Expectations for Carbon Pricing in Japan in the Global Climate Policy Context

Realizing a decarbonized society in consistent with the Paris Agreement, a fundamental transformation of the entire economic and social system is needed, and not only carbon intensive sectors but also all sectors and all stakeholders including households must be decarbonized. This chapter demonstrates increasing expectations for carbon pricing in Japan in this global policy context. After the review of the global trend of carbon pricing, historical progress of carbon pricing in Japan and the existing nation-wide carbon tax, i.e. the Global Warming Countermeasure TaxGlobal Warming Countermeasure Tax, is explained. There are also two sub-national carbon pricing schemes in Japan, Tokyo ETS and Saitama ETS, which are explained in Chaps. 6 and 7 respectively, and not focused in this chapter. We examine the claim that Japan has already implemented high level carbon pricing in terms of various forms of energy taxes. Based on the effective carbon rateEffective carbon rates which is defined by OECD as the sum of explicit carbon pricesExplicit carbon price and fossil fuel taxes per carbon emission, the nationwide average effective carbon rateEffective carbon rates of Japan is lower than the average effective carbon ratesEffective carbon rates of OECD countries and its key partner countries. The current carbon pricing schemes in Japan are too modest to realize decarbonizationDecarbonization transition and there is a room to upgrade them to exploit full potential of carbon pricing. This chapter discusses adequate levels of carbon prices in compatible with decarbonizationDecarbonization transition.