX Economy Transition Bond’s upfront
investment, as indicated in Table 2, along with the eligible criteria shown in Table 1.

Table 2: GX Economy Transition Bond “basic conditions” in the selection of the use of proceeds (overview)
Basic conditions
I. Efforts that are truly difficult to make investment decisions solely by the private sector
II. Efforts that contribute to strengthening industrial competitiveness, economic growth and emission reduction,
which are essential for achieving GX
III. Integration with regulatory regime and system that change corporate investment and demand-side behaviour
IV. Efforts that contribute to the expansion of domestic investment including for human capital23

In addition to the above principles, prioritization will be conducted by identifying projects that meet one of
the A-C requirements related to strengthening industrial competitiveness and economic growth, as well as oneof the 1-3 requirements related to emission reduction.

Enhancing industrial competitiveness & economic growthA

Growth investments for technological or business innovation to acquire external
demand or expand domestic demandorB

Growth investments for advanced technologies contribute to both the reduction offossil fuel & energy consumption and enhancement of the profitability (such as
consolidation, restructuring and markup)orC

Measures to address domestic demand in the initial stage of introducing key
products with the potential for nationwide market (limited to the case involves
investment on the supply side)

Emission reduction

1

Investment for R&D to contribute to future domestic emission reduction throughtechnological innovation

or

2

CAPEX with high technological emission reduction effect that contributes for direct
domestic emission reduction, etc.

or3

Measures to address domestic demand in the initial stage of introducing key
products with the nationwide demand and long-term high reduction effect3.1.2 Climate Transition Bond: Classification of the use of proceeds (eligible projects)
Table 3 is the classification table of main eligible use of proceeds (eligible projects) that meet the “basic
conditions”.
The use of proceeds are the key economic activities that are currently being organized among thegovernment-led initiatives towards achieving carbon neutrality by 2050 and a 46% reduction (compared to FY
2013 levels) in 2030. These activities are expected to be updated with the progress of GX-related initiatives,
etc., in the future. The use of proceeds is broadly classified into six green categories and each category isfurther classified based on the eligibility criteria.

24

Table 3: Climate Transition Bond: Classification of the use of proceeds
Main Category(Green category)Sub-category
Eligibility criteria

Typical use of proceeds(eligible projects)

Promotion of thorough energy
efficiency improvement⚫ Promote the spread of energy-efficient appliancesHouses and buildings⚫ Support for building new houses and buildings withhigh energy efficiency and retrofitting to improveenergy efficiency⚫ Replacing windows with thermal insulated models
with higher energy efficiency

Digital investment aimed at
decarbonization⚫ Facilitating the development of and investment inenergy efficient semiconductors, photonics
electronics convergence technologies

Battery industry⚫ Investments in plants manufacturing batteries
together with their material and components

Making renewable energy
a major power source⚫ Floating offshore wind
⚫ Next-generation solar cells (perovskite)

Infrastructure⚫ Development of cities and communities
contributing to decarbonization

Utilization of nuclear power⚫ Next-generation advanced reactors with built-in
new safety mechanisms

Establishing electricity andgas markets to achieve carbon
neutrality⚫ Promoting zero-emission thermal power⚫ Development of submarine DC transmission systems

GX in transport sector⚫ Support for the introduction of next-generation
vehicles⚫ Developing demonstration aircraft by 2030s andspreading the use of zero-emissions ships

Infrastructure (repost)⚫ Development of cities and communities
contributing to decarbonization

Restructuring the
manufacturing industry (fueland feedstocks transition)⚫ Development and introduction of innovativetechnologies such as hydrogen reduction
steelmaking⚫ Conversion to Carbon-Recycling production systems

Facilitating introduction ofhydrogen and ammonia⚫ Building supply chain both domestically andinternationally⚫ Research and development as well as theintroduction support of production and usage ofhydrogen derived from excess renewable energy
sources

Carbon Recycling and CCS⚫ Support for research and development of Carbon
Recycling fuelFood, agriculture, forestry, andfisheries industry⚫ Decarbonization of agriculture, forestry andfisheries

Resource circulation⚫ Investment to accelerate resource circulation
including plastics, metals, sustainable aviation fuel
(SAF)

Energy efficiency
1

Renewable energy2

Low-carbon anddecarbonized energy
3

Clean transportation
4

Circular economy
adapted products,
production technologies
and processes
5

6

Environmentally sustainable
management of living
natural resources and landuse, Circular economy

