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Financial Research Green Finance in Japan (No. 47)

Investment in CO2 capture technology is key to achieving a decarbonized society

The potential market for green finance in Japan is up to 1,000 trillion yen

Lead Researcher:Yuto KAJITA
  Senior Economist



Achieving carbon neutrality by 2050 will require significant investment. This report quantifies the amount of investment and financing required for Japan to achieve net zero in a manner consistent with its carbon budget. The results show that, even with significant technological innovation to reduce CO2 emissions, Japan will not be able to achieve its net-zero goal without significant investment in and financing of CO2 capture technologies. In addition, the report reviews green finance in Japan, particularly corporate bonds and bank loans. In the case of bonds, the phenomenon of “greenium,” in which yields on green bond issues are lower than those on non-green bonds, has been observed. While the three megabanks lead the way in green-related lending, regional banks lend the largest amount of loans to “brown industries” with high CO2 emissions, and they must strengthen their efforts.