The report assesses Japan’s progress since the previous OECD Environmental Performance Review in 2002.

It analyses the extent to which the country has met its national objectives and international commitments regarding climate change, biodiversity conservation, waste and materials management and, more generally, the management of its environment and natural resources.

Japan has managed to make some progress on improving the environment, particularly in the areas of energy use, air emissions, water abstractions and municipal waste generation.

However, greenhouse gas emissions and generation of non-municipal waste have grown, pressures on nature and biodiversity have intensified, and air and water pollution remain of concern in some areas.

Following a period of modest economic growth, Japan’s economy was severely hit by the 2008-09 global economic downturn. The anti-crisis fiscal stimulus package included several environment-related measures, which amounted to approximately 16% (US $28 billion) of its budget.

OECD Secretary-General Angel Gurría commends Japan for addressing environment as part of the response to the economic and financial crisis.

The report also notes, however, that the stimulus package includes support for agriculture and for the car industry which could have negative effects on the environment and distort competition.

Reforming the environmental policy mix is necessary, Mr. Gurría said: “In its 2011 tax reform Japan should make more use of market- based 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.”

The report recognises that Japan’s industries are among the most energy efficient in the world and greenhouse gases emitted by the transport sector dropped 12% over the past decade. It has also reduced the amount of landfill waste despite a rise in consumption.

However, Japan is far from its Kyoto Protocol targets. Only 3% of Japan’s energy is from renewable sources and electricity consumption in homes and businesses has been growing steadily.

The OECD review says more must be done to reduce reliance on fossil fuels and to achieve Japan’s climate targets more efficiently. The review recommends putting a consistent price on carbon through a mandatory cap-and-trade scheme in combination with a carbon tax.

Alison Brown

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