TOKYO (Kyodo) -- The Japanese government said Friday it expects to obligate 300 to 400 major firms to participate in a full-fledged carbon emissions trading system to be introduced in the fiscal year starting April 2026.

The tally has come up as the government plans to set a threshold for companies subject to joining the emissions trading scheme at those releasing 100,000 tons of carbon dioxide or more a year, around the same level as the European Union and South Korea with similar systems, the government said.

With hundreds taking part from a broad range of industries such as electricity, steel, cars and airlines, the system is estimated to cover about 60 percent of domestic greenhouse gas emissions. Japan is the world's fifth-largest CO2 emitter.

Under the trading system, emissions quotas will be allocated to each company for free. If a company's emissions surpass its quotas, it must purchase additional quotas at the market, while a company with surplus quotas can sell them like stocks.

While the system is expected to encourage emissions cuts, companies could pass on the costs, burdening consumers.