Xpansiv partners with Japan Climate Exchange to offer carbon credits to local companies

Xpansiv, who runs the world's largest spot exchange for international voluntary carbon credits, has announced a partnership with Enechain Corp., which allows Japanese companies to access hundreds of project-specific carbon credits and standardized contracts through Enechain's Japan Climate Exchange (JCEX), Xpansiv said in a statement late July 12.

The partnership is established through a memorandum of understanding, which allows JCEX to connect with Xpansiv Connect, according to the statement.

After connecting with Xpansiv Connect, Japanese companies can access large volume of voluntary carbon credits, including those aligned with the ICVCM Core Carbon Principles and CORSIA, as well as International Renewable Energy Certificates (I-RECs), which are channeled to JCEX from Xpansiv's market infrastructure and CBL exchange, the statement showed.

Notably, ICVCM, or the Integrity Council for the Voluntary Carbon Market, is an organization that sets standards in terms of which carbon credits are of high integrity. Carbon credits with Core Carbon Principles, or CCP, labels are expected to have higher demand as they can address the buyers' concerns over environmental integrity.

CORSIA, or Carbon Offsetting and Reduction Scheme for International Aviation, is a scheme initiated by International Civil Aviation Organization, which requires airlines in ICAO's member states to offset their residual emissions that cannot be reduced through technological improvements. Despite that CORSIA's participation is voluntary until 2026, Japan has committed to be a participant.

"While utilizing carbon credits, such as J-Credits, is essential, the current supply of carbon credits in Japan–approximately 1.5 million tons per year–falls short of the growing demand for carbon-offsets," Xpansiv said in the statement, highlighting the importance of unlocking market access to abundant international carbon credits. J-credits are generated from Japan's domestic decarbonization projects.

Under the MOU, the companies will also explore future opportunities for Xpansiv participants to access Enechain's Japanese products and pricing.

Particularly, the two companies are exploring the possibility of making Japanese J-credits tradable on Xpansiv's CBL platform, the world's largest carbon credits spot trading platform, Xpansiv said in the statement.

Uncertainties around voluntary carbon credits

Japan kicked off a domestic emission trading scheme, called GX ETS, last year.

GX ETS currently allows participating companies to offset their emissions with J-credits, Joint Crediting Mechanism or JCM credits generated from government-backed projects under the UN's Article 6.2 framework, and GX credits that are traded between GX participants, like conventional ETS allowances.

It remains uncertain whether and how voluntary carbon credits can play a role in Japan's GX ETS.

Nevertheless, Japan's demand for voluntary carbon credits is expected to steadily grow, as increasing Japanese companies come up with emission reduction targets following the government's call of carbon neutrality by 2050, but companies face critical challenges to achieve carbon neutrality on their own, due to factor like technical limitations, the statement said.

J-credit closing price was at Yen 3,980/mtCO2e ($25.19/mtCO2e) for renewable power generation projects on July 12, exchange data showed.

Platts, part of S&P Global Commodity Insights, assessed CORSIA-eligible carbon credit at $17.25/mtCO2e and nature-based avoidance carbon credit at $3.75/mtCO2e July 12.