COVERAGE
7.5 MtCO2 (2018) GASES
CO2 only OFFSETS AND CREDITS
domestic ALLOCATION
Free allocation: Grandfathering
20%
Covers large buildings and factories Linked to Tokyo Cap-and-Trade Program since 2011 launch SECTORS:
In force
Under development Under consideration
INDUSTRY
BUILDINGS
industrial processes 11.2 (32%) Transport 9.4 (27%)
Commercial 4.8 (14%) residential 9.1 (26%) OVERALL GHG EMISSIONS (excluding LULUCF) 37.2 MtCO2e (2017)*
OVERALL CO2 EMISSIONS BY SECTOR (MtCO2e)
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POINT OF REGULATION
DownstreamNUMBER OF ENTITIES
~608 facilities (first compliance period):
• Office/commercial buildings: ~180
• Factories: ~428
CAP
The cap is aggregated from the bottom up, based on facil-ity-level “baselines” which are calculated using base-year emissions and a compliance factor (see “Allocation” section).The bottom-up cap for the first compliance period (FY2011- FY2014) was 33.3 MtCO2
Phases & Allocation
TRADING PERIODS
FIRST TRADING PERIOD: 1 April 2012 to 30 September 2016 SECOND TRADING PERIOD: 1 April 2015 to 30 September 2021 THIRD TRADING PERIOD: 1 April 2020 to 30 September 2026 The Saitama ETS has both trading periods and compliance periods (see “Compliance” section). The trading period is defined as the compliance period plus an additional 18-month adjustment period, during which time entities may continue to trade credits in order to reach their targets for the corresponding compliance period.
ALLOCATION
Under the Saitama ETS, each facility has its own cap, which serves as the “baseline” from which it must achieve its reduc-tion target. Baselines for facilities are set according to the following formula: Base-year emissions x (1 – compliance factor) x compliance period (5 years). The compliance factor for each period is determined based on regulations estab-lished by the Governor of Saitama Prefecture.
Base-year emissions are the average emissions of any three consecutive years between FY2002 and FY2007, as chosen by each entity. Credits are issued to facilities whose emissions fall below the baseline.
Baselines for new entrants are based on past emissions (the average of any three consecutive years of emissions from four years prior to the start of the compliance period up until the year before the start of the compliance period) or on emis-sions intensity standards.
COMPLIANCE FACTOR:
First period (FY2011-FY2014): 8% or 6% reduction below base-year emissions
Second period (FY2015-FY2019): 15% or 13% reduction below base-year emissions
Third period (FY2020-FY2024): 22% or 20% reduction below base-year emissions
The higher compliance factor applies to commercial build-ings, as well as to district heating and cooling (DHC) plant facilities. The lower compliance factor applies to other facil-ities, such as commercial buildings that use DHC for more than 20% of the entire energy consumption, and factories.
In the third compliance period, for large facilities owned by small and medium-sized enterprises, the compliance factor is reduced to three quarters of the 22% or 20%, depending on category. Similarly, in medical facilities where electricity is vital to preserve life and health, the compliance factor is two percentage points lower than the 22% or 20% category.
EMISSIONS REDUCTION METHODS:
• Renewable energy: When covered facilities generate elec-tricity from renewable sources for their own use, they can deduct this amount of electricity from the total energy usage of the facility to be reported.
• Low carbon electricity: In order to evaluate energy effi-ciency efforts of the covered facilities, CO2 emissions factors of electricity suppliers are fixed during each compli-ance period. When covered facilities procure electricity from suppliers with lower emissions factors, they can reduce the difference between these emission factors from their emissions to be reported to Saitama Prefecture from the third compliance period.
Facilities demonstrating outstanding performance in emis-sions reduction, as well as in the introduction, use, and management of energy equipment, are certified as top-level facilities that receive lower compliance factors according to their rate of progress, for a period of five years. The certifica-tion standards represent the highest-level energy-efficiency measures currently feasible, stipulating more than 200 different energy-saving measures.
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Flexibility
BANKING AND BORROWING
Banking is allowed only between two consecutive compli-ance periods.
Borrowing is not allowed.
OFFSETS AND CREDITS
Credits from five offset types are allowed in the Saitama ETS.