25

3.1.3
Climate Transition Bond: Eligible Criteria and examples of the use of proceeds (eligible projects)
In Tables 4.1 to 4.6, the overview of eligibility criteria described in Table 3 and typical examples of use ofproceeds (eligible projects) included in eligibility criteria are provided.
The net proceeds (of each Climate Transition Bond) will be allocated to the projects of which its eligibility has
been verified (eligible projects) as confirmed in tables 4.1 to 4.6, as well as research and development, capital
investment and initial demand creation, etc., of the eligible projects that meet the basic criteria as confirmed
in future evaluations and discussions.
In assessing the eligibility of each project, reference will also be made to the policy roadmap and technology
roadmap outlined in Section 2.3 Climate transition strategy with Science-Based targets.

1) Green category: Energy efficiency
Table 4.1: Energy efficiency “Promotion of thorough energy efficiency improvement”“Houses and buildings” “Digital investment aimed at decarbonization” “Battery industry”
Green category: Energy efficiency
No.1.1 Promotion of thorough energy efficiency improvement
Support will be provided for the necessary environmental improvements (related measures, development of related
facilities and systems) to achieve a 62 million kl energy efficiency improvement by FY 2030 compared to FY 2013
levels.
< Related key policy roadmaps, technology roadmaps >Policy roadmaps:
Regional and daily life, Iron and Steel industry, Chemical industry, Cement industry, Pulp and Paper industry
Technology roadmaps: Iron and Steel sector, Chemical sector, Pulp and Paper sector, Cement sector< Examples of initiatives (overview, etc.) >⚫ Support program for promoting energy efficiency in the household sector through the introduction of highefficiency water heaters
Support for the installation of facilities related to efforts to promote the adoption of high-efficiency water heaters
by consumers and others
Criteria example:
The heat pump water heater exceeds the 2025 target (energy consumption efficiency: 3.5 or higher, etc.) set by the
Top Runner Program under the Act on Rationalizing Energy Use and Shifting to Non-fossil Energy, etc⚫ Support program for promoting energy-efficiency investments and transitioning demand structures
Support for energy-efficiency investments such as upgrading to advanced energy-saving facilities with hightechnical capabilities and energy efficiency, which have the potential for future expansion of adoption
Criteria example:
In the case of upgrading to advanced facilities and systems, one of the following criteria should be met as a wholeof factory and business premises.
Energy efficiency rate + increase rate of non-fossil fuel proportion: 30% or higher,
Energy saving volume + non-fossil fuel usage volume: 1,000 kl or higher,
Improvement rate of energy consumption per unit: 15% or higher, etc
In the case of upgrading in a customized manner to fit the usage purposes of the business entity, one of thefollowing criteria should be met as a whole of factory and business premises.
Energy efficiency rate + increase rate of non-fossil fuel proportion: 10% or higher,
Energy saving volume + non-fossil fuel usage volume: 700 kl or higher,
Improvement rate of energy consumption per unit: 7% or higher, etc
26No.1.2 Houses and buildings
To achieve the fundamental energy efficiency improvement of houses and buildings (e.g., ensuring energy-saving
performance at the ZEH22 and ZEB23 level for new houses and buildings by 2030), the expansion and strengtheningof regulations through Building Energy Efficiency Act and other measures will be implemented over the next 10 years.
< Related key policy roadmaps, technology roadmaps >Policy roadmaps: Houses and buildings, Regional and daily life
< Examples of initiatives (overview, etc.) >⚫ Support program for accelerating energy efficiency and CO2 reduction in the household sector through retrofitting
to insulated windows, etc
Support for retrofitting to insulated windows to enhance the thermal performance of existing residential buildings
immediately and effectively
Criteria example:
Heat transfer coefficient (Uw value) of 1.9 or lower, surpassing the 2030 target level of the Top Runner Programme
for building materials, etc

