2026: A Historic Turning Point in Japan’s Energy Policy – A Comprehensive Guide to Seven Major System Changes Affecting Businesses

✅ Key Takeaways

⚡ Full-scale launch of emissions trading system from April 2026, mandating participation for approximately 300-400 companies with CO2 emissions exceeding 100,000 tons
🏭 Approximately 12,000 designated businesses required to set rooftop solar installation targets under major Energy Conservation Law amendments
🔋 Demand-supply adjustment market opens to low-voltage resources, enabling monetization of small and medium-scale battery storage
🏢 Multiple simultaneous system changes including building energy efficiency standard enhancements and solar support revisions mark the “Year One of Decarbonization Implementation”

Introduction

2026 marks a historic turning point in Japan’s energy and environmental policy.
This article provides a detailed explanation of seven critical systems scheduled to be implemented or revised simultaneously, primarily from April 2026, and their impact on businesses.

While the Japanese government has announced various policies toward achieving carbon neutrality by 2050, 2026 represents the year when these shift from “rhetoric” to “implementation.”
Major changes directly affecting corporate management will occur in succession, including the full-scale launch of the emissions trading system under the Amended GX Promotion Act and mandatory rooftop solar installation target setting under Energy Conservation Law amendments.

Particularly noteworthy is that these systems are designed to work not individually but in coordination to transform corporate behavior.
Based on my experience as an attorney supporting numerous companies’ decarbonization efforts, early understanding and preparation will determine corporate competitiveness.

This article comprehensively covers each system’s detailed content, target companies, specific obligations, and practical response measures.

Systems Accelerating Corporate “Decarbonization Management”

Full-Scale Launch of Emissions Trading System (GX-ETS)

From April 2026, Japan’s first full-scale emissions trading system will be mandated.
This is based on the Amended GX Promotion Act (official name: Act on Promotion of Smooth Transition to a Decarbonized Growth-Oriented Economic Structure) and is considered the most impactful system change for corporate decarbonization management.

System Overview

The emissions trading system (GX-ETS: GX Emissions Trading Scheme) is a mechanism where the government sets emission caps by industry sector and allocates emission allowances to companies.
Companies must hold emission allowances commensurate with their actual CO2 emissions and can purchase from others if insufficient or sell if surplus.

This system has been piloted in the GX League since fiscal 2023, but from April 2026, participation becomes legally mandatory for companies above certain thresholds.

Target Companies

The targets are business operators whose direct CO2 emissions (Scope 1 emissions) average 100,000 tons or more over the previous three fiscal years.
This includes the option for parent companies and closely related subsidiaries to fulfill obligations jointly.

According to METI materials, approximately 300-400 businesses are expected to be covered, accounting for about 60% of Japan’s greenhouse gas emissions.
Main target industries include:

• Electric power (power generation businesses)
• Steel
• Chemicals
• Cement
• Automobile manufacturing
• Oil refining and petrochemicals

System Mechanism: Benchmark Method

The benchmark method is being considered for adoption in manufacturing.
This method sets reference values for CO2 emission intensity per production unit by industry sector (e.g., CO2 emissions per ton of crude steel) and allocates emission allowances by comparing each company’s performance.

This method’s characteristic is that companies with higher energy efficiency are favored even with the same production volume, while carbon-inefficient companies bear greater costs.
In other words, the incentive design promotes not merely reducing production volume but improving production process efficiency and decarbonization.

Impact on Companies

This system’s introduction creates the first clear economic cost for CO2 emissions.
Emission allowance market prices fluctuate with supply and demand, but in Europe’s emissions trading system (EU-ETS), they averaged 65 euros (approximately 10,000 yen) per ton in 2024.
Japan’s GX-ETS has set a reference ceiling price of 4,300 yen/ton for fiscal 2026.

For a company emitting 100,000 tons of CO2 annually, if the emission allowance price is 4,000 yen per ton, the annual cost impact would be 400 million yen.
This is not a small amount and directly affects profit margins and international competitiveness.

On the other hand, if emissions can be reduced through investments in self-consumption solar power or energy-saving equipment, not only can emission allowance purchase costs be reduced, but surplus allowances can also be sold for profit.

