What will happen in 2025?
A look back at 2024
The year 2024 was one of record-breaking heat waves and extreme weather events hitting many parts of the world, forcing us to realize that climate change is progressing at an accelerated pace. The World Meteorological Organization (WMO) reported that 2024 marked an increase of 1.55°C above pre-industrial levels. As in the previous year, Japan was hit by extremely hot weather in various parts of the country, with many negative impacts on human health, agricultural crops, and fisheries. The Noto Peninsula (facing the Sea of Japan), severely damaged by a New Year’s Day earthquake, was then hit by torrential rains in September. The Japan Meteorological Agency (JMA) concluded that these heat waves and torrential rains had been made worse by climate change, and pointed out that in events such as heavy rains in July on the Sea of Japan side of the Tohoku region and in the Noto Peninsula in September, warmer temperatures associated with climate change may have increased the amount of rainfall by 15–20%.
Domestically, Japan reviews its climate and energy policies once every few years. The latest review began around May 2024, with frequent meetings being held toward the end of the year, mainly by committees under the Ministry of Economy, Trade and Industry (METI). Important decisions were made regarding Japan’s path to reduce greenhouse gas (GHG) emissions and outlook for energy supply and demand. However, there was no broad discussion open to stakeholders and the public, and the drafts being finalized by the government in December without any leadership from the new Ishiba administration started in November. Based on those drafts, the policy directions were set at the beginning of 2025.
Outlook for 2025
International conditions to tackle climate change were seriously shaken early in the new year of 2025. U.S. president Donald Trump was inaugurated on January 20, and among the first of his many executive orders starting on his first day in office was the retraction of policies related to climate change, leading to growing concerns not only about domestic but also global implications, including impacts on United Nations frameworks and assistance to developing countries. Meanwhile, just over a dozen countries met the February 2025 deadline to submit their nationally determined contributions (NDCs) under the Paris Agreement. How many countries will be able to submit their NDCs before the U.N. finalizes an NDC Synthesis Report in September? How ambitious will the GHG emission reduction targets be? The answers to these questions will be a litmus test for future progress of climate actions. In the context of the 30th Session of the Conference of the Parties to the United Nations Framework Convention on Climate Change (COP30) to be held in Brazil at the end of the year, the prospects for limiting the global temperature rise to 1.5°C will be facing an uphill battle. It is imperative that countries reach agreement on strengthening climate actions.
In Japan, the Global Warming Countermeasures Plan and the Strategic Energy Plan were adopted in February. The government’s GHG emission reduction targets and measures to promote an energy transition fall short of the levels urgently needed to achieve decarbonization. The lack of measures also leads to delays in implementation. The transition to renewables may also be hindered by the government’s use of liquefied natural gas (LNG) and financial support for hydrogen and ammonia projects, and carbon capture and storage (CCS) technologies, making it more difficult to ascertain the future prospects for decarbonization. This year will be a test to see how steadily and concretely actions are advanced from the ground up.
Highlight Summary
Commentary
1. Parliamentary Bill Debates (Jan-Jun)
The 217th ordinary session of the Diet in 2025 is scheduled to amend legislation related to GHG emission reductions and the energy transition.
A draft amendment to legislation to promote floating offshore wind power to Japan’s exclusive economic zone (EEZ) aims to expand the deployment of offshore wind power turbines beyond what is currently permitted (ports and territorial waters), by providing for the national government to designate target areas, establish stakeholder councils, and approve projects that satisfy certain criteria (Bill to Partially Amend the Act on Promoting the Utilization of Sea Areas for the Development of Marine Renewable Energy Power Generation Facilities). The bill was submitted during the ordinary session of the Diet last year but was not given a high priority for deliberations. As a result, there was no time for debate by the House of Councillors (Upper House) after passing the House of Representatives (Lower House). Regrettably, the bill was scrapped when parliament dissolved for the general election. With the bill being resubmitted this year, it will be crucial that deliberation and enactment occur on a priority basis in order to advance offshore wind power. Also, with regard to targets for floating offshore wind, already significantly delayed, it is hoped that after the legislation is amended the establishment of ambitious targets for deployment will give an impetus to actual projects being implemented.
A draft amendment to the GX Promotion Act (Bill to Amend the Act on Promotion of a Smooth Transition to a Decarbonized Growth-Oriented Economic Structure) is intended to put in place a concrete framework to support a Green Transformation, including the establishment of legislation for emissions trading requiring participation by businesses of a certain size (to be introduced in FY2026), determination of matters related to the implementation of fossil fuel levies (to be introduced in FY2028), and the provision of financial support mechanisms to compensate for reduced tax revenues resulting from tax deductions for some GX-related products and materials. The regulatory design details for these items will determine whether or not industry players will make steady progress in reducing their emissions. In particular, the design of the emissions trading system will have an important impact on the effectiveness of carbon pricing in Japan.