No.1.3 Digital investment aimed at decarbonization
To drive growth in the semiconductor industry, continuous investment in semiconductor and related supply chains
towards achieving GX will be implemented throughout the 2030s. This includes advancing the societal
implementation of future technologies such as next-generation semiconductors and optoelectronic fusion.
Additionally, carbon neutrality of data centers will be promoted by leveraging these technologies.
< Related key policy roadmaps, technology roadmaps >Policy roadmaps: Digital investment aimed at decarbonization< Examples of initiatives (overview, etc.) >⚫ Support programs for strengthening the semiconductor supply chain to achieve GX through improved power
performance
Achieving overall improvement in competitiveness of Japan’s power semiconductors and solving societal challenges
such as decarbonization through strengthening the semiconductor supply chain that contributes to energy
efficiency enhancement
Criteria Example:
The investment should be of a substantial scale (in principle, exceeding 200 billion yen) with a focus on SiC power
semiconductors. The performance of equipment and devices to be introduced should be advanced⚫ Research and development projects for future technologies that are essential for achieving GX, such as
optoelectronic fusion
Pursuing the development of important technologies to realize a high-performance and energy-efficient computing
infrastructure with high-speed and low-loss
Criteria Example:
The performance indicator of semiconductor devices with optoelectronic fusion devices implemented in the
package, expressed as bandwidth density/power (Gbps/mm)/(pJ/bit), should be 800 times or more compared tothe products currently available at the start of the research and development

22 The abbreviation for Net Zero Energy House.
23 The abbreviation for Net Zero Energy Building.

27

No.1.4 Battery industry
To achieve the goal of establishing a domestic manufacturing infrastructure for batteries with a capacity of 150 GWh
by 2030, intensive investments in battery production facilities will be implemented over the next 5 years while
creating demand by approaching demand side through the Act on Rationalizing Energy Use and Shifting to Non-fossil
Energy over the next decade.
< Related key policy roadmaps, technology roadmaps >Policy roadmaps: Battery industry< Examples of initiatives (overview, etc.) >⚫ Supporting initiatives for strengthening the manufacturing supply chain of batteries which are essential for a green
society
To ensure the prompt and stable supply of batteries that are essential for maintaining the infrastructure ofelectrification and digitalization society, enhancement of the domestic manufacturing infrastructure will be
implemented by supporting capital investment and technology development in batteries and component materials
Criteria example:
Expansion of production capacity should be as follows
At least 3 GWh per year (for automotive batteries)
At least 300 MWh per year (for stationary batteries)

Representative SDGs classifications

282) Green category: Renewable energy
Table 4.2: Renewable energy “Making renewable energy a major power source” “Infrastructure”
Green category: Renewable energy
No.2.1 Making renewable energy a major power source
Toward the maximum introduction of renewable energy, Japan aim to achieve the social implementation of nextgeneration renewable energy technologies such as the establishment of a domestic mass production system for nextgeneration solar power and the formation of large-scale offshore wind power projects including floating offshore
wind turbines over the next 10 years.
< Related key policy roadmaps, technology roadmaps >Policy roadmaps: Renewable energy, Next generation network (grid and conditioning), Regional and daily life
Technology roadmaps: Power sector< Examples of initiatives (overview, etc.) >⚫ Development and demonstration projects for cost reduction in offshore wind power generation
Development of element technologies for wind turbines and floating platforms tailored to the weather and sea
conditions in Asia. Involvement of users (power generation companies) in the integrated design and demonstrationof wind turbines, floating platforms, cables, etc
Criteria example:
Projected level of 8-9 yen/kWh for the electricity generation cost of bottom-mounted offshore wind turbine under
specific conditions (such as wind conditions) by 2030, etc⚫ Development and demonstration projects for next-generation solar cells
Development of next-generation solar cells (perovskite solar cells, etc.) that can be installed on building walls andother surfaces
Criteria example:
Projected electricity generation cost of 14 yen/kWh or lower under specific conditions (such as sunlight conditions)by the FY 2030

No.2.2 Infrastructure
Promotion of the formation of Carbon Neutral Ports (CNPs) and decarbonization in construction work to achieve
decarbonization and enhance competitiveness in industries and ports. Promotion of renewable energy introduction
and thorough energy consumption reduction by utilizing various infrastructures such as airports, roads, dams andsewage systems. Advancing the development of cities and regions that contribute to decarbonization.
< Related key policy roadmaps, technology roadmaps >Policy roadmaps: Infrastructure, Regional and daily life
< Examples of initiatives (overview, etc.) >⚫ Support program for the construction of local government- and private-owned microgrids
Supporting the installation of key decarbonization products and technologies (renewable energy, energy efficiency,
energy storage), etc, with high GHG emission reduction effects into local government- and private-owned
microgrids in specific regions where private businesses benefit from those microgrids
Criteria example:
In the areas with local government- and private-owned microgrids, to establish a plan to achieve substantial zero
emissions from the household and business sectors by FY 2030

