The Tokyo Stock Exchange (TSE) started trading carbon credits on Wednesday, a key element in the world's fifth-largest carbon dioxide (CO2) emitter Japan's strategy to tackle climate change.

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Following similar steps in other major economies, Japan began introducing a carbon pricing scheme in stages from April this year to encourage companies and cities to curb emissions and achieve its goal of carbon neutrality by 2050.

Via the new market, registered members can trade the existing carbon credit, known as J-Credit, on the TSE, a unit of Japan Exchange Group Inc (8697.T).

Under the J-Credit system, the government certifies as a "credit" the amount of greenhouse gas emissions, such as CO2, reduced or removed through efforts to introduce renewable energy or energy-saving equipment or managing forests.

The credit had been traded individually between companies and other organisations, but it was difficult for them to find buyers or sellers on their own.

The new TSE market will make it easier for companies to buy and sell credits and provide transparency in carbon pricing, according to a TSE official.

A total of 188 entities had registered as participants as of September 19.

Trading hours are 9:00-11:29 a.m. (0000-0229 GMT) and 12:30-2:59 p.m. (0330-0559 GMT). Transaction prices are set twice a day and published after trading hours.