What is the Emissions Trading Scheme (GX-ETS)?

Since April​ ​2026, the Emissions Trading Scheme (GX-ETS) has been in effect as a legally mandated system. This system allocates CO2 emission allowances to companies that emit above a certain level of CO2, requiring them to hold and amortize an amount of allowances equal to their actual emissions each year. If an company has insufficient allowances, it will incur financial burdens such as having to procure them from the emissions trading market. If it has surplus allowances, it can sell the excess on the trading market and make a profit.

The emissions trading scheme (GX-ETS) is not merely an environmental regulation; it's a system where a de facto price is placed on a company's CO2 emissions, making emissions directly linked to costs and investment decisions.
CO2 emissions, which have traditionally been managed primarily by the environmental department, are transforming into a key management indicator directly linked to cost structures and investment decisions with the full implementation of the GX-ETS (Global Emissions Trading System). Proper management and reduction of emissions can not only suppress additional costs such as purchasing emission allowances, but also potentially lead to revenue opportunities, such as the sale of emission allowances, depending on the conditions.

What is covered by the emissions trading scheme (GX-ETS)?

1. Baseline emissions: Businesses whose average direct CO2 emissions (annual average emissions) for the most recent three fiscal years up to the previous fiscal year are 100,000 tons or more are eligible.
2. Only Scope 1 emissions are covered: CO2 emission allowances only cover direct emissions from your own activities, such as fuel combustion (so-called Scope 1). Indirect emissions, such as electricity supplied by other companies (so-called Scope 2), and greenhouse gases other than CO2 (such as methane) are not covered.
3. Unit of target business operator: In principle, the determination is made on a business operator basis (subsidiaries, etc. are treated as separate businesses), however, if GX investment is made integrally with closely related parties (subsidiaries, affiliated companies, etc.), joint notification is permitted.

However, the impact of the emissions trading scheme (GX-ETS) is not limited to companies that are specifically covered by the scheme. Companies, especially those covered by the scheme, are increasingly prioritizing the monitoring and reduction of CO2 emissions throughout their entire supply chain.
Furthermore, even companies that are not currently subject to the system need to consider early on the visualization of emissions and the development of management systems, taking into account the possibility of future expansion of eligibility, requests for emissions data from business partners, and changes in trading conditions based on GX compliance.

The first hurdle many companies face

Many companies face a particular challenge when it comes to complying with the emissions trading scheme (GX-ETS).

The problem is that "we don't know where to start to reduce emissions."

In the conventional approach to complying with the Global Warming Countermeasures Act (officially known as the Act on Promotion of Global Warming Countermeasures), it was common practice to organize energy consumption, such as fuel and electricity, over the previous year as activity levels, calculate CO2 emissions using emission factors set by the government, and report this to the government annually.
While emissions can be understood as a "result," they have been difficult to use to determine which equipment or processes are causing increases or decreases in emissions, or how to link them to daily operations and improvements. However, in emissions trading schemes (GX-ETS) where emissions directly impact costs and profits, simply knowing the emissions is insufficient; the question is whether emissions can be reliably reduced.

From numbers for reporting to data for improvement

To reduce emissions, it is essential to understand which equipment and processes use energy and where there is room for emission reduction.
If the situation at the equipment and process level is not visible,

• Where should we prioritize our countermeasures?
• Which equipment upgrades or operational improvements would be most effective?

This is because it becomes difficult to make such judgments.

In complying with the emissions trading scheme (GX-ETS), the importance of "data that can be used to improve CO2 emissions" is increasing.
Since the goal is to reduce emissions, establishing a data infrastructure that captures emissions in a way that is linked to daily operating conditions and actual energy usage, and that allows for continuous improvement, is the starting point for complying with the Emissions Trading Scheme (GX-ETS).

Visualizing Energy Usage – An Approach Using Kisense®

Macnica offers Kisense®, an energy management system that provides integrated visualization of various data obtainable by sensors, including energy consumption directly used by businesses in their own activities, such as fuel combustion and equipment operation (data corresponding to Scope 1, which is covered by emissions trading schemes), as well as electricity and water usage.
Kisense®​ ​allows you to monitor energy consumption for each factory and piece of equipment in real time, and visualize and store the data. This enables you to:

• Understanding energy usage by equipment and process
• Trend analysis of CO2 emissions estimated from energy usage patterns
• Summary of factors influencing increases and decreases in emissions
• Support for calculating manufacturing unit costs

This allows you to continuously acquire information that forms the basis for compliance with the Emissions Trading Scheme (GX-ETS).

Kisense ® This will create a "foundation for compliance" with the emissions trading scheme (GX-ETS).
By making emissions visible, companies can realistically consider concrete reduction measures and investment decisions for the first time.

What is the energy management system Kisense®?

Kisense® is a system that allows for centralized management of energy consumption in factories, commercial facilities, buildings, and other similar establishments.

The collected data can be viewed in real time, anywhere, through a simple and easy-to-understand interface. By analyzing the data collected with Kisense®, you can reduce energy consumption and CO2 emissions.

▶ Energy Management System Kisense® | Product Details Here