On February 16, Hirono Town signed a comprehensive partnership agreement with Fager Co., Ltd. to promote decarbonized agriculture and strengthen the local rice brand. The agreement focused on cutting greenhouse gas emissions while improving rice quality and farmer incomes.

Hirono’s mayor, Kazuma Komatsu, and Fager’s CEO, Takahiro Ishizaki, formalized the deal at a ceremony marking a new step toward linking climate action with rural economic revival.

A Climate Challenge Turns Into Opportunity

Rice farmers across Japan have struggled with extreme heat in recent years. High temperatures during the growing season have reduced grain quality and increased the risk of damage. In Fukushima’s coastal Hamadori region, growers have felt this pressure directly.

At the same time, Japan’s agricultural sector has begun to see decarbonization not just as an environmental duty but also as a business opportunity. Farmers can now generate carbon credits by reducing emissions from rice paddies and other farm activities. These credits create a new income stream while supporting national climate targets.

Hirono Town had already declared its ambition to become a Zero Carbon City by 2050. This partnership aligned with that goal. It aimed to make local agriculture more resilient, profitable, and climate-friendly.

How the Carbon Credit Model Works

Under the agreement, farmers in Hirono will adopt proven methods to reduce methane emissions from rice paddies. One key technique involves extending the mid-season drainage period. Farmers temporarily drain water from paddy fields during cultivation. This process lowers methane emissions, which normally form in flooded conditions.

Growers will also consider using biochar, a carbon-rich material that stores carbon in soil and improves soil health. Together, these measures can generate government-certified J-Credits.

Japan’s J-Credit system is a national carbon offset program. It certifies emission reductions or removals from activities such as renewable energy use, energy efficiency, forest management, and low-emission farming. Companies buy these credits to offset their emissions or meet climate goals. As a result, farmers and local governments gain a new source of revenue.

Fager has built strong experience in this field. The company supports J-Credit creation in 36 prefectures across Japan. In 2024 alone, it generated about 136,000 tons of CO₂ credits from agricultural projects. Now, it will bring that expertise to Hirono.

Reinventing “Hirono Rice”

Beyond carbon markets, the initiative aims to build a strong premium brand. Farmers will market locally grown Koshihikari rice as “Hirono Rice.” The brand will highlight three features: environmentally friendly cultivation, heat resilience, and high quality.

As extreme heat becomes more common, Japanese consumers are paying closer attention to how food is produced. Climate-smart branding could give Hirono’s rice a competitive edge.

One participating farmer, Toshirei Suzuki, already extended the mid-season drainage period in his paddies. He reported no negative impact on yield or grain quality. In fact, his rice ranked first in taste within Hirono Town, and all of his harvest met first-class standards. He said he joined the program smoothly and wants to continue if it benefits the environment.

His experience offered early proof that emission reductions and quality improvements can go hand in hand.

Digital Tools and Heat Countermeasures

The agreement goes beyond carbon credits as it also promotes agricultural digital transformation, often called agricultural DX.

Hirono and Fager will explore installing water-level and water-temperature sensors in paddy fields. These tools help farmers monitor conditions in real time. With better data, growers can respond quickly to heat stress and water management challenges.

Revenue from carbon credits will fund these upgrades. The partners aim to create a circular model. Farmers reduce emissions, generate credits, sell them, and reinvest the proceeds into better cultivation systems and climate adaptation measures.

This cycle connects environmental action directly to farm income and resilience.

A Model Linked to National Reconstruction

The partnership also fits into broader reconstruction efforts in Fukushima. Fager joined the national “Fukushima Reconstruction Living Lab” initiative led by Japan’s Reconstruction Agency. The program matches private firms with local governments to solve regional challenges.

In this case, agriculture stood at the center. By combining decarbonization, branding, and digital tools, Hirono aims to strengthen its rural economy while supporting recovery in the Hamadori area.

If successful, the model could expand beyond Hirono to other parts of Fukushima and eventually across Japan.

