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CO2 emissions down 0.3% in FY2019 thanks to environment tax, estimates environment ministry

On May 7, the Ministry of Environment (MOE) announced its provisional calculation of the reduction of greenhouse gas emissions in fiscal 2019 resulting from the “tax for global warming countermeasures.” The tax led to an increase in fuel prices, which drove down corporate demand for energy. CO2 emissions decreased by 3.2 million tons as a result. There was a 0.3% decrease in overall emissions from energy sources.

 

The calculation was released at an experts subcommittee meeting on carbon pricing. The tax is levied on the volume of  coal, petroleum, and other fossil fuels consumed, at a rate of 289 yen per ton of emissions. The government gained annual tax revenues of about 260 billion yen. Some of these revenues were used to subsidize the introduction of equipment for renewable energy and energy conservation. Such subsidies were estimated to have led to a 35.5 million ton reduction in carbon emissions in FY2019 alone.

 

This tax, a type of carbon tax levied on emissions of greenhouse gases, is expected to promote decarbonization. Japan’s current carbon tax rate is one to two orders of magnitude lower than those of European countries, and its emissions reduction effect is limited.

 

The Ministry of Economy, Trade and Industry (METI) and MOE each have held discussions about introducing carbon pricing, including a carbon tax, to realize the government’s goal of reducing greenhouse gases to net zero by 2050. Some are cautious about introducing carbon pricing, saying that it “will not promote growth.” The government plans to announce its course of action before the end of 2021.

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