Japan Starts Deliberations on How to Price (or Tax) Carbon

March 29, 2021|Carbon Price


Pricing of carbon is expected to have a considerable impact on Japan’s energy strategy today and in the future. The task of how to price carbon has fallen to a newly created 10-member expert panel, that has embarked on a quick series of meetings to debate the issue, vowing to consider four major options – including the creation of a completely new carbon pricing mechanism in Japan.

The outcome of the debates, due to be submitted to the government before the year-end, will impact the cost of business for power generators, LNG and oil importers, and domestic manufacturers, among others.

The panel has started its work by closely examining Japan’s existing carbon taxes, which already collect the world’s third-highest state revenue from carbon levies. It is also looking carefully at the option of building on Japan’s existing offset schemes, which could serve as a component for more comprehensive regulation.

With U.S. and EU governments also considering more carbon-related penalties, and China last month launching a nationwide cap and trade carbon market, Japan knows that delay in action at home risks having its industry subsumed by regulation from overseas.

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