Representative SDGs classifications

293) Green category: Low-carbon and decarbonized energy
Table 4.3: Low-carbon and decarbonized energy “Utilization of nuclear power”“Establishing electricity and gas markets to achieve carbon neutrality”
Green category: Low carbon and decarbonized energy
No.3.1 Utilization of nuclear power
Developing and constructing next-generation innovative reactors that incorporate new safety mechanisms, with theutmost priority on ensuring safety.
< Related key policy roadmaps, technology roadmaps >Policy roadmaps: Next-generation innovative reactors
Technology roadmaps: Power sector< Examples of initiatives (overview, etc.) >⚫ Project for the development of fast reactor demonstration
Based on the revised “Strategic Roadmap” for fast reactor development, which was updated on December 23 rd2022, the specifications for the reactor concept and the core companies to be selected for the conceptual designfrom FY 2024 onwards⚫ Project for the development of high-temperature gas reactor demonstration
Feasibility study of carbon free hydrogen production method using high temperature above 800°C. Establishmentof connection technologies and evaluation methods to achieve high safety using decarbonized high-temperature
heat source above 800°C and hydrogen production technology through commercialized methane steam reforming
methodCriteria example:
With the aim of supplying a large amount of hydrogen stably at approximately 12 yen/Nm3 by 2050 using
decarbonized high-temperature heat above 800°C and carbon-free hydrogen production methods, efforts will bemade for industrial applications such as iron and steel production and chemical industries

No.3.2 Establishing electricity and gas markets to achieve carbon neutrality
Towards the expansion of low-carbon and decarbonized energy sources such as hydrogen, ammonia, nuclear power,
and renewable energy, necessary environmental development such as research and development for securing
Japan’s technological advantage, establishing domestic advanced research facilities, grid integration and ensuring theconditioning, will be implemented.
< Related key policy roadmaps, technology roadmaps >Policy roadmaps: Next-generation network (grid and conditioning), Hydrogen and ammonia
Technology roadmaps: Power sector, Gas sector, Oil Sector< Examples of initiatives (overview, etc.) >⚫ Support program for the establishment of large-scale hydrogen supply chains
Creating a positive cycle of large-scale hydrogen demand production and supply cost reduction through technology
development such as scaling up transportation infrastructure and large-scale hydrogen transportation verification
for multiple hydrogen carriers (liquefied hydrogen, MCH24), and demonstration of hydrogen combustion stability inactual hydrogen power generation systems
Criteria example:
Supply cost: below 30 yen/Nm3 by 2030 and below 20 yen/Nm3 by 2050 (CIF cost. Aim to reduce costs to a levelcomparable to fossil fuels)

Representative SDGs classifications

24 Abbreviation for Methylcyclohexane.

304) Green category: Clean transportation
Table 4.4: Clean transportation “GX in transport sector” “Infrastructure” (repost)
Green category: Clean transportation
No 4.1 GX in transport sector
In the transportation sector, which accounts for approximately 20% of our country’s CO2 emissions, to achieve theenergy efficiency in each transportation mode such as railways and logistics and passenger flow, and transformationof demand structure towards the expansion of utilization of non-fossil fuel, Japan will systematically and strategicallypromote initiatives for the transition to clean energy over the next 10 years, taking into account the Act on
Rationalizing Energy Use and Shifting to Non-fossil Energy, etc. Japan will also aim to expand private investment inrelated industries such as transportation businesses.
< Related key policy roadmaps, technology roadmaps >Policy roadmaps: Automobile industry, Aviation industry, Zero-emission vessels (maritime industry),
Transportation, Carbon recycling fuels (SAF, synthetic fuels, synthetic methane), Regional and daily life
Technology roadmaps:
Automobile sector, Oil sector, International shipping sector, Domestic shipping sector, Aviation sector< Examples of initiatives (overview, etc.) >⚫ Support program for promoting the introduction of clean energy vehicles
Support for the purchase cost of electric vehicles, fuel cell vehicles and plug-in hybrid vehicles, etc., in the earlystages of adoption
Criteria example:
Being eligible vehicles for the FY 2030 fuel efficiency standards under the Top Runner Program of the Act on
Rationalizing Energy Use and Shifting to Non-fossil Energy⚫ Support program for promoting the electrification of commercial vehicles
Support for adoption acceleration of the electrification of commercial vehicles (trucks and taxis)
Criteria example:
Setting up plans for the introduction of non-fossil fuel vehicles in accordance with the goals set by the government(e.g., replacing 5% of small trucks under 8 tons with non-fossil fuel vehicles by FY 2030), etc⚫ Development and demonstration projects for next-generation aircraft
Technology development of core technologies for hydrogen-powered aircraft
Criteria example:
Engine combustor: 54% reduction in NOx25 emissions compared to CAEP/8
Hydrogen fuel storage tank: Achieving a weight of less than twice of stored hydrogen fuelAircraft design: Confirmation of the conceptual design of a hydrogen-powered aircraft with a range of 2,0003,000km through wind tunnel testing

