The Environmental Agency, the predecessor of the Ministry of the Environment, proposed introducing a carbon tax in 1998. Subsequent discussions, mainly led by the Environmental Agency (Ministry of the Environment), resulted in the introduction of the “Global Warming Countermeasures Tax” in 2012, with a carbon tax of 289 yen/t-CO2 being imposed after the phase of gradual increase. Even after the introduction of the Global Warming Countermeasures Tax, discussions on carbon pricing continued, mainly within the Ministry of the Environment's advisory councils.
From February 2021, discussions on carbon pricing began at the Ministry of Economy, Trade and Industry (METI)'s "Study Group on Economic Approaches for Realizing Global Carbon Neutrality" and from October 2022, at the Cabinet Secretariat's "Green Transformation (GX) Implementation Council". Prime Minister Kishida's proposal of "Growth-Oriented Carbon Pricing ", combining "Specific Business Operator Burden Fee" from paid auctions of Emissions Trading (GX-ETS) and "Fossil Fuel Levy" at the 3rd GX Implementation Council meeting in October 2022 drew attention to the “Fossil Fuel Levy” (also known as a carbon levy), a mechanism similar to a carbon tax.
The Fossil Fuel Levy is scheduled to be introduced in FY2028 and will be used to raise funds for the GX Economic Transition Bonds. It targets fossil fuel import companies and is expected to start with a low initial burden and a gradual increase. Unlike a general carbon tax (e.g. Global Warming Countermeasures Tax) the Fossil Fuel Levy is not classified as a tax. A Carbon Tax, defined as a "tax" by law, requires legislative changes and approval by the Diet for any rate changes. In contrast, the Fossil Fuel Levy is stipulated in the GX Promotion Law, with the unit price for each fiscal year determined by Cabinet Order. According to a METI document, the Fossil Fuel Levy unit price and Specific Business Operator Burden Fee will be introduced based on the premise that "the total burden on energy will decrease over the medium to long term … taking into account that oil and coal tax revenues will decrease in the future due to the progress of GX and that the total renewable energy levy will peak after a decrease in the purchase price of renewable energy electricity.”
The Environmental Agency, the predecessor of the Ministry of the Environment, proposed introducing a carbon tax in 1998. Subsequent discussions, mainly led by the Environmental Agency (Ministry of the Environment), resulted in the introduction of the “Global Warming Countermeasures Tax” in 2012, with a carbon tax of 289 yen/t-CO2 being imposed after the phase of gradual increase. Even after the introduction of the Global Warming Countermeasures Tax, discussions on carbon pricing continued, mainly within the Ministry of the Environment's advisory councils.
From February 2021, discussions on carbon pricing began at the Ministry of Economy, Trade and Industry (METI)'s "Study Group on Economic Approaches for Realizing Global Carbon Neutrality" and from October 2022, at the Cabinet Secretariat's "Green Transformation (GX) Implementation Council". Prime Minister Kishida's proposal of "Growth-Oriented Carbon Pricing ", combining "Specific Business Operator Burden Fee" from paid auctions of Emissions Trading (GX-ETS) and "Fossil Fuel Levy" at the 3rd GX Implementation Council meeting in October 2022 drew attention to the “Fossil Fuel Levy” (also known as a carbon levy), a mechanism similar to a carbon tax.
The Fossil Fuel Levy is scheduled to be introduced in FY2028 and will be used to raise funds for the GX Economic Transition Bonds. It targets fossil fuel import companies and is expected to start with a low initial burden and a gradual increase. Unlike a general carbon tax (e.g. Global Warming Countermeasures Tax) the Fossil Fuel Levy is not classified as a tax. A Carbon Tax, defined as a "tax" by law, requires legislative changes and approval by the Diet for any rate changes. In contrast, the Fossil Fuel Levy is stipulated in the GX Promotion Law, with the unit price for each fiscal year determined by Cabinet Order. According to a METI document, the Fossil Fuel Levy unit price and Specific Business Operator Burden Fee will be introduced based on the premise that "the total burden on energy will decrease over the medium to long term … taking into account that oil and coal tax revenues will decrease in the future due to the progress of GX and that the total renewable energy levy will peak after a decrease in the purchase price of renewable energy electricity.”
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