Actions Companies Should Take

1. Accurate emissions measurement: Establish Scope 1 emission measurement systems and confirm whether your company is subject to the system.
2. Develop reduction plans: Create medium to long-term emission reduction roadmaps and reflect them in capital investment plans.
3. Consider trading strategies: Build systems to determine timing and price trends for purchasing/selling emission allowances.
4. Respond to supply chain spillover: Anticipate increased demands from trading partners as large companies advance emission reductions.

Energy Conservation Law Amendment: Mandatory Rooftop Solar Target Setting

From fiscal 2026, amendments to ministerial ordinances and notifications under the Energy Conservation Act (Act on the Rational Use of Energy) will mandate rooftop solar power installation target setting for companies above certain scales.

System Overview

This amendment is a policy to promote utilizing previously unused rooftop spaces of factories and warehouses for solar power generation toward achieving carbon neutrality by 2050.
Building rooftops are existing spaces that do not involve new land development, thus having smaller environmental impact and easier harmonization with local communities.

Target Companies

Targets are designated businesses under the Energy Conservation Act.
Specifically, businesses whose company-wide annual energy consumption is 1,500kl or more in crude oil equivalent, with approximately 12,000 companies nationwide according to METI materials.

By prefecture, Tokyo (2,690 companies), Osaka (940 companies), and Aichi (821 companies) have the most, distributed across all 47 prefectures.
By industry, they span 92 sectors including manufacturing, services, and local governments, covering nearly all industrial fields.

Obligation Content

From Fiscal 2026

• Submission of “qualitative targets for rooftop solar power installation” in medium to long-term plans becomes mandatory.

From Fiscal 2027

• In periodic reports, for energy management designated factories with rooftop areas of 1,000㎡ or more per building (approximately 14,500 buildings nationwide), reporting the following information becomes mandatory:
• Rooftop area
• Seismic standards
• Load capacity
• Already installed solar power area

Meaning of “Mandatorization”

Importantly, this system is not merely a “consideration obligation” but requires “target setting and performance reporting premised on installation.”
However, it does not immediately force solar panel installation but is designed to encourage phased introduction according to each company’s circumstances.

If there are reasonable reasons making installation difficult (structural problems, sunlight conditions, etc.), explaining such circumstances should be acceptable, but reasons of merely “because it costs money” may not be recognized.

Corporate Impact and Business Opportunities

This system means approximately 12,000 designated businesses will seriously consider solar power introduction.
This signifies a massive market becoming visible for renewable energy solution companies.

From the corporate perspective, in addition to electricity cost reduction effects, multiple benefits are expected including emission reduction in the aforementioned emissions trading system and monetization through participation in the demand-supply adjustment market.

Actions Companies Should Take

1. Rooftop installation feasibility survey: Survey rooftop areas, structures, and sunlight conditions of owned buildings to understand installable capacity.
2. Economic analysis: Comprehensively evaluate initial investment, electricity cost reduction effects, subsidy utilization, and emission reduction effects.
3. Target formulation: Formulate specific installation targets for medium to long-term plan submission in fiscal 2026.
4. Consider PPA and other schemes: Consider schemes like PPA that require no initial investment, not just ownership.

Building and Equipment Energy Efficiency Standard Enhancement

Building Energy Efficiency Act: BEI Standard Enhancement for Non-Residential Buildings

From April 2026, energy efficiency standards under the Building Energy Efficiency Act (Act on the Improvement of Energy Consumption Performance of Buildings) will be strengthened, applying stricter standards to medium-scale non-residential buildings.

System Overview

While energy efficiency standard compliance became mandatory for all new buildings in principle from April 2025, the government has indicated a policy of gradually raising standards based on the government policy to secure ZEH/ZEB level energy efficiency performance for buildings newly constructed from fiscal 2030 onward.

Target Buildings

Medium-scale non-residential buildings with floor areas of 300㎡ or more and less than 2,000㎡ are targeted.
This includes small to medium-scale office buildings, stores, warehouses, and factories.

Standard Content: BEI Enhancement

Energy efficiency standards are evaluated by BEI (Building Energy Index: primary energy consumption standard).
BEI is the value obtained by dividing designed primary energy consumption by reference primary energy consumption, with 1.0 or less indicating standard compliance.

While the BEI standard for medium-scale buildings was 1.0 as of fiscal 2025, from April 2026 it will be raised to 0.75-0.85 depending on usage.
Specific standard values vary by building usage (offices, hotels, hospitals, department stores, etc.).

