Japan's Tokyo Gas invests in nature-based carbon fund

Japanese gas retailer Tokyo Gas is investing up to $25mn in Climate Asset Management's nature-based carbon fund.

The carbon credits provided by the fund are natural carbon credits created from efforts such as afforestation and nature regeneration. Its carbon credits require large, continuous areas of land to be created, so supplies are limited and are expected to become difficult to purchase in the medium to long term, Tokyo Gas said.

It has secured carbon credits over a 12-year period until 2037 with its investment in the carbon fund of Climate Asset Management, a partnership between HSBC Asset Management and climate change advisory and investment group Pollination.

Tokyo Gas sees carbon credits as an important tool in the transition period from city gas. It aims to replace half of its domestic supplies of city gas with synthetic methane, or so-called e-methane, by 2040 after it starts commercial use in 2030. Japan's trade and industry ministry aims to replace 1pc of the country's city gas volumes to e-methane by 2030 and 90pc by 2050.

The gas retailer is already participating in five e-methane projects globally, including the ReaCH4 project in Cameron in the US state of Louisiana, partnering fellow Japanese gas utilities Osaka Gas and Toho Gas and trading house Mitsubishi. The four companies aim to export 130,000 t/yr of synthetic methane to Japan by 2030 using the 15mn t/yr Cameron LNG facility. This project aims to move to an initial engineering stage this year.

By Reina Maeda