Photo/Illutration Masakazu Tokura, chairman of Keidanren (Japan Business Federation), speaks at a news conference in Tokyo on April 26. (Asahi Shimbun file photo)

A large chunk of the carbon dioxide emissions produced by human activities that is causing global warming stems from business operations. Who should pay for the cost of tackling this problem and how?

The business community has the responsibility to address this question and shoulder a fair share of the burden of dealing with the challenge.

Keidanren (Japan Business Federation) has announced a set of proposals to reform the nation’s taxation system. In regard to issues concerning carbon reduction, the country’s most powerful business lobby calls for expanding tax incentives to promote capital investment for cleaner operations.

But the group has demurred at the idea of a carbon tax, a fee imposed on companies that spew out CO2 by burning carbon-based fuels, saying the levy cannot be regarded as reasonable at this moment.

This stance is in line with Keidanren’s consistent opposition to the full-scale introduction of a carbon tax. The organization argues that the tax would reduce corporate funds for investment and undermine Japanese industries’ international competitiveness by pushing up energy prices.

The body also contends that the measure would not necessarily be effective in curbing CO2 emissions.

All these claims are far from convincing.

A carbon tax is a market-oriented system to reduce CO2 emissions by putting a direct price on emissions to require businesses and consumers to pay for the social cost. It works by raising the prices of products and technologies with high environmental impacts as a financial incentive to reduce the carbon footprint.

The idea, along with emissions trading, has been widely recognized as an effective approach to slashing greenhouse gas emissions efficiently and a growing number of countries have been adopting the measure.

Businesses committed to carbon reduction should not oppose a carbon tax on the grounds that it would lead to cuts in corporate investment and make Japanese industries less competitive.

That is because continuing investment in technologies with massive environmental impacts to maintain international competitiveness in the area should not be part of the future vision for the Japanese economy.

Moreover, the government is working on a large policy package to encourage private-sector investments for the nation’s shift toward a low-carbon society. The government says the package will be financed by debt, for the time being.

This initiative has been launched in response to Keidanren’s own proposal made this spring. A carbon tax is one of the potential revenue sources to pay back the debt in the future.

While seeking huge debt-financed policy support from the government, Keidanren has ignored the question of revenue sources and continued dodging serious and meaningful debate on a carbon tax.

The business community is partly responsible for Japan’s delayed efforts to prune its carbon footprint. Keidanren is acting in an irresponsible manner by focusing only on short-term profits.

As for international competition, the current global race to cut carbon emissions offers a great opportunity to nurture new growth industries.

To push Japan Inc. toward seizing this opportunity, it is urgently needed for the government to design and adopt specific carbon pricing systems including a carbon tax.

Given the policy challenges involved in this approach, including working out transition support for industries that would be greatly affected and securing consistency with the existing tax system, the time for sidestepping the issue has run out.

Keidanren’s stance toward carbon pricing seems to reflect the huge clout that heavy and energy industries have within the organization.

Keidanren Chairman Masakazu Tokura, however, has repeatedly stressed the group’s social responsibility since he assumed the post last year. The issue of a carbon tax is testing his commitment to the cause.

--The Asahi Shimbun, Sept. 22

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