NCPA - National Center for Policy Analysis


April 2, 2010

Prime Minister Yukio Hatoyama would play a cruel joke on Japan's economy if he succeeds in passing the carbon-emissions-regulating climate change bill the Diet is currently considering.  Cap-and-trade or more carbon taxation isn't a good idea for Japan, by any measure, says the Wall Street Journal. 

Hatoyama's cabinet approved on March 12 a law establishing a framework for carbon emissions cuts, and the full Diet could vote on it within the next few months: 

  • The mid-term target -- that 25 percent cut by 2020 -- is conditional on other countries adopting their own emissions reductions.
  • But the long-term target of a draconian 50 percent cut in emissions by 2050 would not be conditional on anything.
  • As to how these cuts would be enforced, expectations run toward a combination of domestic cap-and-trade, carbon taxes and subsidies for renewable energy. 

Here's why companies aren't laughing: Japanese industry already is highly efficient.  Partly that's because Japan Inc., which imports almost all of its oil, was chastened by its experience during the 1970s-era oil crises, and partly due to earlier rounds of costly government regulations, says the Journal: 

  • As of 2006, to produce one kilowatt hour of electricity France used 2 percent more energy than Japan; the United States, 13 percent; China, 32 percent; and India, 41 percent.
  • The same is true of cement clinker (the stuff that's ground down to cement), and many other products, ranging from industrial chemicals to paper (though with paper Germany is 15 percent more efficient than Japan). 

The flip side of this situation is that Japan has few ways to eke more energy efficiency out of the economy, says the Journal: 

  • If all Japanese steelmakers adopted all of the most energy-efficient methods currently available for commercial use, the industry would cut its emissions by only 0.07 tons of carbon dioxide per ton of steel.
  • Adopting those same technologies across China's entire steel industry, by contrast, would cut its emissions by 0.48 tons of carbon dioxide per ton of steel, and the United States and European Union would each cut emissions by around 0.15 tons. 

So Japanese companies would have to spend big wads of yen to comply with Hatoyama's carbon dream, says the Journal. 

Source: Joseph Sternberg, "Japan's Carbon Hara-Kiri: A self-inflicted blow to Japanese industry, largely for political gain," Wall Street Journal, April 1, 2010.


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