Japan Scales Up Carbon Markets to Hit 2050 Net Zero

Japan has pledged to achieve carbon neutrality by 2050. It also aims to cut greenhouse gas emissions by 46 percent from 2013 levels by 2030. To reach these goals, the government has steadily expanded carbon markets and sector-based policies.

In April 2026, Japan will introduce a full-scale emissions trading scheme (ETS). Around 300 to 400 companies that emit more than 100,000 tons of greenhouse gases per year must participate. The system is expected to cover roughly 60 percent of national emissions.

To support this shift, the government launched the Green Transformation (GX) Promotion Strategy. The plan outlines more than 150 trillion yen in public and private climate investment over the next decade. It includes a 20 trillion yen early-stage package backed by GX Economic Transition Bonds. The goal is to stimulate new markets while keeping economic growth stable.

Japan has taken a cautious and pragmatic approach. Policymakers design climate rules that businesses can realistically follow. The Japan Business Federation, known as Keidanren, plays a key role in shaping legislation. Its involvement helps ensure that new climate policies remain practical and economically viable.

The Role of the J-Credit Scheme

The J-Credit Scheme plays a central role in Japan’s domestic carbon market. Three ministries jointly manage it: the Ministry of the Environment, the Ministry of Economy, Trade and Industry, and the Ministry of Agriculture, Forestry and Fisheries.

As of May 2025, the scheme had registered 1,262 projects. It had certified a total of 12.08 million tons of CO₂ credits. The government now targets 15 million tons of certified J-Credits by fiscal year 2030.

Projects can register individually or as programmatic bundles that group many small activities into one larger project. This structure makes it easier for small farmers to participate.

Hirono’s rice initiative fits well within this framework. It visualizes emission reductions measurably and links them directly to local economic benefits.

A Blueprint for Sustainable Rural Growth

The Hirono–Fager partnership showed how climate policy can work on the ground. It connected national carbon markets with everyday farming practices. It turned methane reduction into income. It funded heat countermeasures with carbon revenue. And it built a premium rice brand around sustainability.

If the project delivers as planned, Hirono Town could become a model for climate-smart agriculture in Japan. The town’s rice would stand not only for taste and quality, but also for environmental responsibility and resilience in a warming world.

• LATEST: 2026 Could Redefine Voluntary and Compliance Carbon Market Convergence, with Japan Leading the Way

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A new regulatory filing in the European Union shows that several major carmakers will not join the 2026 carbon credit pool led by Tesla. The filing lists Stellantis, Toyota Motor Corporation, and Subaru Corporation as absent from the Tesla-led alliance for the coming compliance year.

The change highlights an important shift in the European auto market. Carbon credit trading has become a major financial lever for electric vehicle makers, especially Tesla. At the same time, legacy automakers are investing heavily in electric and hybrid vehicles to reduce their dependence on regulatory credits.

EU Filing Reveals Breakup in Tesla’s Carbon Credit Alliance

The European Union allows automakers to join “emissions pools” to meet strict fleet-wide carbon targets, as shown below. In these alliances, companies combine their fleets when regulators calculate average CO₂ emissions.

Carmakers with high emissions can offset them by joining a pool led by a low-emission manufacturer such as Tesla.

According to an EU filing dated February 27, 2026, Tesla is recreating its carbon credit pool for the year. However, Stellantis, Toyota, and Subaru are not currently listed as members.

The absence marks a change from 2025. That year, the Tesla pool included a large group of automakers: Tesla, Stellantis, Toyota, Subaru, Ford, Honda, Mazda, Suzuki, and Leapmotor. These partnerships helped companies comply with EU emissions targets while their EV production ramped up.

For 2026, the pool appears smaller. Current participants include Tesla alongside Ford Motor Company, Honda Motor Company, Mazda Motor Corporation, and Suzuki Motor Corporation.

However, companies can still join later. Automakers are allowed to enter pooling agreements until December 2026, leaving the door open for changes during the year.