No 4.2 Infrastructure (repost)
Promotion of the formation of Carbon Neutral Ports (CNPs) and decarbonization in construction work to achieve
decarbonization and enhance competitiveness in industries and ports. Promotion of renewable energy introduction
and thorough energy consumption reduction by utilizing various infrastructures such as airports, roads, dams andsewage systems, etc. Advancing the development of cities and regions that contribute to decarbonization.
< Related key policy roadmaps, technology roadmaps >Policy roadmaps: Infrastructure, Regional and daily life

Representative SDGs classifications

25 Abbreviation for Nitrogen oxides.

315) Green category: Circular economy adapted products, production technologies and processes
Table 4.5: Circular economy adapted products, production technologies and processes“Restructuring the manufacturing industry (fuel and feedstocks transition)”“Facilitating introduction of hydrogen and ammonia” “Carbon Recycling and CCS”
Green category: Circular economy adapted products, production technologies and processes
No 5.1 Restructuring the manufacturing industry (fuel and feedstocks transition)
To address the GX market growing worldwide, in the manufacturing industry which accounts for a significant portionof CO2 emissions after electricity and heat distribution, Japan will swiftly establish a GX supply chain through researchand development as well as capital investment support, and engage in market creation etc., in new GX fields.
< Related key policy roadmaps, technology roadmaps >Policy roadmaps:
Iron and Steel industry, Chemical industry, Cement industry, Pulp and Paper industry, Biomanufacturing
Technology roadmaps: Iron and Steel sector, Chemical sector, Pulp and Paper sector, Cement sector< Examples of initiatives (overview, etc.) >⚫ Development and demonstration projects for the utilization of hydrogen in the iron and steel production process
Research and development towards the establishment and societal implementation of decarbonization
technologies, including hydrogen reduction steelmaking, in anticipation of a future where cost-effective andabundant hydrogen supply infrastructure is established
Criteria example:
Establishment of hydrogen reduction technology in blast furnaces to achieve over 50% reduction of CO 2 emissions.
Establishment of direct hydrogen reduction technology to achieve over 50% reduction of CO2 emissions⚫ Development and demonstration projects for decarbonization of thermal processes in the manufacturing
Utilization of zero-emission fuels and development and demonstration of efficient thermal processes to address
decarbonization of industrial furnaces
Criteria example:
Establishment of industrial furnaces with 50% co-firing capability of existing fuels such as natural gas and hydrogenand ammonia by FY 2031. Establishment of technologies to reduce peak power consumption, etc., by 30% or more
by FY 2031

No 5.2 Facilitating introduction of hydrogen and ammonia
In order to achieve the domestic introduction targets of 3 million tons of hydrogen and 3 million tons (ammonia
equivalent) of ammonia by 2030, and 20 million tons of hydrogen and 30 million tons (ammonia equivalent) of
ammonia by 2050, efforts will be made over the next 10 years to establish a large-scale and robust supply chain(manufacturing, transportation, utilization) through the support system for supply chain development and the
support system for base development.
< Related key policy roadmaps, technology roadmaps >Policy roadmaps: Hydrogen and ammonia
Technology roadmaps: Power sector, Gas sector, Oil sector< Examples of initiatives (overview, etc.) >⚫ Development and demonstration projects for the establishment of a large-scale hydrogen supply chain
Creating a positive cycle of large-scale hydrogen demand creation and supply cost reduction through technology
development such as scaling up transportation infrastructure and large-scale hydrogen transportation verification
for multiple hydrogen carriers (liquefied hydrogen, MCH), and demonstration of hydrogen combustion stability inactual hydrogen power generation systems
Criteria example:
Supply cost: below 30 yen/Nm3 by 2030 and below 20 yen/Nm3 by 2050 (CIF cost. Aim to reduce costs to a levelcomparable to fossil fuels)32