Impact on Companies

This standard enhancement is expected to increase energy-saving equipment investment during new construction and renovation. Specifically, the following measures become necessary:

• Introduction of high-efficiency air conditioning equipment
• Complete transition to LED lighting
• Use of high-performance insulation materials
• Installation of solar power generation equipment
• Introduction of energy management systems like BEMS

While initial investment increases, energy cost reduction effects during operation are also significant, so lifecycle costs are considered economically rational.

Application Timing Notes

Buildings for which energy efficiency judgment applications are submitted on or after April 1, 2026, must comply with the enhanced standards.
Since new standards must be considered at the design stage, building plans scheduled to begin construction during fiscal 2026 require urgent standard verification.

Actions Companies Should Take

1. Review building plans: If building plans exist for fiscal 2026 onward, design must be based on new standards.
2. Coordinate with designers: Discuss new standards early with architects and facility designers to consider compliance methods.
3. Gather energy-saving technology information: Collect information on the latest energy-saving technologies and equipment to clear BEI standards.
4. Utilize subsidies: Consider utilizing subsidy systems for energy-saving buildings such as ZEB support.

Top Runner Transformer Standard Third-Phase Judgment Criteria

From April 2026, energy consumption efficiency standards for transformers under the Top Runner Program will transition to third-phase judgment criteria.

System Overview

The Top Runner Program is a system under the Energy Conservation Act that sets standards based on the most energy-efficient products on the market for specific equipment.
For transformers, first-phase judgment criteria were introduced in 2006 and second-phase judgment criteria in 2014, making the third-phase judgment criteria in April 2026 the first major revision in about 12 years.

Target Equipment

Oil-immersed transformers and molded transformers are targeted, with products having rated capacities of 10kVA or more being regulated.
This includes power receiving and transformation equipment widely used in factories, buildings, and commercial facilities.

Standard Content

The third-phase judgment criteria are set at a level where energy consumption efficiency is improved by approximately 15% compared to second-phase standards.
According to Japan Electrical Manufacturers’ Association materials, compared to first-phase Top Runner standards (2005 JIS standard values), there is approximately 46% energy-saving effect.

This reflects technological progress, with levels made achievable through advances in inverter technology and material improvements.

Impact on Companies

Transformers are equipment used for 20-30 years once installed, during which power losses (sum of no-load loss and load loss) affect operating costs.
Updating to high-efficiency transformers can be expected to reduce electricity costs over the long term.

According to Japan Electrical Manufacturers’ Association calculations, updating existing transformers to new standard-compliant products can reduce annual power losses by several thousand kWh in some cases.

However, transformer updates require significant initial investment, making update timing judgment important. For transformers exceeding the legal useful life (15 years) or facilities with equipment update plans, consideration with fiscal 2026 onward updates in view is recommended.

Actions Companies Should Take

1. Understand existing transformers: Grasp installation year, capacity, and efficiency of owned transformers.
2. Formulate update plans: Consider update plans to new standard-compliant products for aging transformers.
3. Confirm standards for new installations: Transformers newly installed from April 2026 onward must select third-phase judgment criteria-compliant products.
4. Lifecycle cost analysis: Comprehensively evaluate initial investment and energy-saving effects during operation stages.

Structural Transformation of Renewable Energy Markets

Opening Demand-Supply Adjustment Market to Low-Voltage Resources

From fiscal 2026, utilization of low-voltage resources in the demand-supply adjustment market will commence.
This is an important milestone in electricity system reform, signifying full-scale utilization of distributed energy resources (DER).

System Overview

The demand-supply adjustment market is a market for trading adjustment capacity necessary to match electricity demand and supply in real time.
Operated by the Organization for Cross-regional Coordination of Transmission Operators (OCCTO), general transmission and distribution business operators procure adjustment capacity.

Until now, only high-voltage and extra-high-voltage connected resources such as thermal power plants and large-scale battery storage could participate, but from fiscal 2026, low-voltage connected resources can also participate.

Target Resources

Low-voltage resources refer to equipment connected to the grid at low voltage, such as:

• Small and medium-scale battery storage (residential and business)
• Low-voltage solar power (under 50kW)
• EV (electric vehicle) V2G (Vehicle to Grid)
• DR (demand response) compatible air conditioning and refrigeration equipment

Aggregators (businesses that bundle multiple DERs and manage them as a single resource) bundle these and supply them to the demand-supply adjustment market.