2. Inauguration of U.S. President Donald Trump (Jan 20)
President Trump launched a series of consequential changes to drastically reverse the country’s climate policies, in line with the idea of once again being a major supplier of energy at lower prices. His actions include giving notice that the United States will withdraw from the Paris Agreement, nullifying financial commitments under the United Nations Framework Convention on Climate Change (UNFCCC), lifting a moratorium on LNG export permits, halting wind power lease sales in federal waters, cutting personnel and budgets of key organizations such as the Environmental Protection Agency (EPA) and National Oceanic And Atmospheric Administration (NOAA), and blocking environmental data collection. Steps were taken to hinder even the continuation of minimal efforts, posing major challenges to grasp the magnitude of these impacts. Nevertheless, despite the challenging situation, there are also signs of growing solidarity through concerted efforts both at home and abroad to prevent the stalling of progress toward decarbonization, as international cooperation becomes increasingly crucial.
3. NDC Submissions (Feb (→Sep))
Under the Paris Agreement, Parties are required to submit a nationally determined contribution (NDC) every five years stating targets and policy measures for reducing GHG emissions. In the NDCs, which must be submitted this year, Parties are expected to declare their national targets and measures beyond 2030. The information will reveal the extent of any gaps in the feasibility of realizing the 1.5°C goal. The United Nations plans to compile an NDC Synthesis Report in September based on the submissions received, to serve as the basis for negotiations at COP30 (see 10 below). However, just over a dozen reports had been submitted by the deadline of February 10. Most Parties are significantly behind schedule, so many submissions are expected in the near future. Also, it is not enough just to submit an NDC. Parties should also show a sufficient level of ambition so that the targets and policy measures set forth are consistent with the 1.5°C goal.
4. Strategic Energy Plan and Global Warming Countermeasures Plan (Feb 18)
From spring to the end of 2024, the government conducted a review of its overall climate and energy policies. Drafts of the 7th Strategic Energy Plan, Global Warming Countermeasures Plan, and GX 2040 Vision were finalized in December. After a public comment period lasting about a month until late January 2025, the government adopted all three by Cabinet decision on February 18. The targets for GHG emission reductions were set at 60% for FY2035 and 73% for FY2040 (relative to FY2013). Although many industry groups and NGOs from civil society provided comments calling for higher targets, they were not raised. In terms of energy policy, while stating that renewables will be a main power source, the Japanese government has maintained its existing policy of promoting a variety of energy sources and has adopted the position of promoting nuclear and LNG thermal power. Thus, there are concerns that the transition from fossil fuels to renewables will not happen quickly enough. Reference: Climate Integrate “Japan Policy Briefing: 7th Strategic Energy Plan, Climate Plan/NDC, and GX 2040 Vision” (March 2025).
5. Issuance of Sustainability Disclosure Standards (Mar)
The Sustainability Standards Board of Japan (SSBJ) has issued a Japanese version of sustainability disclosure standards that conform to the ISSB Standards of the International Sustainability Standards Board (ISSB), which is under the International Financial Reporting Standards (IFRS) Foundation. Among these, climate-related disclosure standards stipulate the handling of Scope 3 measurements based on the GHG Protocol and measurements based on the Act on Promotion of Global Warming Countermeasures. The SSBJ Standard will first be mandatory for 69 companies listed on the Prime Market of the Tokyo Stock Exchange with a market capitalization of 3 trillion yen or more (representing 55% of market capitalization), starting with annual securities reports for the fiscal year ending March 2027. From the fiscal year ending March 2028, the SSBJ Standard will be extended to cover 179 companies with a market capitalization of 1 trillion yen or more (representing 74% of market capitalization), and then to all companies on the Prime Market in the 2030s. With these disclosure requirements being made more mandatory, it is expected that companies will develop more transparent transition plans, enabling investors to accurately grasp climate-related risks and opportunities facing the companies, and consequently, Japan will accelerate the pace of decarbonization.
