Japan Voluntary Emission Trading Scheme (自主参加型排出量取引制度) (JVETS)
Introduction
The Kyoto Protocol is an international agreement to reduce greenhouse gases (cf. derivativeslawyer.com article on a emission) and CDM (clean development mechanism) is a framework under the protocol which allows member states (or Annex I countries) with binding targets to implement CO2 reduction project activities that reduce emissions in “non Annex I countries” in return for CERs (certified emission reductions).
JVETS
JVETS (自主参加型排出量取引制度) was started by the Japanese Ministry of Environment (MoE)(環境省) in 2005 and Japanese allowances (目標保有参加者に初期割当量として交付される排出枠, JPA) were issued by the MoE as domestic allowances traded between participants of JVETS. Under the trading scheme under JVETS, a member with excess JPAs (i.e. who stays within its voluntary emission target under JVETS) will be able to sell the excess JPAs to another member who exceeded its emission target. One unit of JPA equal one metric ton of CO2.
In addition, CERs purchased or obtained may be converted under the scheme into Japanese CERs (CDMによるクレジット（CER）を基に発行される排出枠, JCERs) (but JCERs could not be converted to CERs). One unit of JCER equal to one metric ton of CO2.
During the “setting-up” period (between April 2005 and March 2006), applications for subsidy and screening took place and subsidiaries were made for new facilities. Calculation and verification were also performed in respect of the emission level for 2002 to 2004.
During the “commitment” period (between April 2006 to March 2007), JPAs were allocated to 31 participants and the allowances (JPAs and JCERs) were allowed to be transferred between participants in the scheme.
Calculation and verification of the 2006 emission level were conducted during the “adjustment” period between April 2007 and August 2007 and allowances continued to be transferred during the period.
During phrase I of the scheme (between April 2006 to August 2007), the majority of transaction (78% of Phase I traded volume) were traded over-the-counter bilaterally with price, volume, scheduled delivery date and other terms agreed between the parties.
For a copy of the rules (available in Japanese only) please access this link.
GHC-Trade.com
GHC-Trade.com is an electronic matching system established and managed by Mitsubishi Research Institute which allows participants to access information of bid and offer prices of allowance (this Japanese document provides a brief explanation of the system). Trading system matches bids and offers of corresponding product type, price, volume and SD. Participants in the GHC-Trade.com “matching service” are required to submit an application form and enter into a “standard agreement” for the trading in allowance. Trading of JPA and JCERs are possible using this trading system.
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Last updated November 2007
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