Technical Requirements

To participate low-voltage resources in the demand-supply adjustment market, the following technical requirements must be met:

1. Individual equipment measurement: Technology to measure input/output of each resource in real time
2. Group management: Technology to integrate and control multiple distributed devices
3. Communication infrastructure: Real-time communication between aggregators and each resource

With progress in these technical preparations, market opening from fiscal 2026 became possible.

Corporate Impact and Benefits

With this system change, battery storage introduced by companies will have the following three functions:

1. Self-consumption optimization: Store surplus solar power and use during nighttime or demand peaks
2. BCP measures: Backup power during outages
3. Revenue source: Compensation from demand-supply adjustment market

Point 3 is especially a new value. In the demand-supply adjustment market, compensation is paid for providing adjustment capacity.
While compensation varies with market prices, effects of shortening battery storage investment recovery periods can be expected.

Additionally, as small and medium factories, warehouses, and commercial facilities can now participate in the “adjustment capacity business” previously only accessible to large-scale facilities with high-voltage or higher connections, democratization of the power resource market is expected to advance.

Actions Companies Should Take

1. Re-evaluate battery storage economics: Perform investment recovery calculations including revenues from the demand-supply adjustment market.
2. Select aggregator: Select a reliable aggregator and confirm contract conditions (revenue distribution, control scope, etc.).
3. Confirm equipment requirements: Confirm whether battery storage to be introduced supports individual equipment measurement and remote control.
4. Utilize VPP subsidies: May be able to utilize subsidies for VPP (Virtual Power Plant) construction projects.

Review of FIP System and Output Control Rules

As early as fiscal 2026, revision of output control rules for FIP system-applicable power plants is expected to be implemented.

System Background

In Japan, renewable energy introduction rapidly advanced through the FIT system from 2012, but the FIP system aiming for market integration was introduced from April 2022.

In the FIP system, power generators sell electricity on the market, with a certain premium added to the market price.
This creates incentives for generators to engage in power generation behaviors conscious of market prices (e.g., generating more during high-demand periods).

Current Status and Issues of Output Control

With renewable energy introduction expansion, periods when supply exceeds demand are increasing, and output control (generation curtailment) implementation frequency is rising.
Particularly in the Kyushu area, solar power output control has become routine.

In conventional operations, FIT power plants were preferentially subject to output control, which represented favorable treatment toward FIP power plants and was problematic from a fairness perspective.

Fiscal 2026 Revision Content

In METI discussions, revision of output control priority order as early as fiscal 2026 is being discussed in the following direction:

Current: Nuclear/hydro/geothermal → Biomass → FIP plants → FIT plants
After revision: Nuclear/hydro/geothermal → Biomass (FIT) → FIT solar/wind → FIP solar/wind in equalized order

This change is expected to significantly reduce output control for FIP plants while increasing it for FIT plants.

Impact on Companies

For power plants already operating with FIT certification, profitability may decline due to increased output control.
On the other hand, motivation to consider transitioning to the FIP system (FIP conversion) may strengthen.

However, FIP conversion involves the following risks:

• Market price fluctuation risk
• Imbalance risk
• Need for supply-demand forecasting

To manage these risks, battery storage installation or aggregator coordination is effective.
With battery storage, arbitrage strategies of selling during high market price periods and charging during low price periods become possible.

Actions Companies Should Take

1. Reconsider FIT/FIP selection: For new certification from fiscal 2026 onward, carefully consider FIT/FIP selection.
2. Analyze FIP conversion economics: Analyze benefits and drawbacks of migrating existing FIT projects to FIP.
3. Consider battery storage installation: Consider battery storage installation to mitigate output control risk and market price fluctuation risk.
4. Coordinate with aggregators: Delegating supply-demand forecasting and imbalance management to aggregators is also an option.

Abolition of Ground-Mounted Solar Support and Cessation of Biomass Power Support

At the 110th Procurement Price Calculation Committee held on January 7, 2026, major revisions to renewable energy support systems were proposed.

Abolition of Ground-Mounted Solar Power Support (From Fiscal 2027)

Background of System Change

Large-scale ground-mounted solar power (so-called mega-solar) has caused environmental destruction and conflicts with local residents throughout Japan, becoming a social issue.
Additionally, technological progress has significantly reduced power generation costs, with self-reliance advancing.

