“Carbon price” measures and the country’s competitiveness

“Carbon price” measures and the country’s competitiveness

          Carbon tax and carbon credit exchange measures (often collectively referred to as “carbon pricing”) are important economic measures to mitigate greenhouse gas emissions. These measures are tools that aim to reduce the distortion in resource allocation due to the external effects of greenhouse gas emissions on the environment by forcing enterprises to share external costs in accordance with the “Polluter Pays Principle.”

          Carbon price measures encourage operators to embrace cleaner technologies over time, as long as carbon-derived fuels are used. This is because they have to pay carbon taxes or buy carbon credit. Therefore, in addition to the short-term stimulating effects on switching to alternative energy with lower carbon, it also promotes the production of electricity from natural gas instead of coal and encourages car users to use gasohol as a replacement for regular gasoline.

          In the longer term, the carbon price measure also provides an incentive to install more carbon-neutral, fuel-based energy systems, such as solar and wind power. This includes switching to more energy-efficient products, such as eco-cars and electric vehicles to reduce the carbon price.

          Since the carbon price measure increases costs for operators, it may affect their competitiveness at the international level. Therefore, negotiations have been made to set a harmonized carbon tax rate, consistent emissions targets, and a common carbon emissions trading market for the countries in the same group.

The benefits of the introduction of carbon pricing to the organizations or businesses are as follows:

•  Facilitates the corporate assessment of climate change risks;

•  Facilitates investment decisions in new projects or low-carbon technology;

•  Promotes the reduction of greenhouse gas emissions by the organizations;

•  Prepares the organizations to deal with relevant laws or regulations in the future, such as carbon tax or ETS;

•  It is a tool used in planning and formulating the organizations’ strategies to become low-carbon or zero-carbon organizations;

•  Improves the competitiveness in the low-carbon economy or green economy in the future;

• It shows the organizations’ responsibility toward society and the environment. In the case of the projects or operations to reduce greenhouse gas emissions, the value of reduced greenhouse gasses can be expressed in monetary terms.