Japan's primary focus steadily shifts to designing and developing new batteries and semiconductors. Moreover, the "climate transition bonds" are expected to also finance the construction of low-cost wind turbines, new recycling facilities, and the development of an innovative aircraft powered by alternative fuels.

Toshio Morita, President of the Japan Securities Dealers Association (JSDA), notes, "While Japan may lack natural resources and be vulnerable to energy crises, it stands out for its technological strength." He believes that "ecological transformation and the transition from a fossil fuel economy to one based on clean energy sources" is crucial for modernizing industrial policy and enhancing competitiveness at both corporate and national levels.

The "climate transition bonds" are a central policy tool for the government of Fumio Kishida, aiming to at least halve greenhouse gas emissions by 2030 compared to 2013 levels, with the next target being zero emissions by 2050! It is estimated that over 150 trillion yen will be required over the next decade to achieve these goals.

Investor reactions have been mixed. Dai-Ichi Life Insurance announced its enthusiastic support for the bond issuance, as it "encourages the transition of Japanese society to a development path not reliant on fossil fuels." Conversely, a representative from Nikko Asset Management Co said that they would not comment on the bond issuance, as "it is a new financial instrument and our analysts would like to thoroughly examine it before responding to any questions."

Generally, the market's response immediately after the bond issuance was slightly lower than expected. "Perhaps the expectations before the issuance were too high," says Keisuke Tsurota, an analyst at Mitsubishi UFJ Morgan Stanley Securities, to Reuters.

Japan begins its journey towards ambitious climate goals from a challenging starting point, with its economy stabilizing, a shrinking population, and the nuclear industry severely impacted by the 2011 Fukushima disaster. The country is forced to import energy to meet 90% of its needs.

"The limits of the state budget have been exceeded," says Martin Schulz of the Fujitsu Global Market Intelligence Unit. He points out that "these specific bonds are designed to finance the development of renewable energy sources and necessary infrastructure while ensuring fiscal balance for government maneuvers." He adds that it remains somewhat unclear which portion of the revenues will be used for which project and what exactly is evaluated as 'green' and 'eco-friendly', leading to criticism of the new bonds as 'green-washing.'

However, the Climate Bonds Initiative (CBI), a non-profit ecological organization based in London, praises the Japanese initiative as "best practice at a global level." According to CBI head, Sean Kidney, "the issuance of climate transition bonds shows how governments or other stakeholders can gather the necessary capital for ecological transformation. It is a landmark decision."