Energy / Climate Change

January 4, 2013


Japan Introduces New Tax on Carbon Emissions

Keywords: Climate Change Government Policy / Systems 

The Japanese government introduced on October 1, 2012, a tax for reducing carbon dioxide (CO2) emissions from fossil fuels used in thermal generation, automobiles, and the like, thereby enhancing national measures for combating global warming. The tax requires all people to equitably share the burden of alleviating the environmental impacts that arise from all types of fossil fuels, such as oil and petroleum products (e.g., gasoline), natural gas, and coal, according to the amount of CO2 each type emits..

The tax rate will be incrementally increased up to 289 yen (US$3.7) per ton of emitted CO2 in three stages for three and a half years; the initial rate will be one-third of the 289 yen. Each household will eventually bear an average cost of about 100 yen (US$1.3) per month by fiscal year 2016 .

The tax revenue will be used exclusively for efforts to mitigate global warming, for example for enhancing energy conservation measures including government assistance for installing energy efficient equipment for small and medium-size enterprises, developing next-generation rechargeable batteries, and introducing renewable energy infrastructure suited to the characteristics of each region.

In addition to disincentivizing polluting activities, using the tax revenue for other measures such as promoting energy conservation and the deployment of renewable energy sources is expected to act as double effect for reducing emissions.