Energy / Climate Change

November 3, 2010


Japanese Government Proposes Leasing of Low-Carbon Equipment to Reduce GHG Emissions

Keywords: Climate Change Energy Conservation Government 

Japan's Ministry of the Environment released on June 15, 2010, a report titled, "Environmental Finance in the Future -- The New Role of Finance for a Low-Carbon Society." It proposes a number of schemes to use financing to smooth the way to reducing greenhouse gas (GHG) emissions by 25 percent, including promoting the commercial leasing of equipment that results in low carbon emissions.

In order to reduce GHG emissions, the report emphasized, it is imperative to increase the installation of low-carbon-emitting equipment in homes and businesses, but this is still at quite a preliminary stage due to a number of barriers, such as high upfront investment costs, the long payback period for new equipment, and constrained cash flows. The report stressed the importance of taking urgency action to promote specific financing approaches to reduce initial investment costs by utilizing leasing services and so on, and to provide support to leasing companies in order reduce leasing costs.

The report was compiled by the Ad Hoc Committee on the Environment and Finance, which was established in July 2009, under the Comprehensive Policy Subcommittee of the Central Environment Council, with the aim of considering ways to promote eco-friendly investment and loan schemes (environmental finance). Besides the recommendation for the government itself to utilize commercial leasing services for low-emission equipment, the report suggested three other main measures: encouragement for pension funds to make eco-friendly investments, corporate disclosure and provision of environment-related information (asset securities reports), and establishment of principles to encourage efforts in environmental finance (provisionally titled "Principles of Environmental Finance in Japan").

Ministry to Develop Japanese Principles for Environmental Finance (Related JFS article)

Ministry of the Environment official website

Posted: 2010/11/03 06:00:15 AM