Launch of the Environmental Performance Review of Japan
Introductory Remarks by Angel Gurría, OECD Secretary-General
OECD Headquarters, 16 November 2010
Mr Minamikawa, Ladies and Gentlemen
I am very pleased to have this opportunity to participate in the launch of the third OECD Environmental Performance Review of Japan. I regret that I cannot be with you personally, but Deputy Secretary-General Mario Amano is in Tokyo today. He will present the main findings and recommendations at greater length, and in Japanese. With this in mind, I will keep my remarks brief.
Since we last reviewed Japan’s environmental policy in 2002, Japan has made good progress in addressing a range of traditional environmental problems including air and water pollution, and waste management. As a result of measures taken, Japan now has one of the most energy- and materials-efficient societies in the world. Not only has Japan pursued these environment-related efforts in an adverse economic context, but identifying positive opportunities for addressing environment has been part and parcel of Japan’s response to the economic and financial crisis.
We estimate that about 16% of the total fiscal stimulus package that Japan adopted, equivalent to JPY2.9 trillion (1), was devoted to the environment – mostly for energy efficiency, renewable energy and related R&D. These measures, and Japan’s New Growth Strategy to 2020, see investment in the environment not so much as a cost to the budget, but as a new source of economic growth, jobs, and enhanced quality of life for citizens.
Relying on environment to promote economic development builds on Japan’s excellent achievements in promoting eco-technologies. Between 2000 and 2005, Japan accounted for 30% of worldwide inventions in air, water and waste management technologies. Between 2000 and 2007, Japan accounted for nearly 70% of world patents in electric cars, 50% in efficient lighting and 30% in renewable energy technologies. According to some studies, Japan has the third largest share of the global market in environmental goods and services. “Green jobs”, as estimated by the Japanese authorities, have doubled since the early 2000s.
I would like also to commend Japan for continuing to show real leadership in a variety of fields of international environmental cooperation. Most recently, Japan hosted the meeting of the Conference of the Parties to the Convention on Biological Diversity in Nagoya, where important progress was made in advancing cooperation in this area.
These achievements are impressive and of great interest to the OECD, and its member and partner countries. 18 months ago, Ministers of Economy and Finance asked OECD to prepare a Green Growth Strategy. We have to submit our final report on this to Ministers in May 2011, so your experience is both timely and relevant for the preparation of this Strategy.
In OECD environmental performance reviews, we aim to learn from such positive achievements, and also to provide some suggestions for how environmental performance could be further improved. We have identified 38 specific recommendations for Japan in this review. In view of the limited time available, I would like to emphasize just two, inter-related points.
>> First, I would say a few words about Japan’s approach to environmental policy, which is characterised by a strong emphasis on performance standards, negotiated agreements with industry, and incentives to purchase environmentally friendly products. This approach has helped Japanese industry to become a world leader in some technologies. However, it also has its limitations. It tends to focus on the manufacturing sector, and to not address other sectors where progress could be achieved, sometimes at lower cost. Such agreements tend to promote incremental change rather than the more fundamental technological changes that will be needed to address the main environmental challenges. And, finally, continued use of subsidies for environmentally-friendly products puts an additional burden on Japan’s already strained public budget.
We believe that if Japan is to overcome these limitations and to take a decisive step toward achieving its ambitious policy goals, it should make more use of market-based environmental policy instruments, such as environmental taxes, that apply to the economy as a whole: we believe they would provide a more cost-effective way of providing incentives for achieving environmental policy objectives, reduce pressure on the public budget, and further promote eco innovation. For example, better targeted fuel taxes and road charges would influence transport decision, address associated air pollution and greenhouse gas emissions, and promote the development of cleaner vehicles more effectively than incentives to purchase greener cars. Expanding pay-as-you-throw waste charges could help Japan to further reduce household waste generation, as well as to better recover the costs of municipal waste management.
>> Making use of market-based environmental policy instruments is also relevant for my second point which concerns climate change. More cost-effective policies are particularly needed in this area, if Japan is to succeed in meeting its climate targets.
Under the Kyoto Protocol, Japan adopted ambitious objectives for reducing emissions of greenhouse gases; namely to reduce such emissions by 6% compared to 1990 levels. In 2007, emissions were 9% above 1990 levels – a 15% implementation gap. The situation has probably improved as a result of the financial crisis, but emissions will probably rebound before too long.
In addressing climate change, Japan has applied various instruments, including a negotiated agreement with industry. Good progress has been made in some parts of the manufacturing sector, and in the transport sector. But in other sectors, progress is not so good. Moreover the costs of reducing emissions vary considerably among sectors -- this means that, in some cases, sectors may be paying too much for emissions reductions, while some low-cost emissions reduction opportunities are not being realised. Thus, we recommend that Japan should put a consistent price on carbon that covers the widest range of activities. This could be in the form of a mandatory emissions trading scheme, in combination with a tax on greenhouse gas emissions. This would drive investments in renewable and energy conservation more cost effectively than current policies. The current Bill on Global Warming Countermeasures is a step in the right direction, and I encourage the Diet to adopt it.
My time for this brief introduction is now over. I believe that the schedule allows time for one or two questions, which I would be happy to take now.
(1) USD28 billion