Changes from Fiscal 2027

According to 110th Procurement Price Calculation Committee materials, business solar power generation (ground-mounted, 10kW or more) will be excluded from FIT/FIP system support from fiscal 2027 onward, formally proposed.

This has a broader scope than the previously anticipated “mega-solar of 1MW or more,” requiring attention that all ground-mounted projects of 10kW or more are targeted.

Rooftop Installation Remains Supported

Meanwhile, rooftop-mounted solar power continues to be supported.
According to 110th Committee materials, procurement prices for business solar (rooftop installation) in fiscal 2026 and 2027 will be maintained at 11.5 yen/kWh.

This is because rooftop-mounted types utilize existing building spaces without involving new land development, thus being smaller in environmental impact and achieving better local community coexistence.

Corporate Impact

Companies planning ground-mounted solar projects need to consider the following:

• New projects from fiscal 2027: FIT/FIP support cannot be used, requiring business feasibility evaluation premised on direct electricity sales
• Projects until fiscal 2026: Can apply for certification under conventional systems, making early decision-making important
• Shift to rooftop installation: Emphasis shifts to rooftop installation utilizing existing building spaces

Actions Companies Should Take

1. Review existing plans: If ground-mounted solar plans exist, urgently consider whether to apply for FIT/FIP certification by fiscal 2026
2. Switch to rooftop installation: Consider switching to rooftop-mounted solar utilizing owned building rooftops
3. Consider direct electricity sales: For projects from fiscal 2027 onward, develop business models premised on direct electricity sales or corporate PPAs
4. Utilize existing facilities: For already certified ground-mounted solar, continue stable operation and consider battery storage installation

Cessation of Imported Biomass Fuel Support (From Fiscal 2026)

Background of System Change

Biomass power generation has been introduced as one type of renewable energy with high purchase prices set from the FIT system’s introduction.
However, cases of importing most fuel from overseas have increased, with the following problems pointed out:

1. Environmental issues: CO2 emissions during transport, concerns about overseas deforestation
2. Economic efficiency: Increased public burden for high-cost imported fuel
3. Energy security: Risks of depending on overseas fuel sources

Considering these problems, METI decided in March 2024 to exclude power plants using imported woody biomass as main fuel from FIT/FIP support from fiscal 2026 onward, as confirmed by the Procurement Price Calculation Committee’s “Opinion on Procurement Prices for Fiscal 2025 Onward” (announced February 3, 2025).

Specific Changes

The following types of imported fuels will no longer be eligible for support:

• Imported wood chips
• Imported wood pellets
• PKS (Palm Kernel Shells)

In contrast, biomass power generation that uses domestically sourced wood or locally unused biomass resources will continue to be supported.

Impact on Existing Projects

Importantly, power plants that have already obtained FIT/FIP certification and are currently in operation will not be affected.
The current feed-in tariff will remain guaranteed until the end of the support period (typically 20 years).

In addition, according to the Japan Biomass Energy Association’s position, the imported fuels currently in use are not affected by this policy revision.

Grace Period for Shortening the Procurement Period under the Initial Investment Support Scheme (Until FY2029)

At the 110th Procurement Price Calculation Committee Meeting, an important decision was also made regarding the Initial Investment Support Scheme for residential solar power.

What Is the Initial Investment Support Scheme?

This scheme, which came into effect in October 2025, aims to accelerate investment recovery for residential solar power systems (under 10 kW).
It introduced a tiered pricing structure, offering JPY 24/kWh for the first four years and JPY 8.3/kWh from the fifth year onward.

Grace Period for Shortening the Procurement Period

Originally, this tiered pricing structure was scheduled to gradually transition to a shorter procurement period.
However, following a formal request submitted by the Japan Photovoltaic Energy Association, a grace period extending until FY2029 has been granted.

The key issues identified by the association are as follows:

1. Underdeveloped post-FIT market: After the fifth year, all power purchase agreements are single-year contracts, and no providers offer multi-year fixed-price contracts.
2. Lack of predictability for PPA operators: There is insufficient basis for planning cash flows beyond the fifth year.
3. Difficulty in coordination with financial institutions: Uncertainty in business outlook makes financing decisions challenging.

As a grace period to address these issues, FY2029—four years prior to the expected full-scale operation of GX-ETS in the power generation sector (expected around 2033)—has been proposed.