6. Amended Building Energy Efficiency Act Entry into Force (Apr 1)
With the entry into force of the amended Building Energy Efficiency Act, all newly constructed homes and buildings will be required to meet energy efficiency standards starting in April. However, the mandatory standard is Grade 4 on a scale of 1 to 7 for the insulation performance of residential housing. As of 2019, more than 80% of new homes were already achieving Grade 4, so although there may be some benefit in setting that as a minimum, the actual improvements in thermal insulation performance as a result will only be marginal. The government is also beginning to provide incentives to support decarbonization-type (GX-oriented) housing, equivalent to Grade 6 or higher. Since homes and buildings are used for a long period of time once they are built, new homes and buildings that are likely to be in use even after 2050 need to be designed and constructed with zero-emission specifications.
7. G7 Summit (Jun 15-17 (Kananaskis, Canada))
This year’s G7 Summit will be held in Kananaskis, Canada. With the selection of Mark Carney, until now a leader in the decarbonization of the financial sector, as the new prime minister in March, there is some anticipation that he will show leadership in climate diplomacy. However, as the Trump administration imposes tariffs, and other U.S. economic measures shift from international cooperation to competition, Canada has taken a tough stance against the U.S. Thus, the future of G7 relations going forward is likely to be influenced by what topics Canada will take up and in what direction it takes the summit after a general election scheduled for April. In recent years, G7 Summits have played a role in driving global consensus with its members taking the initiative as advanced economies to reach some agreement ahead of COP negotiations that occur at the end of the year. This year, however, it seems unlikely that the summit will result in any ambitious agreement that includes the U.S. Meanwhile, in the UK, the Labour government has won a landslide victory for the first time in 14 years, and prime minister Keir Starmer is likely to promote climate diplomacy. On the other hand, in Germany, the Social Democratic Party lost many seats in the federal election in February and the Christian Democratic Union and Christian Social Union (CDU/CSU) appear likely to form government, while the far-right Alternative for Germany (AfD) achieved a significant surge, so there is some uncertainty in predicting the degree of leadership Germany will show in climate diplomacy. In this context, it will also be important to observe the stance taken by Japan, which so far has continued to advocate for carbon neutrality.
8. Elections: Tokyo Metropolitan Assembly (Jun 22) House of Councillors (around Jul 20)
The summer 2025 will be a summer of elections. This occurs once every 12 years, with an overlapping of elections for the House of Councillors (every three years) and the Tokyo Metropolitan Assembly (every four years). For political and economic reasons, approval ratings are slumping for the LDP — leading party in a minority coalition government — so the election results will have a significant impact on functioning of the administration. In addition, observers will be paying attention to the extent to which climate change and energy measures are seen as election issues, as this will be an opportunity to choose the government. Climate-related disasters and economic impacts, such as extreme heat, forest fires, torrential rains, and rising energy and food prices, are having a major impact on the daily lives of the people. One would hope that candidates will communicate about their perceptions and prospects for decarbonization in both national and Tokyo politics, and show some options, while making the connection between political issues and the daily concerns and interests of voters regarding climate change.
9. GX Economy Transition Bonds (3rd Issuance) (July and Oct)
GX Economy Transition Bonds have been issued to promote GX through individual issuance as Climate Transition Bonds. The first round was in FY2023 (two tranches in February 2024 totaling approx. 1.6 trillion yen) and the second in FY2024 (in May, July and October 2024, and January 2025, with the four tranches totaling approx. 1.4 trillion yen). The third issue is scheduled for FY2025 (July and October 2025, January and March 2026, four tranches), totaling approx. 1.2 trillion yen. A large share of these funds is being allocated to areas based on the GX Investment Strategy, particularly in categories to date such as battery storage, semiconductors, and housing and building measures. Much investment has also been made in R&D as a cross-sectoral category. Hydrogen and ammonia-related projects were not initially included, but they have been included in the use of proceeds since the second issue. With these large investments, it will be important to properly evaluate and verify cost-effectiveness and GHG emission reductions, based on highly transparent information disclosure.
10. COP30 (Nov 10-21)
The 30th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP30) will be held in Belem, in the Amazon region of northern Brazil. Proactive on environmental measures, the Lula government has signaled its intention to appoint Marina Silva, known for her tropical forest conservation activities, as Minister of the Environment and Climate Change, and to have her perform in a leadership role at COP30. On the other hand, due to the above-mentioned delays in Parties submitting their NDCs, it will be a difficult balancing act to gather the required information to close the gap with the 1.5°C goal and engage in negotiations. Moreover, since the U.S has effectively withdrawn from the Paris Agreement, concrete outcomes will undeniably be affected, such as the conclusion of an agreement under the United Nations to strengthen emission reduction measures, and on financial support to developing countries. The world might also witness the emergence of new countries and leaders coming forward to lead climate diplomacy on the international stage.