No 5.3 Carbon Recycling and CCS
Research and development, demonstration, and capital investment will be implemented over the next 10 years topromote the use of fuels that contribute to decarbonization, such as SAF (Sustainable Aviation Fuel), synthetic fuels
and synthetic methane. Additionally, there will be efforts for the establishment of regulations and frameworks, andcoordination towards international rules establishment.
To ensure the annual storage capacity of CCS which is necessary for achieving carbon neutrality by 2050, efforts will
be made to establish advanced CCUS value chains and CCUS markets in Asia, as well as establish CCS business laws assoon as possible and organize a business environment for business initiation in 2030.
< Related key policy roadmaps, technology roadmaps >Policy roadmaps:
Biomanufacturing, Carbon recycling fuels (SAF, synthetic fuels, synthetic methane), CCS, Resource circulationindustry
Technology roadmaps: Power sector, Gas sector, Oil sector< Examples of initiatives (overview, etc.) >⚫ Development and demonstration projects for control technologies to address feedstock variations in synthetic fuelproduction
Development of control technologies for temperature, catalyst quantity, and other parameters to address feedstock
variations in synthetic fuel production

Representative SDGs classifications

336) Green category: Environmentally sustainable management of living natural resources and land use,
Circular economy
Table 4.6: Environmentally sustainable management of living natural resources and land use,
Circular economy “Food, agriculture, forestry, and fisheries industry” “Resource circulation”
Green category:
Environmentally sustainable management of living natural resources and land use, Circular economy
No 6.1 Food, agriculture, forestry, and fisheries industry
Based on the “Green Food System Strategy” (formulated in May 2021) and the “Act to Promote Environmental
Burden Reduction Activities for Establishment of Environmentally Harmonized Food System” (enacted in April 2022,
implemented in July 2022), efforts will be made to promote transformation in the food, agriculture, forestry, andfisheries industry towards decarbonization and reducing environmental impacts.
Forests, farmland, algae fields, etc., which serve as production areas for the agriculture, forestry, and fisheries
industry, play an essential role as carbon sinks in achieving carbon neutrality by 2050. From the viewpoint of
attracting private investment, efforts will be made to strengthen these functions including behavioural changes
among stakeholders.
< Related key policy roadmaps, technology roadmaps >Policy roadmaps: Food, agriculture, forestry, and fisheries industry

No 6.2 Resource circulation
To promote resource circulation through the collaboration between production side and recycle side, and achieveautonomic and robust resource circulation systems, efforts will be made over the next 10 years to establish
information distribution platforms utilizing digital technologies. Additionally, resource circulation market will becreated through revision of regulatory frameworks towards the acceleration of the collaboration between production
side and recycle side, and GX investment support based on the premise of structural reforms.
< Related key policy roadmaps, technology roadmaps >Policy roadmaps: Resource circulation industry< Examples of initiatives (overview, etc.) >⚫ Development and demonstration projects aimed at achieving carbon neutrality in the waste and resource
circulation sector
Development of technologies, etc., related to alternative treatment methods to conventional waste disposal
systems, such as incineration, that release CO2 into the atmosphere, etc
Criteria example:
By 2030, establishing technologies that realize the waste incineration facilities based on CO 2 separation andrecovery, which ensures a stable carbon recovery rate of 90% or higher from waste under specific conditions

Representative SDGs classifications

34

< Exclusionary Criteria >3.2 Process for Project Evaluation and
Selection

The Government of Japan commits not to allocate
the net proceeds procured based on the
Framework to finance projects related to the
below.

The compliance status regarding the adherence toeligible projects stipulated in “3.1 Use of Proceeds”
for the allocated projects is confirmed within eachrelevant ministry or agency. Also, the“Government-Related Ministries and Agencies
Liaison Conference on GX Economy Transition Bond
Issuance” (Liaison Conference), which consists ofdirector-level officials, confirms based on thecompliance status regarding the adherence toeligible projects stipulated in “3.1 Use of Proceeds”.
During this process, if necessary, consultations are
conducted with other relevant ministries, agencies,and related organizations, and the findings arereported to the GX Implementation Council.
Additionally, each project is determined throughthe approval by the National Diet as part of thegovernment budget annually.

⚫ Projects involved in manufacturing, sale or
distribution of mass destruction weapons suchas nuclear weapons, chemical weapons,
biological weapons, and inhumane weapons
such as anti-personnel landmines and projects
involved in manufacturing and providing servicesof products that support the manufacturing or
sale of mass destruction weapons such as
nuclear weapons, chemical weapons, biologicalweapons, and inhumane weapons such as antipersonnel landmines⚫ Projects involved in mining, refining andtransportation of coal
⚫ Projects involved in the ownership or operationof gambling facilities or businesses

Members of the Liaison Conference are as follows.

