After nearly three years promoting energy transition finance, next month Japan will finally issue sovereign transition bonds for the first time. Officially known as Japan Climate Transition Bonds, they’re popularly known as “GX bonds”. The goal is to raise up to ¥20 trillion over 10 years through this new instrument to support areas of the energy transition not covered by the more specific ‘green bonds’.

The debut of the GX bonds would be the first time any country issues such a financial instrument with international third party verification. If successful, Japan will set a precedent for countries in Southeast Asia and elsewhere to raise funds for decarbonization projects outside of the traditional green sectors, such as renewables.

The bond sale faces obstacles, however. Those investors most interested in financial products linked to decarbonization tend to focus on activities that are widely accepted as “green” across the various national taxonomies. Japan’s emission reduction strategy, however, relies in part on new technologies such as ammonia-firing at coal power plants. That approach is under heavy criticism from environmental groups and some energy consultancies like BNEF, which see it as a means to prolonging the use of coal.

As Japan’s finance ministry prepares the first two tranches of GX bonds (a 10-year and then a 5-year note), PM Kishida’s government will need to “sell” its energy strategy to a largely skeptical international investor community. That’s further complicated by uncertainty around the future course of the yen and the inevitably low yields of Japanese sovereign bonds.