The Liberal Democratic Party (LDP) has begun to discuss concrete measures to achieve the Japanese government’s decarbonization goal. A change in the industrial structure may create a fluid employment situation in the automotive and other industries. The LDP plans to include related budgetary and tax proposals in its platform for the Upper House election next summer.
If industries insist on maintaining the current employment structure, human resources will not shift to growth fields. The government is faced with a difficult situation. Compared to the Suga administration, the Kishida administration seems to have less momentum for decarbonization measures. This is why the LDP’s actions are attracting attention.
On Dec. 14 at LDP headquarters, the LDP Research Commission on Environment and Global Warming Countermeasures held its first meeting since the launch of the Kishida administration. Commission chairperson Inoue Shinji said, “I would like to put together a proposal by May or June next year so that it can be reflected in the Basic Policy on Economic and Fiscal Management and Reform and our party platform for the Upper House election.”
In October 2021, the government finalized the basic energy plan, which provides the framework for achieving the decarbonization target. Communication with organizations that support the LDP will become more important when implementation gets underway.
The biggest issue is employment. For example, the automotive industry employs about 5.5 million people including those in related businesses. A gasoline-powered car has about 30,000 parts. According to the Ministry of Economy, Trade and Industry (METI), electric vehicles (EVs) have 40% fewer parts than gasoline-powered vehicles. Having fewer parts will hurt employment.
The LDP will also solicit opinions from industries that use internal combustion engines, such as outer space and fisheries.
Even after the advancement of EVs, there will still be industries that use internal combustion engines as a core technology. The research commission will discuss whether technology transfer and employment retention are possible. The commission aims to realize budget measures including subsidies for companies promoting decarbonization.
The tax system is also an issue. The ruling parties included the carbon tax as an issue to be considered in the ruling parties’ outline of tax reforms, which was finalized this month.
A carbon tax is levied on companies according to the amount of emissions associated with their products and services. Industries with high emissions will have a higher tax burden. The research commission will seek to find common ground by soliciting opinions from sectors and companies that are very cautious about the carbon tax, such as the steel industry and small and medium-sized enterprises.
There will be an Upper House election next summer. Industry groups influence the proportional representation segment of the election, so building good relationships with the groups is essential.
Prime Minister Kishida Fumio mentioned decarbonization as a pillar of Japan’s growth strategy in his Dec. 6 policy speech. The research council will support this effort.
The creation and growth of new industries also requires the transfer of labor from existing industries. The industrial structure will not change if maintaining employment is prioritized in anticipation of the Upper House election out of consideration to companies that will be negatively affected by decarbonization measures.