How Tesla Turns Carbon Credits Into Billions in Revenue

Tesla’s role in carbon pools comes from its all-electric lineup. Since the company sells only zero-emission vehicles, its fleet emissions are far below EU regulatory limits. This creates excess regulatory credits. Tesla can sell those credits to other automakers that struggle to meet the limits.

Globally, Tesla has earned nearly $2 billion in 2025 from emissions credits, according to its report filings. The EV maker has earned a total of around $12.4 billion since 2017.

These revenues have historically played an important role in Tesla’s profitability. In several earlier years, regulatory credits accounted for a large share of the company’s net income.

• MUST READ: Tesla Reports First-Ever Annual Revenue Drop in 2025, Carbon Credit Sales Also Dip 28%

In Europe alone, analysts previously estimated that Tesla’s pooling arrangements could generate more than €1 billion in annual credit revenue. For traditional automakers, buying credits is often cheaper than paying regulatory fines.

Under EU rules, companies that fail to meet emissions targets face penalties of €95 per gram of CO₂ above the limit for every car sold. This can add up quickly for large manufacturers selling millions of vehicles each year.

Carbon credit pooling, therefore, acts as a compliance bridge while companies transition their fleets to electric vehicles.

Why Some Automakers Are Leaving the Pool

The absence of Stellantis, Toyota, and Subaru from the 2026 pool may reflect several strategic changes across the industry.

First, the European Commission adjusted the compliance timeline. Instead of assessing emissions strictly for 2025, regulators now allow compliance based on the average emissions between 2025 and 2027.

This change gives automakers more flexibility. Companies that expect their emissions to fall in the next two years may decide they no longer need to buy credits immediately.

Second, many legacy manufacturers have expanded their production of hybrid and electric vehicles. For example:

• Toyota has one of the world’s largest hybrid fleets.
• Stellantis has expanded its EV lineup across brands such as Peugeot, Opel, Fiat, and Jeep.
• Subaru sells hybrid vehicles and is developing more EV models with Toyota.

These changes could reduce their reliance on Tesla’s credits in the short term. There are also corporate partnerships reshaping the market. Stellantis has a joint venture with Leapmotor, which sells EVs in Europe and could help offset emissions within the group.

• SEE MORE: Stellantis and Leapmotor Forge Carbon Credit Deal Amid Booming EV Market

Europe’s Strict Climate Rules Are Reshaping the Auto Market

The EU has some of the world’s strictest vehicle climate rules. Under the bloc’s current standards, automakers must steadily cut average fleet emissions. These targets support the EU’s broader climate goal of reducing greenhouse gas emissions 55% by 2030 compared with 1990 levels.

The long-term objective is even more ambitious. The EU plans to phase out sales of new gasoline and diesel cars by 2035, effectively shifting the market toward zero-emission vehicles.

As a result, the European EV market has grown rapidly. Battery-electric vehicles (BEVs) accounted for 15% in 2024. In 2025, this share rose to 19%, reflecting continued EV market growth amid stricter emissions rules.

Hybrid vehicles also play a large role in the transition. Many manufacturers use hybrids to reduce fleet emissions while EV adoption grows.

Tesla’s EV Dominance Still Anchors the Carbon Credit Market

Despite changes in the credit market, Tesla remains one of the most influential players in the global EV industry. The company delivered about 1.81 million vehicles in 2024, making it one of the largest electric car producers worldwide. However, deliveries dropped to 1.6 million in 2025.

• Tesla’s main models include: Model 3, Model Y, Model S, and Model X.

The carmaker also continues to expand its production footprint. Major factories operate in the United States, China, and Germany. The company’s Gigafactory Berlin-Brandenburg plays a key role in supplying EVs to the European market.

However, BYD has overtaken Tesla in EV sales in 2025, both in the EU market and globally.

As EV adoption rises, the role of regulatory credits may gradually shrink. More automakers will meet emissions targets using their own electric vehicles rather than buying credits. Yet, credits still provide a useful financial buffer for Tesla during the transition period.

