Japan

JP-5:Fiscal incentives for energy efficiency

Policy Description

In the industrial sector, Japan has implemented a tax system to promote investment in energy efficiency technology.

Description

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. [1] [3]

 

This system applies to high-energy saving and high-efficiency equipment. The list of equipment items covered by the Taxation System for the Energy Reform can be found in the following document: [3].

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 Categorisation

Policy Instrument Type: Economic, Incentives & Subsidies

Position in the Pyramid

About Us

Participation: Voluntary

Period

Start Date: 1978

Policy Linkages

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

Agencies Responsible

New Energy and Industrial Technology Development (NEDO)
Ministry of Environment

Primary Objective: Energy

Objective

Increase cost-effectiveness of investments in energy efficiency

Target Group

Industry

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.

Coverage

-

Quantitative Target? no

Progress Monitored? yes

Verification Required? no

Enforced? no

Requirements on the Target Group

Not available

Support by Government

Contribution from the state budget in the form of reduced tax revenues

Implementation Toolbox

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
Other Benefits
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

References

[1] Energy Policies of IEA Countries. 2008 Japan Review. OECD/IEA.

[2] 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

[3] 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