JP-7:Emission Credit Scheme for Small and Medium-Sized Companies

Policy Description

This offset credit system has been introduced under the Kyoto Protocol Target Achievement Plan (2008). Under this scheme, the emission reductions achieved at small and medium-sized companies (SMEs) through financial, technical, or other assistance from large industrial companies can be certified as offsets (so called J-VER) for these large companies to meet their targets under the Keidanren Voluntary Action Plan. 


This offset credit system was introduced in 2008 to fill the gap identified by the government for an official verification scheme. The Offset Credit (J-VER) Scheme was introduced as a verification scheme for credits generated through the reduction/removal by sink of greenhouse gases carried out [1]. The aim was to channel funds for carbon offsetting activities by individuals, businesses, local governments and others to local projects promoting forest management or local industries.

The Scheme was designed according to the ISO Standards. 

According to this Scheme, participants draft an emission reduction project document, including a calculation of the expected emission reduction, which is validated by a third-party. A Certification Committee certifies the offsets on the basis of specific methodologies named in their “positive lists” to ensure a high level of stringency and additionality (with independent verification of the offsets). Issuance of credits is verified by a third party. 


In 2012, the Ministry of Economy, Trade and Industry (METI), the Ministry of the Environment (MOE), and the Ministry of Agriculture, Forestry and Fisheries (MAFF) explored options for a new system for reduction and removal of GHG emissions integrating the domestic CDM markets and the Offset Credit Scheme. In April 2013, the above Ministries began operation of this new system called the J-Credit Scheme. Under this scheme, the Government certifies as “credit” the amount of greenhouse gas emissions (such as CO2) reduced or removed through efforts to introduce energy-saving devices and manage forests.  Credits issued under this scheme is used towards achieving the goals set in the Action Plan for Achieving a Low-Carbon Society or carbon offsets [2].Expiration of credits under this scheme will be discussed in the future. 

Policy Information Expand this section for information on the key features of the policy, such as its date of introduction, categorization, main objective(s) and linkages with other policies.

Policy Categorisation

Policy Instrument Type: Economic

Position in the Pyramid

About Us

Participation: Voluntary


Start Date: 2008

Policy Linkages

Complements Keidanren Voluntary Action Plan (VAP) (ENDED) Effort Defining

Agencies Responsible

Ministry of Economy Trade and Industry (METI)
Agency for Natural Resources and Energy (ANRE)
Ministry of Environment

Primary Objective: GHG Emissions


Cost-effective GHG emission reduction across sectors [3]

Target Group

SMEs and large enterprises for the J-Credit Scheme

Driver of energy consumption or emissions affected by policy: GHG emissions

Implementation Information Expand this section for information on targets, monitoring, verification and enforcement regimes, and implementation requirements and tools.



Quantitative Target? no

Progress Monitored? yes

Verification Required? yes

Enforced? no

Requirements on the Target Group

  • Each applicant has to draft a project design document in accordance with a specific methodology [1] ;
  • Each applicant needs to implement the project within a certain period, and monitor and reports on the resulting emission reductions

Support by Government

Government provides regulatory framework and has set up the certification procedures, registry and organization.

Implementation Toolbox


Implementation of this Scheme requires integration of pre-existing Domestic CDM and J-VER Schemes. This includes integration of registries, agreeing on methodologies, certification, verification committees etc. 

Complexity of Implementation


Case-by-case evaluation needed. Projects are often small, so transaction costs for certification can be relatively high.

Target Group

Baseline needs to be established, Project Design Document (PDD) developed, monitoring reports submitted for verification. Offset projects are often small, so transaction costs (monitoring and verification) can be relatively high

Impacts, Costs & Benefits Expand this section to find information on policy effectiveness and efficiency.

Impact Quantitative Estimate Qualitative Estimate
Estimated effect on energy consumption or emissions Not available Not available
Estimated costs/benefits for industry Not available
Estimated cost for government Not available
Other Benefits
General Benefits Reduced local air pollution, improved competitiveness, promotion of local businesses
Specific Benefits Carbon price incentive and/or technology support made available to SMEs. Larger enterprises can use credits towards their action plans

References & Footnotes


[1] MOEJ (2011). Offset Credit (J-VER) Scheme. Available at http://www.j-ver.go.jp/document/e/J-VER_OutlineMoEJNov2011.pdf

[2] METI (2013). Acceptance of Applications for the J-Credit Scheme started Available at http://www.meti.go.jp/english/press/2013/0819_01.html