Stockholm (NordSIP) – Following an initial announcement by Prime Minister Fumio Kishida at the PRI in Person conference that took place in Tokyo in October, the start of December saw the Japanese Finance Ministry publish the details of the Climate Transition Bonds (also known as green transition (GX) bonds) it intends to issue in February.
The government of Japan will issue two JPY800 billion bonds with five– and ten-year maturities, scheduled to be issued on February 14th and February 27th. The securities will be supported by the Japan Climate Transition Bond Framework, published at the start of November. Transition
According to the Framework, “Japan formulated the Climate Transition Bond Framework to raise 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 with public-private cooperation.”
The Japanese Ministry of Economy, Trade and Industry notes that “Japan is in a leading position on new technologies and business development to solve challenges such as the limitation of available renewable energy, heat demand and demand of raw material within the industrial sector. Funding these technologies and businesses will lead to innovation and significantly contribute to decarbonization in areas where existing technologies are not sufficient. (…) More than 150 trillion yen of public-private investment is required over the next 10 years for GX investment, and Japan have decided to issue 20 trillion yen of GX Economy Transition Bonds to finance these investments. The GX Economy Transition Bonds are not limited to the integrated issuance of existing JGBs as the same financial instruments, but also issue ‘climate transition bonds’ that have been certified by an external review provider to assess (Second Party Opinion) for compliance with international standards as individual bonds.”
The Japan Climate Transition Bond Framework was reviewed by JCR and DNV, two Japanese second-opinion providers. “JCR has confirmed that the Government of Japan has positioned the realization of decarbonized society as one of Japan’s important issues and has stipulated laws and regulations for the decarbonization of GX and power sources, and is working on it as an important priority issue for the government,” JCR commented.
According to DNV, “the Framework meets the criteria established in [DNV’s] Protocol, and that it is aligned with the following stated definition or purpose of the [Climate Transition Finance Handbook] CTFH/[Basic Guidelines on Climate Transition Finance] CTFBG and GBP/GBGLs. “provide an investment opportunity with transparent sustainability credentials” “enable capital-raising and investment for new and existing projects with environmental benefits”.
