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

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By Risa Maeda

TOKYO, Oct 10 (Reuters) - Japan's new tax on carbonemissions will cost utilities about 80 billion yen ($1.02billion) annually from 2016, adding to their already high costsof running power stations after the Fukushima crisis shut mostof the country's nuclear plants, a government backed think-tanksaid.

Japan will gradually phase in the tax on oil, natural gasand coal over the next five years, in a move that will hit thebalance sheets of businesses from refineries and power plants tofactories and gas stations.

The tax will be added to existing levies already imposed onfossil fuels, and will generate about 260 billion yen inadditional revenue annually from April 2016, the Ministry ofFinance says.

The tax, which will be used to fund green initiatives, willbe introduced in three phases, with the first increase addingbetween 12-31 percent on existing levies.

Yu Nagatomi, a researcher at the Institute of EnergyEconomics of Japan, said nearly a third of the 2016 revenue, or80 billion yen, will come from the country's power companies,including Tokyo Electric Power Co

(Tepco), the operatorof the Fukushima Daiichi plant hit by three reactor meltdownslast March.

The remainder will be paid by other primary users of fossilfuels.

Utilities have mostly funded their energy purchases throughdebt, and have avoided passing on the cost to consumers, exceptfor Tepco which was nationalised this year, but the new taxescould force a change of heart.

"The government must reconsider the environment tax,including the advisability of raising tax rates in future," theEnglish-language version of the Daily Yomiuri, Japan's bestselling newspaper, said in an editorial on Wednesday.

Kansai Electric Power Co

and other regionalutilities are mostly reporting losses, yet have not sought therequired government permission to raise tariffs.

"It's time for an open and honest discussion of who is goingto pay for the increased fuel bills," said Nagatomi.

Nippon Keidanren, the country's biggest business lobby, lastweek called on the government to rethink the new tax because itraises energy costs further and might push companies to moveoperations to countries that regulate carbon emissions less.

Japan has no immediate plan to review the new levies, atrade ministry official said on Wednesday.

The Federation of Electric Power Companies of Japan, whichrepresents the country's 10 big power utilities, has no plan tomake a representation on the new tax, a federation spokesmansaid.

Almost 30 percent of Japan's energy needs were met by thecountry's 50 nuclear reactors until last year's earthquake andtsunami caused the meltdowns at the Fukushima Daiichi plant,resulting in a backlash against atomic power.

Prime Minister Yoshihiko Noda's cabinet last month tookaccount of anti-nuclear sentiment in devising a new energypolicy that sought to end reliance on nuclear power by the 2030sby fostering renewable energy sources and supporting energyconservation.

A nationwide safety shutdown of the country's nuclear powerplants since last year has added an estimated 3.1 trillion yento the cost of importing fuel for oil, gas and coal powerstations in the 12 months through March next year.

Below are the details of the new taxes being introduced inthree phases from this month. The CO2 tax is being added toexisting levies on fuels. Figures are in yen.

Fuel type Standard tax Oct 2012 Apr 2014 Apr 2016Crude, oil products 2,040 +250 +250 +260per kilolitre 2,290 2,540 2,800LNG, LPG 1,080 +260 +260 +260per tonne 1,340 1,600 1,860Coal 700 +220 +220 +230per tonne 920 1,140 1,370($1 = 78.1850 Japanese yen)

(Reporting by Risa Maeda; Editing by Aaron Sheldrick and JeremyLaurence)


Messaging: risa.maeda.thomsonreuters.com@reuters.net))


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