A Pitfall of Environmental Policy: An Analysis of “Eco-point Program” in Japan and its Application to the Renewable Energy Policy

By analyzing the policy making process and the policy effects of “the Program to Promote the Spread of Green Home Appliances (Eco-point Program)” implemented in Japan during May 2009 to March 2011, and examining the current Japanese renewable energy policy (especially Feed-in Tariff), this paper aims to illustrate pitfalls that a green policy is likely to fall in.

Our analysis indicates that environmental effects of Eco-point Program were considerably smaller than expected. It also seemed to induce many imported TVs, which might cause sharp declines of Japanese electronics companies. This suggests that mere expansion of green markets through government spending does not guarantee long-term economic growth of the country. When technology is widely available due to standardization and commoditization, expansion of domestic markets may just deteriorate long-term competitiveness of domestic firms and industries.

We then analyze the process that Eco-point Program was formulated and implemented, and identify three factors that tend to drive an unbalanced green policy program: the “strange bedfellows” trap, the power of the magic words “energy” and “environment”, and the illusion that “market expansion leads to economic growth”. The paper also applies this insight drawn from the analysis of Eco-point Program to the emerging renewable energy policy in Japan.

An environmental policy often encompasses different issues such as an energy policy and an economic policy; the same policy is possibly implemented with different objectives. Our analysis illustrates that such a structure, though it is often inevitable, may have a risk of that nothing is solved.