RPT-Japan's new carbon tax to cost utilities $1bln annually

Wed Oct 10, 2012 6:30am EDT

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(Repeats to fix tabulation, no changes to text)
    By Risa Maeda
    TOKYO, Oct 10 (Reuters) - Japan's new tax on carbon
emissions will cost utilities about 80 billion yen ($1.02
billion) annually from 2016, adding to their already high costs
of running power stations after the Fukushima crisis shut most
of the country's nuclear plants, a government backed think-tank
said.
    Japan will gradually phase in the tax on oil, natural gas
and coal over the next five years, in a move that will hit the
balance sheets of businesses from refineries and power plants to
factories and gas stations.
    The tax will be added to existing levies already imposed on
fossil fuels, and will generate about 260 billion yen in
additional revenue annually from April 2016, the Ministry of
Finance says.
    The tax, which will be used to fund green initiatives, will
be introduced in three phases, with the first increase adding
between 12-31 percent on existing levies.      
    Yu Nagatomi, a researcher at the Institute of Energy
Economics of Japan, said nearly a third of the 2016 revenue, or
80 billion yen, will come from the country's power companies,
including Tokyo Electric Power Co (Tepco), the operator
of the Fukushima Daiichi plant hit by three reactor meltdowns
last March. 
    The remainder will be paid by other primary users of fossil
fuels.
    Utilities have mostly funded their energy purchases through
debt, and have avoided passing on the cost to consumers, except
for Tepco which was nationalised this year, but the new taxes
could force a change of heart.
    "The government must reconsider the environment tax,
including the advisability of raising tax rates in future," the
English-language version of the Daily Yomiuri, Japan's best
selling newspaper, said in an editorial on Wednesday.    
    Kansai Electric Power Co and other regional
utilities are mostly reporting losses, yet have not sought the
required government permission to raise tariffs.
    "It's time for an open and honest discussion of who is going
to pay for the increased fuel bills," said Nagatomi.
    Nippon Keidanren, the country's biggest business lobby, last
week called on the government to rethink the new tax because it
raises energy costs further and might push companies to move
operations to countries that regulate carbon emissions less.
    Japan has no immediate plan to review the new levies, a
trade ministry official said on Wednesday.    
    The Federation of Electric Power Companies of Japan, which
represents the country's 10 big power utilities, has no plan to
make a representation on the new tax, a federation spokesman
said.
    Almost 30 percent of Japan's energy needs were met by the
country's 50 nuclear reactors until last year's earthquake and
tsunami caused the meltdowns at the Fukushima Daiichi plant,
resulting in a backlash against atomic power.
    Prime Minister Yoshihiko Noda's cabinet last month took
account of anti-nuclear sentiment in devising a new energy
policy that sought to end reliance on nuclear power by the 2030s
by fostering renewable energy sources and supporting energy
conservation.     
    A nationwide safety shutdown of the country's nuclear power
plants since last year has added an estimated 3.1 trillion yen
to the cost of importing fuel for oil, gas and coal power
stations in the 12 months through March next year. 
    Below are the details of the new taxes being introduced in
three phases from this month. The CO2 tax is being added to
existing levies on fuels. Figures are in yen.
    
Fuel type         Standard tax  Oct 2012   Apr 2014   Apr 2016
Crude, oil products   2,040       +250       +250       +260
per kilolitre                    2,290      2,540      2,800
LNG, LPG              1,080       +260       +260       +260
per tonne                        1,340      1,600      1,860 
Coal                    700       +220       +220       +230
per tonne                          920      1,140      1,370
($1 = 78.1850 Japanese yen)

 (Reporting by Risa Maeda; Editing by Aaron Sheldrick and Jeremy
Laurence)
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