CO2 goal could cost households big

Kyodo News

Japan’s efforts to cut greenhouse gas emissions could cost households ¥130,000 to ¥765,000 a year, a task force said Tuesday.

The financial burden will come in the form of estimated declines in disposable income. Prime Minister Yukio Hatoyama has pledged a goal of slashing emissions by 25 percent from 1990 levels by 2020 without purchasing emissions credits from foreign countries.

The previous administration estimated that a 25 percent cut would cost each household at least ¥360,000 a year.

Hatoyama’s predecessor, Taro Aso, had set a more modest target of 8 percent. The new administration has since re-examined the economic impact of the more ambitious goal.

The task force, headed by Kazuhiro Ueta, a professor of environmental economics at Kyoto University’s Graduate School of Economics, compiled the new estimates under various scenarios.

Think tanks that comprise the governmental task force came up with the new figures based on an assumption that the economy will expand 1.3 percent a year.

But they set different preconditions regarding how to use revenues from an environment tax which would be introduced by the administration to implement the 25 percent cut goal.

The scenarios involved returning tax revenues to households in a lump sum, using the money for policies to help achieve the emissions reduction, and allocating tax revenues to repayment of the national debt.

The task force also showed that financial burdens on households will be smaller if Japan tries to meet its goal through a combination of domestic efforts, purchasing emissions credits from abroad and forest absorption.

One combination model had the hit on disposable household income at ¥30,000 to ¥280,000 a year, according to the experts.