Impact on Companies and Required Responses

Ground-Mounted Solar Power Operators

• Operators planning new projects from FY2027 onward must shift toward self-sustaining business models that do not rely on support schemes
• Consider transitioning to rooftop-mounted or self-consumption-based business models
• Existing projects remain unaffected

Biomass Power Operators

• Operators planning new projects from FY2026 onward must significantly revise fuel procurement strategies
• Securing stable supply chains for domestically sourced and regional biomass is a key challenge
• Existing projects remain unaffected

Residential Solar and PPA Operators

• The current tiered pricing structure is expected to remain in place until FY2029
• This provides additional time to consider post-FIT market development and measures to improve business predictability

General Companies (Electricity Consumers)

• Improved economic viability of self-consumption solar power systems
• Increased interest in renewable energy procurement aligned with regional coexistence

Actions Companies Should Take

1. Reassess New Projects: Companies planning new certifications from FY2026 or FY2027 onward should revise business plans based on policy changes.
2. Shift to Rooftop or Self-Consumption Models: Consider transitioning from ground-mounted systems to rooftop or self-consumption-based installations.
3. Evaluate Feasibility of Domestic Biomass Procurement: Biomass operators should build partnerships with local forestry operators and timber-related industries.
4. Monitor Post-FIT Market Developments: Residential solar and PPA operators should closely track post-FIT market evolution through FY2029.

Cross-Sector Analysis and Future Outlook

Policy Direction Indicated by the Seven Major Reforms

The seven policy reforms discussed above share clear common characteristics.
They are defined by three key concepts: demand-side leadership, market mechanisms, and regional coexistence.

Transition Toward Demand-Side Leadership

Traditional energy policy has been based on a centralized model, where electricity is generated at large-scale power plants and delivered to consumers via transmission and distribution networks.
However, the 2026 policy reforms clearly signal a shift toward a distributed model, in which electricity consumers themselves generate, store, and participate in supply-demand balancing.

• Revisions to the Energy Conservation Act: consumers install solar power themselves
• Opening of the balancing market: demand-side resources provide balancing capacity
• FIP framework: power producers act with market awareness

This shift has the potential to fundamentally transform the structure of the energy industry.

Increased Use of Market Mechanisms

Policies such as the emissions trading scheme, the FIP framework, and the balancing market are all designed to influence corporate behavior through price signals.

This represents a shift from traditional regulation-and-subsidy approaches toward incentive structures that leverage market mechanisms.
By assigning costs to CO₂ emissions and creating economic incentives for energy efficiency and renewable energy adoption, these policies aim to encourage voluntary corporate action.

Shift Toward Regional Coexistence

The planned termination of support for ground-mounted solar power (from FY2027) and the exclusion of imported biomass fuels from support schemes indicate a clear shift from large-scale centralized systems toward locally rooted, small-scale, distributed energy systems.

Priority is given to renewable energy sources that harmonize with local communities and contribute to regional economies, such as rooftop solar and biomass using locally sourced materials.

Impact on Industry

These policy changes are expected to have the following effects on industry.

Visibility of Carbon Costs

With the introduction of the emissions trading scheme, CO₂ emissions will, for the first time, be explicitly reflected as economic costs in corporate profit-and-loss calculations.
This may significantly alter management decision-making frameworks.

• CO₂ emissions will be factored into capital investment decisions
• Emissions performance will become a criterion in supplier selection
• Carbon costs may be reflected in product pricing

Improved Economic Viability of Renewable Energy Investments

Multiple policy reforms significantly enhance the economic rationale for renewable energy investments.

• Electricity cost reduction (existing benefit)
• Reduced costs for purchasing emission allowances (emissions trading scheme)
• Revenue from the balancing market (low-voltage resource participation)
• Compliance with energy efficiency regulations

When assessed comprehensively, the payback period for combined solar and battery investments may be substantially shortened.

Supply Chain-Wide Impacts

As large companies subject to the emissions trading scheme advance emission reduction efforts, pressure across entire supply chains is expected to intensify.

An increasing number of small and medium-sized enterprises will also be required to reduce Scope 3 emissions, accelerating decarbonization across industry as a whole.

Business Opportunities

These policy changes create not only obligations and cost pressures but also new business opportunities.

Expansion of the Renewable Energy Solutions Market

With approximately 12,000 designated companies considering solar installations and an estimated 300–400 companies facing emission reduction requirements, the renewable energy solutions market is expected to expand rapidly.