⚫ Projects involved in forced labor⚫ Cabinet Secretariat⚫ Projects involved in unfair trade practices,
bribery, corruption, extortion, embezzlement
and other inappropriate relationships that do
not comply with the laws of the country where
they are located⚫ Financial Services Agency⚫ Projects involved in transactions that may cause
human rights, environmental, or other social
issues⚫
Furthermore, the aforementioned Liaison
Conference also discusses the allocation reportingand impact reporting mentioned in 3.4 andconducts the confirmation and evaluation of theallocation status. As necessary, the results arereported to the “GX Implementation Council”.

⚫ Ministry of Finance⚫ Ministry of Economy, Trade and Industry⚫ Ministry of the Environment< Identification of Environmental and Social
Negative Impacts and Implementation of
Mitigation Measures >Through the aforementioned evaluation process,the presence of negative impacts caused by theallocated projects and its mitigation measures areverified. Additionally, when individual businesses
implement the allocated projects, they will ensurethat mitigation measures are being taken throughidentifying negative effects on the environmentand society based on laws and regulations such asenvironmental impact assessments.

35

3.3 Management of Proceeds

3.4 Reporting

The Government of Japan will allocate the net
proceeds to eligible projects. The eligible projects
to be allocated are those that have started
operations or have been executed in the fiscal
year26 including the implementation date offunding based on the Framework, as well as
projects that have started operations or executedin subsequent FYs and the previous FY.

3.4.1 Overview of Reporting
After the fund raising based on the framework, theGovernment of Japan will provide allocation andimpact reporting as follows. The reporting aims to
go beyond disclosing the progress of eligible
projects financed by the Framework and provide
information that can be used as a reference for
future allocation decisions by conducting
appropriate project reviews similar to theverification of regular budget projects and taking
into account the progress of the projects, theirenvironmental improvement impacts, etc.
Furthermore, disclosure of the midterm strategy
and anticipated impacts of eligible projects will bemade to the extent possible, strengthening
companies’ commitment and enabling market
evaluation not only of the current financial
performance but also of the content of upfront
investments.

The allocated projects are managed within the
Energy Supply and Demand Account in the Special
Account for Energy Measures, separate from otheraccounts. Within this account, the budget related
to GX (allocated projects) will be categorized, and
METI will track and monitor the amount of the net
proceeds to match the actual expenses on anannual basis using an internal management system.
Until full allocation of the net proceeds, theunallocated proceeds will be managed in cash.

3.4.2 Allocation Reporting
Until the proceeds are fully allocated to eligible
projects, the Government of Japan will report theallocation of net proceeds of GX Finance annuallyon its website, within the scope of confidentiality
obligations and to the extent reasonably
practicable, regarding any or all of the following
items.
Should a significant change occur after the
allocation of the proceeds, such change will be
disclosed in a timely manner.
< Reporting items >⚫ The amount of net proceeds allocated to theeligible projects⚫ The amount of unallocated proceeds⚫ The estimated amount (or percentage) of theproceeds allocated to the projects in FY which
ends before the issuance date
26 In the GX Promotion Act, it is stated that “the issuance of GX Economy Transition Bonds can be carried out until June 30th of the following year foreach FY. In this case, the revenue related to GX Economy Transition Bonds issued after April 1st of the following FY shall be attributed to the revenueof the respective FY”. Therefore, for example, funds raised from April 1st to June 30th in FY X may be attributed to the revenue of FY X-1. In this case,
the FY X-1 becomes the “relevant FY” in this provision.

36

3.4.3 Impact Reporting

3.5 Review of the Framework

The Government of Japan will report theenvironmental impacts for each eligible criterion
annually on its website, within the scope ofconfidentiality obligations and to the extent
reasonably practicable, regarding any or all of thefollowing items.

In the future, a review of the Framework will beconsidered within a period of at least 5 years,
depending on the progress of Japan’s GX
Promotion Strategy and the progress of eligible
projects. The Liaison Conference will formulate arevision draft of the Framework, taking into
account evaluations and opinions from private
sector insights of capital market participants andexperts, and report to the GX Implementation
Council.

The initial report will be conducted within two
years from the first issuance, and subsequent
progress reports will be conducted at least until thecompletion of the individual project period.

Furthermore, except for minor revisions, whenreviewing the Framework, the Government ofJapan will engage independent external reviewers
to provide second party opinions on the alignment
with appropriate principles and guidelines such as
ICMA Green Bond Principles.