Are Carbon Pools a Temporary Bridge for the Auto Industry?

Carbon credit pooling reflects the uneven pace of the automotive transition. Some companies, like Tesla, moved early into fully electric vehicles. Others are still shifting large gasoline and diesel fleets toward cleaner technology.

Pooling allows the industry to comply with regulations while maintaining vehicle supply and avoiding sudden price increases.

Yet, the system may evolve. As more automakers scale EV production, fewer companies will need to buy credits. This could gradually reduce the value of Tesla’s carbon credit business, as the 2025 sales drop shows.

At the same time, tightening climate policies and rising EV demand could create new market dynamics.

For now, Tesla remains at the center of the regulatory credit ecosystem. The 2026 EU filing shows that alliances are shifting, but the underlying system still plays an important role in the global transition to low-carbon transportation.

The coming years will reveal whether carbon pools remain a major financial tool or become a temporary bridge as the auto industry moves toward fully electric fleets.

• READ MORE: BYD Banks 6.2M Carbon Credits Potentially Worth US$217M Under Australia’s EV Efficiency Scheme

The post Tesla’s Carbon Credit Empire Faces a Shake-Up as Stellantis, Toyota, Subaru Exit EU Pool appeared first on Carbon Credits.

The United States is stepping up its push for small modular reactors (SMRs) in the Philippines. In mid-February 2026, the U.S. Trade and Development Agency (USTDA) announced $2.7 million in technical assistance for Meralco PowerGen Corp. (MGEN). The work will review advanced U.S. SMR designs and create an implementation roadmap for what could become the country’s first SMR nuclear power plant.

USTDA framed the project as “vendor-neutral” evaluation support that can help the Philippines compare options and plan the steps needed to move from concept to construction. The goal is to speed early planning, such as technical screening and sequencing, before major capital decisions.

This is not a power plant approval. It is a funded study and planning effort. Still, it signals stronger U.S. backing for nuclear cooperation at a time when the Philippines is looking for more reliable, low-carbon power sources.

Meralco Chairman Manuel Pangilinan remarked:

“Through the generosity of the US government, we are laying the groundwork for the responsible integration of nuclear into our energy mix through small modular reactors. This offers a safe and responsible pathway towards energy security for generations to come.”

Coal Dependence and Rising Demand Drive the Debate

The Philippines still relies heavily on fossil fuels for electricity. Official DOE data show that in 2024, total power generation reached 126,941 GWh. Coal produced 79,359 GWh, which is about 62.5% of the country’s electricity that year.

• Natural gas produced 18,047 GWh (about 14%). Renewable energy produced 28,193 GWh (about 22%). Oil produced 1,342 GWh (about 1%).

On the capacity side, the DOE reported 29,706 MW of total installed generating capacity in 2024, with the following breakdown:

• Coal capacity was 13,006 MW (about 44%);
• Renewable energy capacity was 9,520 MW (about 32%);
• Natural gas was 3,732 MW (more than 12%); and
• Oil was 3,448 MW (almost 12%).

Demand growth also shapes this debate. In the DOE’s power planning materials, the country’s peak demand is projected to rise from 16,596 MW in 2022 to 68,483 MW by 2050, which the DOE notes equals an average annual growth rate of 5%.

These numbers help explain why policymakers and utilities are reviewing many options at once. They include grid upgrades, energy efficiency, renewables, storage, gas, and now nuclear.

SMRs Explained: Smaller Reactors, Big Expectations

An SMR is a nuclear reactor designed to be smaller than traditional large reactors. The International Atomic Energy Agency (IAEA) defines SMRs as reactors with a capacity of up to 300 MW(e) per unit. That is roughly one-third of the size of many conventional reactors.

The image is an example of an SMR design by NuScale Power, an American SMR company.

Supporters point to three practical features. First, SMRs aim for modular construction. Developers may build parts in factories and assemble them on site. Second, SMRs can be scaled by adding modules over time. Third, SMRs can provide steady output that does not depend on weather, which can help a grid manage variability from wind and solar.

