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Business of climate change
OpinionComment
Yoshihiro Sakai
Yoshihiro Sakai

The View | How Japan’s carbon neutrality goal could destroy its economic recovery

  • Vehicle exports keep Japan’s economy afloat, but new regulations could put a million jobs and Japan’s trade surplus at risk
  • Calculating the environmental impact of a car’s entire life could cripple carmakers unless the government changes Japan’s energy mix

Reading Time:4 minutes
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Employees work on a Yaris car at the Toyota car factory in Onnaing, northern France, on April 28, 2020. Photo: AP
Yoshihiro Sakai

Akio Toyoda, the CEO of Toyota and chairman of Japan Automobile Manufacturers Association, has appealed several times in the past year for Japan to increase its use of sustainable energy as soon as possible.

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He cautioned that Japan could lose up to 1 million jobs in the automobile industry because of its pledge to be carbon neutral by 2050 without any practical proposals to change the energy generation portfolio. Toyoda is concerned about preserving jobs in Japan because carmakers could transfer production outside Japan if the government doesn’t change its plans.

Japanese carmakers have established global production and sales infrastructure to remain viable since the yen started appreciating in 1985. Their production volume outside Japan is twice that in Japan. They do not have to follow the Japanese government if its economic recipe is nonsense.

The strong ties between the Japanese government and corporations have made many industries strong and afforded Japanese people a high quality of life. The automobile industry is a textbook example of a sector that received powerful support from the government in the 1960s, which led to Japan’s economic miracle of rapid growth.

This approach reached its peak during the “bubble economy” era. Japan expected that the yen might become the world’s key currency together with the US dollar because the United States became a net debtor in 1985 for the first time since World War I.
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But the Japanese dream evaporated quickly as the bubble burst, and Japan dived into the lukewarm water that could boil it to death in the future. Its semiconductor, personal computer, home appliance, shipbuilding and mobile phone industries have lost competitiveness in the global market.
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