JP-5:Fiscal incentives for energy efficiency
In the industrial sector, Japan has implemented a tax system to promote investment in energy efficiency technology.
In the industrial sector, Japan has implemented a tax system to promote investment in energy efficiency technology. This system allows individuals and corporations to claim a tax credit or a flexible depreciation for eligible equipment. The tax credit is equivalent to 7% of relevant equipment acquisition costs to be deducted from the corporate tax amount and the special depreciation covers 30% of the equipment acquisition cost in the initial year.  
Policy Information Expand this section for information on the key features of the policy, such as its date of introduction, categorization, main objective(s) and linkages with other policies.
Policy Instrument Type: Economic, Incentives & Subsidies
Position in the PyramidAbout Us
Start Date: 1978
|Supported By||Keidanren Voluntary Action Plan (VAP) (ENDED)||Effort Defining|
|Supported By||Mandatory energy efficiency benchmarking in industry||Effort Defining|
|Supported By||Japanese Voluntary Emissions Trading Scheme (JVETS)||Effort Defining|
New Energy and Industrial Technology Development (NEDO)
Ministry of Environment
Primary Objective: Energy
Increase cost-effectiveness of investments in energy efficiency
Driver of energy consumption or emissions affected by policy: Technology implementation rate (of efficient technologies)
Implementation Information Expand this section for information on targets, monitoring, verification and enforcement regimes, and implementation requirements and tools.
Quantitative Target? no
Progress Monitored? yes
Verification Required? no
Requirements on the Target Group
Support by Government
Contribution from the state budget in the form of reduced tax revenues
The most important tool providing support to the implementation of this policy is the guidance for claiming a tax credit or a flexible depreciation for eligible equipment.
Impacts, Costs & Benefits Expand this section to find information on policy effectiveness and efficiency.
|Impact||Quantitative Estimate||Qualitative Estimate|
|Estimated effect on energy consumption or emissions||Not available||Not available|
|Estimated costs/benefits for industry||Not available||Not available|
|Estimated cost for government||Not available||Not available|
|General Benefits||Reduced GHG emissions as well as of other energy-related pollutants, less reliance on imported fossil fuels, cost reduction of production|
|Specific Benefits||Increased availability and reduced cost of capital for energy efficiency investment. Incentive for improved condition for energy efficiency commercial financing, Increased cost-effectiveness|
References & Footnotes
 Energy Policies of IEA Countries. 2008 Japan Review. OECD/IEA.
 Energy Conservation Centre / Asian Energy Efficiency and Conservation Collaboration Centre. http://www.asiaeec-col.eccj.or.jp/st-takes/pdf/jpn/2_1_a.pdf
 The Agency for Natural Resources and Energy /The Ministry of Economy, Trade and Industry / The Energy Conservation Center of Japan "Questions & Answers for Application of the Taxation System for Promoting Investment in the Reform of the Energy Supply and Demand Structures" http://www.asiaeec-col.eccj.or.jp/brochure/pdf/qanda.pdf