Press Conference by Minister Nishimura (Excerpt)

*Note: This is a provisional translation for reference purposes only.

8:42-8:49 a.m.
Tuesday, March 28, 2023
In front of the Cabinet Room, 2nd floor, National Diet Building

Question-and-Answer Session

EU Regulation of Combustion Engine Vehicles

Q: The EU was aiming to effectively ban sales of new combustion engine vehicles by 2035, but on March 25, the European Commission and the German government agreed to continue allowing sales of those vehicles on condition of the use of synthetic fuels. Please comment on that.

A: I am aware that in Europe, the European Commission and the German government have agreed to allow sales of new combustion engine vehicles using only synthetic fuels even after 2035, the year by which the EU has already agreed all new cars should be clean energy vehicles such as electric ones. However, the EU and the German government have now reached an agreement to allow some combustion engines during the process of developing the regulation of new vehicle sales. As this matter concerns another country’s institutional system, I would like to refrain from offering a comment on behalf of the Government of Japan. However, in the automobile industry, a great change, which may be called a tectonic change, is occurring. Under these circumstances, we will continue frank exchanges of opinions through various channels as to how Europe will promote decarbonization in the future. Recently, I exchanged opinions with a German cabinet member.

In Japan, we have already considered using synthetic fuels as one of the options in addition to electric vehicles and fuel cell vehicles. In light of such international situations, Japan will continue to engage in the commercialization projects and technological development projects that we have supported through the GI (Green Innovation) Fund.

U.S. Inflation Reduction Act

Q: I would like to ask you about the U.S. Inflation Reduction Act. The U.S. government is expected to announce its policy for operating the EV (electric vehicle) tax system this month. Could you tell me about the impact on Japan and the status of coordination between Japan and the United States?

A: At the cabinet meeting held earlier today, we made the decision to sign an agreement between Japan and the United States on strengthening critical mineral supply chains. Based on this cabinet decision, the Office of the U.S. Trade Representative is coordinating the signing of this agreement by Ambassador to the United States Tomita and U.S. Trade Representative Tai.

As the demand for batteries used in EVs is expected to increase steeply, it is an urgent task to secure critical minerals that are essential for the production of the batteries. The forthcoming agreement aims to build robust supply chains through collaboration between Japan and the United States as well as with other like-minded countries by strengthening cooperation toward securing sustainable and equitable supply chains.

Going forward, following the implementation of the necessary procedures on the U.S. side, Japan is expected to become an FTA (free trade agreement) partner country under the Inflation Reduction Act (IRA). As a result, EVs using relevant critical minerals extracted or processed in Japan are expected to meet the requirements for eligibility to receive tax credits under the preferential tax measures for EVs based on the IRA.