At the same time, SMRs do not remove hard requirements. Any nuclear project still needs a strong regulator, safe site selection, trained staff, emergency planning, fuel and waste plans, and long-term financing. These items often drive timelines and costs, especially for a first plant in a country that is new to commercial nuclear power.

Small Reactors, Big Global Ambitions

Around the world, interest in small modular reactors is growing fast. Designers have created more than 120 SMR designs in recent years, with dozens in early review or licensing stages.

The global market for SMRs is also expanding. Analysts estimate the value of SMR markets at several billion U.S. dollars today, and rising over the next decade. Some forecasts show markets increasing to roughly double or more by the early 2030s, around $10–16 billion.

Installed SMR capacity is also expected to rise. Industry reports project several hundred megawatts of capacity by 2030, with further growth as more designs reach construction, up to 2.0 GW per IEA forecast.

Countries in North America, Europe, and the Asia Pacific are leading deployment and planning. Many governments see SMRs as a way to add reliable, low-carbon power alongside renewables.

Global forecasts to 2050 show SMRs could play a bigger role in clean energy systems, especially under scenarios that aim for low emissions and stable power. However, real deployment depends on licensing, investment, and supply chain development.

The 123 Agreement: Legal Groundwork for Nuclear Cooperation

A key reason U.S. firms can offer nuclear technology is the U.S.–Philippines Agreement for Cooperation in the Peaceful Uses of Nuclear Energy, often called a “123 Agreement.” The U.S. State Department said the agreement entered into force on July 2, 2024. It sets the legal framework for civil nuclear cooperation and can support exports of nuclear material, equipment, and components under U.S. rules.

In practice, this type of agreement is one building block. It does not select a reactor design and does not guarantee financing. It does create the conditions for deeper technical engagement, training, and potential commercial activity, as long as both sides meet non-proliferation and regulatory requirements.

From Planning to Licensing: Mapping the Nuclear Timeline

The Philippines began its nuclear journey after the 1973 oil crisis. It built the 621 MWe Bataan Nuclear Power Plant in 1984 at a cost of USD460 million. However, safety and financial concerns stopped it from operating. The plant was never fueled but has been maintained.

The DOE has publicly set nuclear targets in its 2022 planning. Reporting around the Philippine Energy Plan has cited a pathway that aims for at least 1,200 MW of nuclear capacity by 2032, rising to 2,400 MW by 2035, and 4,800 MW by 2050.

The DOE has also discussed regulatory readiness. In a November 2025 media release, the DOE said the Philippines aims to begin accepting nuclear power plant license applications by 2026, linked to the creation of the country’s nuclear safety regulator under Republic Act No. 12305.

International reviews add more context. In December 2024, the IAEA reported that the Philippines was making progress on nuclear infrastructure development, while still working through the many steps needed for a full nuclear power program.

Against that timeline, the USTDA-MGEN work looks like an “early stage” accelerator. It helps narrow design choices and map steps. It does not replace the national licensing process.

Geothermal’s Role in a Future Nuclear Mix

The Philippines already has a major source of steady renewable power: geothermal energy. DOE statistics list 1,952 MW of geothermal installed generating capacity in 2024. Geothermal generation reached 10,789 GWh in 2024.

This matters for the SMR discussion because many people describe nuclear as “baseload,” meaning it can run day and night. In the Philippines, geothermal already provides a similar kind of steady output in many areas. The challenge is that geothermal expansion depends on location, drilling success, and up-front exploration risk.

This is why planners often look at a mix. They can expand renewables like geothermal, hydro, wind, and solar, while adding storage and grid upgrades. They can also evaluate nuclear for future reliability needs, especially if coal plants retire over time.

For the U.S. side, the near-term goal is clear. It wants U.S. designs and services to be part of the shortlist. For the Philippines, the task is also clear. It must match any technology choice to national needs, grid limits, safety rules, and long-term affordability.

• READ MORE: What is SMR? The Ultimate Guide to Small Modular Reactors

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