Wednesday, November 24, 2010

No. 64: Subsidy for the introduction of low-carbon equipment (November 25, 2010)

The Ministry of Economy, Trade and Industry will establish a new system to provide a subsidy to medium-sized companies that introduce equipment like a boiler capable of reducing carbon dioxide emissions. The subsidy is proportionate to the emissions and scheduled to be 3,000 yen per ton that is about two times as much as the price for the international transaction. A medium-sized company gets the amount equivalent to the reduction of two years when it introduces the equipment. The government wishes to promote the introduction of low-carbon equipment and stimulate domestic economy simultaneously. It projects to create the investment effect of at least 30 billion yen and the reduction of carbon dioxide of about 500,000 tons for two years.

The equipment subject to the subsidy is such low-carbon equipment as city gas boiler and heat pump that has great effect on the reduction of carbon dioxide emissions. The current price of emission trading is about 1,500 yen per ton, and the government plans to set the price at 3,000 yen to stimulate investment will of medium-sized companies. If a company introduces a biomass boiler of about 10 million yen, it can get a subsidy of 1,200,000 yen because carbon dioxide emissions will be reduced by 400 tons in two years. The government will aggregate the emission quotas purchased from medium-sized companies and put them together into large quotas for the sales to power companies and steelmakers.

Many large Japanese companies currently purchase emission quotas from China and East European countries, creating the problem of outflow of capital to foreign countries. Medium-sized companies account for about 13% of Japan’s total emissions, but many of them are hesitate to make an investment on environment because of heavy financial burden. The government wishes to play an interface role between big companies and medium-sized companies.

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