J-credits generated by utilizing hydrogen and ammonia; New rules applied

J-credits generated by utilizing hydrogen and ammonia; New rules applied

The government adds utilization of hydrogen and ammonia to the J-credit generation rules, covering power generation with fossil fuels and fuel conversion at heat source equipment. Renewal of equipment by business operators will be prompted by giving credits to CO
2 emission reduction at the time of equipment operation. The methods for manufacturing hydrogen and ammonia utilized cover not only those based on renewable energy, but also those based on non-renewable energy. Credits are also given to emission reduction by introduction of FCVs (Fuel Cell Vehicles). New rules are applied within 2022.

The aforementioned was presented at the J-credit System Steering Committee held by the Ministry of Economy, Trade and Industry, Ministry of the Environment, Ministry of Agriculture, Forestry and Fisheries, and Forestry Agency on December 9. METI, etc. was considering review of the J-credit system because hydrogen and ammonia had been positioned as decarbonized fuels by revisions of the Sophisticated Methods of Energy Supply Structures in April 2022. At this meeting, application of new rules was approved by the committee members.

“J-credits (renewable energy)” based on introduction of renewable energy equipment are given to utilization of hydrogen and ammonia manufactured by renewable energy, and “J-credits (energy efficiency)” based on introduction of energy-saving equipment are given to hydrogen and ammonia manufactured by by-product hydrogen or non-renewable energy. Clarification of fuel purity and mixed combustion rate is a requirement for giving the credits.

For the FCVs, it is required to specify an emission coefficient of hydrogen to be filled in them because emissions will be compared with conventional vehicles.

The J-credit system assumes that emissions have been reduced by the volume equivalent to the credits purchased. On the other hand, emissions equivalent to the credits sold are added to the seller’s emissions. The credits are mainly sold by medium- and small-sized businesses and local governments, and purchased by major enterprises which want to control emissions.

METI explains the demonstration status of the “carbon credit market”, reporting that J-credit trading started in September and total CO2 emission trading reached 34,249 tons by December 8. An average trading unit price was \1,927 per ton.