Japan to Issue US$11bn Climate Transition Bond

Japan is to issue the first tranche of its JPY1.6 trillion (US$11 billion) climate transition bond, with plans to use the proceeds to fund its Green Transformation (GX) programme. GX was launched last year as part of Japan’s nationally determined contribution (NDC) to implement the Paris Agreement on climate change, initiating a shift forward clean energy and decarbonisation and underscoring the country’s commitment to greenhouse gas reduction goals. The programme promotes public and private investments of JPY150 trillion and over the next 10 years in advanced and sustainable technologies that support national emissions reduction. The new bond is certified under the Climate Bonds Standard, offering investors assurance on the environmental objectives of the use of proceeds, and showing alignment with global best practice standards. “Transition is the theme for the year: corporates, cities and countries need to do transition plans in line with global emission reduction targets,” said Sean Kidney, CEO of the Climate Bonds Initiative. “This bond shows clearly how governments, and others, can raise funds to invest in that transition. It marks a significant milestone in transition finance.” Around 55.5% of the bond proceeds will be allocated to research and development initiatives in areas ranging from renewable energy to hydrogen utilisation in steelmaking, while the remaining 44.5% will subsidise activities, including manufacturing of electricity storage batteries and energy-efficiency measures in buildings.

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