Last week, Prime Minister Fumio Kishida announced a ¥29 trillion economic package to fight inflation, centered mainly on the energy sector, that will supposedly save every household in Japan about ¥5,000 a month on their utility and gasoline bills. As part of this plan, the government said it would expand its existing subsidies to gasoline wholesalers and others in order to check the price at the pump, thus effectively placing the administration’s carbon neutral policy on hold, though, according to an Oct. 30 article in the Nihon Keizai Shimbun, no one has actually come out and said this, including bureaucrats in the Ministry of the Environment and most mainstream media outlets.
As the Nikkei reporter, Junya Iwai, points out in the article, inflation aligns with the ministry’s fundamental carbon neutrality policy, since higher prices for gasoline would compel consumers to shift away from internal combustion engines to electric vehicles and other forms of transportation that don’t use fossil fuels. However, the current administration is worried about falling support rates and thus believes it has to be seen as doing something about inflation, especially given that imported oil is subject to exchange rate fluctuations and the yen’s value has been historically low in recent months. The subsidies are meant to reduce retail gasoline prices and thus bolster consumer confidence, and since the Cabinet as a whole has promoted these measures, the environmental ministry has to go along with them, even if they go against their own fundamental policy. The new environmental minister, Akihiro Nishimura, has said virtually nothing about the matter.
The gasoline subsidy plan, in fact, was supposed to end last March, but it has subsequently been extended several times. As a result, fossil fuel consumption has increased, thus confounding the environmental ministry’s aims. Iwai says that there are bureaucrats within the ministry who are very critical of the government’s continued use of gasoline subsidies to increase public support for the administration, since they think the longer the subsidies last, the longer it will take for Japan to reach its carbon-neutral goals. Iwai himself comments that subsidies like the one being used to bring gasoline prices down usually are only implemented on a temporary basis because the end game is predictable. However, as the subsidies continue to be renewed and even expanded, there’s a danger they will become “normalized.” As it stands, the budget for the gasoline subsidies has already reached ¥3 trillion. In contrast, the environmental ministry’s budget for subsidizing carbon neutral policies at the local level is only ¥20 billion on an annual basis. Moreover, the ministry’s request for money to fund home insulation improvement and further energy conservation measures has hit a wall of passive resistance in the government.
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