• Sales and installation of solar and battery systems
• Provision of PPA models
• Support for energy management system deployment

Growing Demand for Energy Efficiency Consulting

Compliance with emissions trading and energy efficiency regulations requires specialized expertise, driving demand for consulting services.

• Emissions calculation support
• Emission reduction planning
• Energy efficiency audits
• Subsidy application support

Aggregation and Virtual Power Plant (VPP) Businesses

With low-voltage resources allowed to participate in the balancing market, the role of aggregators and VPP operators becomes increasingly important.

• Integrated control of distributed energy resources
• Supply-demand forecasting and optimization
• Market transaction agency services

EV and V2H-Related Businesses

Electric vehicles function not only as transportation tools but also as mobile energy storage.
Technologies such as V2H (Vehicle-to-Home) and V2G (Vehicle-to-Grid) are expected to expand business opportunities by enabling EVs to serve as supply-demand balancing resources.

Actions Companies Should Take Immediately

Short-Term Actions (First Half of 2026)

Information Gathering and Current Status Assessment

Companies must first determine whether they fall under the scope of each policy.

Checklist

• [ ] Do annual CO₂ emissions exceed 100,000 tons? (Emissions Trading Scheme)
• [ ] Does annual energy consumption exceed 1,500 kl in crude oil equivalent? (Energy Conservation Act)
• [ ] Are there plans to construct or renovate non-residential buildings of 300 m² or more from FY2026 onward? (Building Energy Efficiency Act)
• [ ] Are there aging transformers? (Top Runner Standards)
• [ ] Are battery storage systems or low-voltage solar assets owned? (Balancing Market)
• [ ] Are there power plants certified under FIT/FIP? (Output control rules)
• [ ] Are new ground-mounted solar projects planned from FY2027 onward? (Termination of support)

Establishing Internal Structures

Policy compliance requires coordination across multiple departments.

• Energy management
• Facility management
• Corporate planning
• Legal and compliance
• Procurement

Establishing a collaborative framework for information sharing across departments is essential.

Collaboration with External Experts

Understanding policy details and developing response strategies require specialized expertise.

• Lawyers (legal interpretation, contractual matters)
• Energy consultants (energy audits, reduction planning)
• Architects and facility designers (building energy efficiency compliance)
• Aggregators (balancing market participation)

Early collaboration with external experts enables more effective and efficient responses.

Conclusion

The year 2026 marks a historic turning point in Japan’s energy and environmental policy landscape.
With the full-scale implementation of the emissions trading scheme, revisions to the Energy Conservation Act, strengthened standards under the Building Energy Efficiency Act, the opening of the balancing market to low-voltage resources, and the termination of support for ground-mounted solar power, multiple policy changes will take effect simultaneously.
It can rightly be described as the “first year of full-scale decarbonization implementation.”

These policy changes share clear common characteristics, represented by three key concepts: demand-side leadership, market mechanisms, and regional coexistence.
An era is now fully emerging in which electricity consumers themselves generate power, store energy, and participate in supply–demand balancing.

For companies, these changes represent not only new obligations and potential cost increases, but also opportunities to strengthen competitiveness.
As carbon costs become more visible through the emissions trading scheme, investments in energy efficiency and renewable energy are no longer merely environmental measures, but are becoming a core component of corporate strategy.

Particularly noteworthy are the decisions made at the 110th Procurement Price Calculation Committee Meeting held on January 7, 2026.
From FY2027 onward, FIT/FIP support for commercial solar power projects (ground-mounted systems of 10 kW or more) will be abolished, while rooftop-mounted systems will continue to receive support.
In addition, the shortening of the procurement period under the initial investment support scheme for residential solar power has been deferred until FY2029.

Based on my experience as a lawyer supporting corporate decarbonization efforts, I am convinced that early understanding and preparation will determine which companies succeed and which fall behind.
Ahead of 2026, it is essential for companies to accurately identify which policies apply to them and to develop response strategies from a medium- to long-term perspective.

Moreover, responding to these policy changes is not merely a legal or compliance issue.
It requires a broad range of expertise spanning management strategy, technology, and finance.
I strongly recommend taking a comprehensive approach while collaborating with external experts.

Toward the ambitious goal of achieving carbon neutrality by 2050, the year 2026 represents a critical first step.
By viewing this transition as an opportunity and responding proactively, companies can move toward sustainable and resilient corporate management.