By Maiko Nakashima

June 18, 2021 - Japanese oil industry lobby group the Petroleum Association of Japan (PAJ) is opposing the introduction of a carbon tax in Japan, as higher energy costs will hamper research and development efforts to achieve the country's 2050 decarbonisation goal.

The Japanese government is discussing the implementation of a carbon tax as one of the measures under its carbon pricing scheme, as well as a carbon emission-trading system, to accelerate the country's energy transition by encouraging firms to lower CO2 emissions.

But the PAJ insists that a carbon tax will pressure the country's efforts to achieve net-zero greenhouse gas emissions by 2050, in turn lowering the global competitiveness of Japan's industrial sectors.

Japan already has a tax in place for petroleum and coal, and the government added a global warming mitigation tax to the system in October 2012. These taxes add up to ¥2,800/kilolitre ($25/kl) for crude and oil products, ¥1,860/t for LNG and LPG, and ¥1,370/t for coal.

The Japan Business Federation Keidanren, the country's most influential business group, supports the PAJ's stance as it is in line with its green growth strategy, suggesting also that the government examine existing taxes when considering the carbon tax.

PAJ also pointed out "unfairness" in taxes imposed on oil-fuelled cars but not electric vehicles (EVs). EVs are currently not subject to road fuel taxes in Japan.