SMALL AND MID-SIZE FACILITY CREDITS: Emissions reduc-tions from non-covered small and medium-sized facilities in Saitama Prefecture.
Quantitative Limits: None
OUTSIDE SAITAMA CREDITS: Emission reductions achieved from large facilities outside of Saitama Prefecture. Large facilities are those with an energy consumption of 1,500kL of crude oil equivalent or more in a base year, and with base-year emissions of 150,000t or less.
Quantitative Limits: Credits are issued only for the reduc-tion amount that exceeds the compliance factor. These credits can be used for compliance for up to one-third of offices’ reduction obligations. Factories can use up to 50%.
RENEWABLE ENERGY CREDITS: Renewable energy credits generated under the Saitama ETS encompass the following types: Environmental Value Equivalent, Renewable Energy Certificates, and New Energy Electricity, generated under the Renewable Portfolio Standard Law. Credits from solar (heat,
electricity), wind, geothermal, or hydro (under 1,000 kW) electricity production for use under the Saitama ETS were converted to 1.5 times the value of regular credits until the end of the second compliance period. From the third compli-ance period, they are converted on a 1 to 1 basis. Credits from biomass (biomass rate of 95% or more, black liquor is excluded) are also converted with factor 1.
Quantitative Limits: None TOKYO CREDITS (VIA LINK):
• Excess Credits: Emissions reductions from facilities with base-year emissions of 150,000 tonnes or less. Issuance of credits from FY2015.
• Small and mid-size Facility Credits: Issued by Saitama Prefecture. Issuance of credits from FY2012.
Quantitative Limits: None
FOREST ABSORPTION CREDITS: Credits from forests inside Saitama Prefecture are counted at 1.5 times the value of regular credits. Others are converted with the factor 1.
Quantitative Limits: None
All offsets must be verified by verification agencies.
MARKET STABILITY PROVISIONS
In general, Saitama Prefecture does not use market stability provisions.
Compliance
COMPLIANCE PERIOD
FIRST COMPLIANCE PERIOD: FY2011–2014 SECOND COMPLIANCE PERIOD: FY2015–2019 THIRD COMPLIANCE PERIOD: FY2020–2024
Covered entities must submit a global warming countermea-sures plan preparation report and implementation status report by 31 July of the first fiscal year of the compliance period. Every year thereafter, operators must submit a new global warming countermeasure plan and emissions report by 31 July.
Compliance instruments must be submitted and the prede-termined target achieved by the end of the 18-month adjust-ment period, 30 September of the second fiscal year after the end of the compliance period.
The next compliance period coincides, then, with the adjust-ment period for 18 months and begins immediately after the preceding period.
MRV
REPORTING FREQUENCY: Annual emissions reporting, including emission reduction plans. All seven GHGs must be monitored and reported: CO2, CH4, N2O, PFCs, HFCs, SF6, and NF3. VERIFICATION: These reports require third-party verification by the end of the adjustment period.FRAMEWORK: These are based on ‘Saitama Monitoring/
Reporting Guidelines’ and ‘Saitama Verification Guidelines.’
ENFORCEMENT
If the reduction target is not achieved, the name of the company is made public and the insufficient reduction amount added to the reduction amount of the following compliance period.
Regardless of whether the target is achieved, the global warming countermeasures plan and implementation status report of each facility are published on Saitama Prefecture’s
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Linking
LINKS WITH OTHER SYSTEMS
Linking with the Tokyo Cap and Trade Program started in April 2011. Tokyo and Saitama credits are officially eligible for trade between the two jurisdictions. During the first compliance period, 15 credit transfers took place between the Saitama Prefecture and Tokyo (nine cases from Tokyo to Saitama, six cases from Saitama to Tokyo).
Other Information
INSTITUTIONS INVOLVED
Saitama Prefectural GovernmentIMPLEMENTING LEGISLATION
Saitama Prefecture Global Warming Strategy Promotion Ordinance1
Regulation on Saitama Prefecture Global Warming Strategy Promotion Ordinance2
1 – http://www3.e-reikinet.jp/saitama-pref/d1w_reiki/42190101000900000000/42190101000900000000/42190101000900000000.html 2 – https://en3-jg.d1-law.com/saitama-pref/d1w_reiki/42190210001900000000/42190210001900000000/42190210001900000000.html
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