< Reporting items >⚫ Environmental improvement effects such as
reduction in CO2 emissions (expected reduction
effects for research and development)⚫ Overview of main projects, allocated amount,number of projects adopted, case studies ofproject implementation, progress updates on
research and development and capital
investment, etc.
* Additionally, other indicators and criteria related to the project may
be disclosed as needed.

37

4External Review

384.1 Second Party Opinion
The Government of Japan has engaged DNVBusiness Assurance Japan K.K. and Japan Credit
Rating Agency, Ltd. as independent external
reviewers to provide Second Party Opinion (“SPO”)
on the alignment with the Green Bond Principles(ICMA, 2021), the Green Bond Guidelines (MOE,2022), the Climate Transition Finance Handbook(ICMA, 2023) and the Basic Guidelines on Climate
Transition Finance (FSA, METI and MOE, 2021).

4.2 Post-issuance External Verification
The Government of Japan will engage independent
external reviewers to provide annual externalverifications on the allocation of the net proceeds
financed based on the Framework to the eligible
projects and assessment of their environmental
impacts until full allocation of the proceeds.

39Disclaimer
The Framework does not constitute, or form part of, a prospectus or other offering document. The Framework is not, and should not
be construed as, an invitation or offer for sale or subscription of, or a solicitation of any offer to buy or subscribe for, any securities of
the Government of Japan in any jurisdiction or an inducement to enter into investment activity.
The information and opinions contained in the Framework are provided as at the date of the Framework and are subject to change
without notice. None of the Government of Japan or any of its affiliates assume any responsibility or obligation to update or revise suchstatements, regardless of whether those statements are affected by the results of new information, future events or otherwise. The
Framework represents current the Government of Japan policy and intent, is subject to change and is not intended to, nor can it berelied on, to create legal relations, rights or obligations. The Framework is intended to provide non-exhaustive, general information.
The Framework may contain or incorporate by reference public information not separately reviewed, approved or endorsed by theGovernment of Japan and accordingly, no representation, warranty or undertaking, express or implied, is made and no responsibility or
liability is accepted by the Government of Japan as to the fairness, accuracy, reasonableness or completeness of such information. The
Framework may contain statements about future events and expectations that are forward-looking. None of the future projections,
expectations, estimates or prospects in this document should be taken as forecasts or promises, nor should they be taken as implying
any indication, assurance or guarantee that the assumptions on which such future projections, expectations, estimates or prospects
have been prepared are correct or exhaustive or, in the case of assumptions, fully stated in the Framework.
No representation is made as to the suitability of any of the Climate Transition Bonds to fulfil the environmental, social or sustainability
criteria required by prospective investors. Each potential purchaser of bonds should determine for itself the relevance of theinformation contained or referred to in the Framework or the relevant bond documentation for such Climate Transition Bonds
regarding the use of proceeds, and its purchase of the Climate Transition Bonds should be based upon such investigation as it deems
necessary.
The Government of Japan has set out its intended policy and actions in the Framework in respect of use of proceeds, project
evaluation and selection, management of proceeds and reporting, in connection with the Climate Transition Bonds. However, it will not
be an event of default or breach of contractual obligations under the terms and conditions of any such Climate Transition Bonds if theGovernment of Japan fails to adhere to the Framework, whether by failing to fund or complete eligible projects or by failing to ensurethat proceeds do not contribute directly or indirectly to the financing of the activities that meet one or more of the exclusionary
criteria specified in the Framework, or by failing (due to a lack of reliable information and/or data or otherwise) to provide investors
with reports on uses of proceeds and environmental or social impacts as anticipated by the Framework, or otherwise. In addition, it
should be noted that all of the expected benefits of the eligible projects as described in the Framework may not be achieved.
Factors including (but not limited to) market, political and economic conditions, changes in government policy (whether with acontinuity of the government or on a change in the composition of the government), changes in laws, rules or regulations, the lack ofavailable eligible projects being initiated, failure to complete or implement projects and other challenges, could limit the ability toachieve some or all of the expected benefits of these initiatives, including the funding and completion of eligible projects. Eachenvironmentally or socially focused potential investor should be aware that eligible projects may not deliver the environmental, social
or sustainability benefits anticipated, and may result in adverse impacts.

front coverCreated by modifying "Sunrise (Shibu Toge)" (© ko_photography (Licensed under CC BY 4.0))

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