Japan’s new car rules could charge up greentech
Japan is reportedly nearing a ban on the sale of new gasoline-only cars by the mid-2030s and is planning a new carbon offset market for the auto sector. Both measures should help the country meet its 20 0 net ero emission pledge, speed the adoption of electric and hybrid cars, and draw more investments into green infrastructure like renewable energy and charging networks.
Local media 1 . and .yodo this week reported the Japanese government is mulling a ban on traditional gasoline-fueled cars by the mid-2030s, citing official sources. Japan s economy ministry reportedly wants all new cars sold by the mid-2030s to either Tualify as new energy vehicles 1(9 or cleaner-running hybrid engine vehicles (9 .
,n addition, the 1ikkei reported that the government will begin talks next week on establishing a carbon offset market specific to the automobile industry. These policies would confirm our expectations for more aggressive national targets for the country s 1(9 sales mix, compared with the current 2030 targets of between 20 to 30 market share.
:e had anticipated such a shift following Prime 0inister oshihide Suga s decision in October to formally commit Japan to net carbon neutrality by 20 0.
onsidering the si e and international reach of Japan s auto industry, 8BS Japan eTuity analyst hisa .obayashi thinks that a maMor green shift on the vehicle sales mix would be one of the most significant global announcements yet.
:e believe the change will also strengthen the Japanese auto sector s prospects in key offshore markets like hina and the 8S, given Japan s relative leadership in energy efficiency technologies. By 203 , hina wants 1(9s to account for 0 of all new sales, with (9 sales making up the remainder. ,n the 8S, President-elect Joe Biden has pledged to spend billions and add 0,000 electric vehicle charging stations nationally. This week the president-elect won a cooperation pledge from maMor automakers to accelerate electric vehicle spending.
,n addition to the more stringent green auto targets, we think Japan will also need to invest in the country s broader green infrastructure. .obayashi predicts Japan will raise its 2030 target for the renewable energy share closer to 30 , versus the current target of 22 24 .
Japan, the 8S, hina and other governments have signaled a maMor turn toward low-carbon societies, and we think this will push batteries, renewable energy, hydrogen and digitali ation to the forefront of the greentech wave.
:e believe select Japanese companies, many of which are global leaders in related fields, are well positioned to take advantage of the new trend.