Japan Climate Transition Bond Framework

This Framework was formulated in the context of Japan's numerous energy supply shortages, which necessitates the move away from fossil fuels to decarbonisation technologies and clean energy for a stable energy supply (a process termed Green Transformation or GX). Another driving factor for the Framework is to increase the competitiveness of Japanese industry and place the Japanese economy back towards a path of growth, contributing towards achieving carbon neutrality and achiving economic growth through creating new demand and a market in decarbonisation. Japan expects the Framework to be a milestone for transition finance and a catalyst for further transition finance promotion and funding by private sectors.Japan will issue climate transition bonds based on the Framework, implementing 20 trillion yen scale of investment to increase policy predictability and achieve GX with public-private cooperation. The Framework lays out how the proceeds from the bonds will be allocated towards initiatives aligned with the GX Promotion Strategy, i.e., the eligibility criteria and exclusionary criteria for such initiatives; the process for project evaluation and selection; the management of proceeds; the requirements for allocation and impact reporting; and the process for external verification.