In brief
Recent amendments to key Japanese environmental laws materially expand compliance obligations for manufacturers, importers and other business operators, particularly in relation to (i) the use of recycled materials, (ii) environmentally-conscious product design, (iii) emissions trading and (iv) product specific recycling obligations.
Amendment to the Act on the promotion of effective utilization of resources
This amendment, legislated in June 2025 and effective from April 2026, supports the development of a “circular economy” and decarbonization policies in Japan by introducing new compliance obligations and incentives.
Key changes
Mandatory planning and reporting for use of recycled materials
Manufacturers of certain products and other relevant business operators required to use recycled materials under the Act must do the following:
- Formulate plans for the use of recycled materials and submit them to the competent authority
- Submit periodic reports on the implementation of said plans to the authority
Products covered by the Act include plastic containers and packaging, household appliances (e.g., unit-type air conditioners, televisions, refrigerators and washing machines) and certain automobiles in which recycled plastics are used and specified volume thresholds are exceeded.
Promotion of environmentally-conscious product design
A certification scheme will be introduced for products with particularly advanced environmentally-conscious designs (e.g., designs facilitating disassembly and sorting and contributing to longer product lifespans).
Certified business operators may benefit from official labeling indicating certification status and access to certain financial support measures, including subsidies for recycling related investments.
Incentives for recycling of materials critical to green transformation
Manufacturers of designated “Specified Recycling Products” that obtain certification (e.g., by setting ambitious collection targets) may be granted exemptions under the Waste Management and Public Cleansing Act — including exemptions from waste business licensing requirements — subject to proper waste treatment standards.
Promotion of circular economy-related commerce
New categories will be formally recognized for "circular economy" business operators (e.g., subscription-based services or businesses that promote sharing of high-value consumer goods). Effective resource utilization standards will be introduced for these business operator categories.
Practical impact
In practice, the amendments will require covered manufacturers and importers to more closely track product composition, recycled material usage and applicable regulatory thresholds across their product portfolios. Companies may need to enhance internal data collection and reporting systems to support mandatory planning and periodic reporting, while also assessing whether certain products fall within the newly designated categories.
The certification-based schemes for environmentally-conscious design and recycling provide incentives for companies to integrate circular economy-related considerations into their product design and collection strategies. Business operators engaged in circular economy-related commerce should closely monitor the development of applicable standards by the authorities, as these may shape future operational and compliance expectations.
Amendment to the GX promotion Act
This amendment, effective from 1 April 2026, establishes a statutory framework for growth-oriented carbon pricing in Japan, with the aim of achieving carbon neutrality by 2050 while supporting economic growth.
Key changes
Mandatory Emissions Trading System (ETS)
From fiscal year 2026, businesses with annual direct CO2 emissions exceeding 100,000 tons will be required to participate in an emissions trading system. Emissions allowances will be allocated free of charge based on industry-specific government guidelines, and in-scope businesses will be required to report their actual emissions and maintain allowances equivalent to their verified emissions. A market for trading surplus allowances and allowance shortfalls will be established, together with price stabilization measures.
Implementation framework for the fossil fuel levy
Procedural rules will be introduced related to implementing the fossil fuel levy scheduled to apply from fiscal year 2028, including payment, collection and exemption mechanisms.
Expansion of fiscal support for GX-related investments
Financial support for GX-related investments (e.g., renewable energy, hydrogen and carbon capture technologies) will be expanded.
Practical impact
Companies with significant greenhouse gas emissions in Japan will need to prepare for mandatory participation in the ETS by strengthening their internal emissions measurement, reporting and verification frameworks, as well as their processes for managing emissions allowances.
More broadly, businesses should assess the medium- to long-term cost implications of carbon pricing — including the future fossil fuel levy — while monitoring available GX-related subsidy and support programs that may facilitate decarbonization investments.
Other recent measures reflecting Japan’s move toward stricter environmental regulation
Japan has also introduced targeted regulatory measures addressing specific environmental and safety risks, reflecting a broader policy trend toward stricter controls over product lifecycle management and hazardous substances.
Key changes
Expansion of the Small Home Appliance Recycling Act to mobile batteries
On 10 March 2026, the Ministry of the Environment and the Ministry of Economy, Trade and Industry decided to expand the scope of the Act to cover certain lithium-ion battery-using products, including mobile batteries, portable power supplies, heated tobacco products and electronic cigarettes. The amendment, to be implemented through cabinet orders expected during FY2026, aims to address fire risks associated with improper disposal while promoting the recovery of valuable resources.
Addition of PFHxS-related substances to the export control list
From 17 April 2026, exports of goods containing PFHxS-related substances will generally require prior approval from the Minister of Economy, Trade and Industry. This change aligns with international regulatory developments under the Stockholm Convention and Japan’s prior designation of PFHxS as a Class I Specified Chemical Substance, effective June 2026.
Practical impact
Manufacturers, distributors and exporters should review their product composition, disposal instructions and export control classifications to ensure continued compliance with these targeted regulatory changes. More broadly, these measures signal Japan’s increasing scrutiny of environmental and safety risks at the product and chemical substance level, underscoring the importance of proactive compliance monitoring even for products or materials that may previously have been viewed as lower risk.