WORLD TRADE  
ORGANIZATION   
G/SCM/Q2/JPN/52/Suppl.1 
9 March 2012 
 (12-1310) 
Committee on Subsidies 
and Countervailing Measures Original:   English 
 
 
 
SUBSIDIES 
 
Replies to Questions Posed by INDIA1 Regarding the  
New and Full Notification of JAPAN2 
 
Supplement 
 
 The following communication, dated 25 October 2011, is being circulated at the request of 
the Delegation of Japan.   
 
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Subsidies to Promote Action to Improve Energy E fficiency of Building under the Leadership of 
Energy Suppliers 
Question 1 
 
 What are the role and functions of the Energy Supply Company? 
 Reply 
 
 An Energy Supply Company is a supplier of en ergy such as electricity and gas to consumers. 
 
Question 2 
 
 What were the specific energy efficiency activities which availed the subsidy and how 
did the subsidy impact "Energy efficiency" in commercial and residential sectors? 
  Reply 
 
 Energy efficiency activities include activiti es introducing energy-efficient equipment and 
advertising. Concerning the impact of "energy effi ciency" in the commercial and residential sectors, 
there are no statistical data available.  Question 3 
 
 By what percentage did subsidy reduce the co st per unit of electricity for commercial 
users? 
                                                      
1 G/SCM/Q2/JPN/51.   
2 G/SCM/N/186/JPN. G/SCM/Q2/JPN/52/Suppl.1 
Page 2 
 
 
  Reply 
 
 There are no statistical data available in this regard.  Subsidy for Wind Power Generation and its Grid Connection 
Question 1 
 
 What are the eligibility criteria for the wi nd power generation companies for availing 
the subsidy? What is the process by which elect ric utilities make the "Offer" of subsidies to 
wind power generation companies?  
Reply 
  This subsidy program was impl emented from FY 2007 to FY 2009. 
 
The eligibility criteria for this subsidy program are as follows: 
 (1) to cooperate with the post-assessment repor t, tracing investigation and assessment conducted 
by New Energy and Industrial Technology Devel opment  Organization (NEDO) for 5 years from the 
termination of the program; (2) to obtain data of actual measurement of the generation by wind power according to the 
method specified by NEDO and to provide NEDO with  the data for 2 years from the termination of 
the program.  Question 2 
 
 Are foreign companies eligible for this subsidy? 
 
Reply 
  Foreign companies are eligible for this subsidy.    Question 3 
 
 By what percentage did the subsidy reduce the cost per unit of electricity for 
commercial users?  
Reply 
  There are no statistical data available in this regard.  The aim of the subsidy is not to reduce 
energy costs but to control the instability of  power generation which may occur when the 
consumption of energy generated by wind power further prevails. 
 Subsidy for Demonstration of Fuel Cell Systems 
Question 1 
 
 Who are the ultimate beneficiaries of the R&D developed by the two institutes? 
 
Reply 
  The results of the R&D are publicly availabl e on websites and in a related seminar.    G/SCM/Q2/JPN/52/Suppl.1 
 Page 3 
 
 
  Question 2 
 
 What has been the commercial application of such R&D? 
 Reply 
  The R&D is expected to be u sed for the Hydrogen supply business . 
 
Question 3 
 
 How have the subsidies impacted pricing of fuel cell systems? 
 Reply 
 
 There are no statistical data available in this regard.  The aim of the subsidy is to improve the 
cost performance of the infrastructure of the Hydrogen supply business. 
 
Liability Guarantees for Overseas Explorat ion and Development of Oil and Gas 
Question 1 
  What is the percentage of subsidy granted out of total expenditure on exploration and 
development that is incurred by the beneficiaries?  
Reply 
  The amount of the liability guarantees is up to 50 per cent of the debt of the cost of overseas 
exploration and development of oil and gas.  In case of necessity, the percentage would be up to 
75 per cent of the debt of the cost.  Question 2 
 
 How are beneficiary companies identified? 
 
Reply 
 
 Japan, Oil, Gas and Metals National Corporation (JOGMEC), an incorporated administrative 
agency, assesses the eligibility of applicants  to provide the liability guarantees.  
 Question 3 
 
 Would all companies incorporated in Japan be eligible for the subsidy, or are there any 
national treatment restrictions?   Reply 
 
 This liability guarantees program is meant for a project company (special purpose company 
(SPC)) which is engaged in overseas oil and natural gas explorati on and production, including related 
refining, and natural gas liquefaction.   JOGMEC assesses the eligibility of applicants.  
 
 
 G/SCM/Q2/JPN/52/Suppl.1 
Page 4 
 
 
  Loans for Purchasing Petroleum and LPG for Stockpiling by Private Companies  
Question 1 
 
 What is the percentage of the total cost of purchase of petroleum that is subsidized?  
 
Reply 
  The Oil Stockpiling Act obligates certain compan ies to stock a certain amount of petroleum 
and LPG.  Those companies are eligible to apply fo r this loan program which covers up to 80 per cent 
of the purchase cost of the petroleum stockpile, and 90 per cent of the purchase cost for the LPG 
stockpile.  Question 2 
 
 How are beneficiary companies identified? Is there a difference between the companies 
that can avail of the subsidies under the loan scheme and those under the liability guarantees 
for overseas exploration and development of oil & gas? 
 Reply 
 
 With respect to the first question, the oil re finers stipulated in Article 5.1 of the Oil 
Stockpiling Act and the petroleum gas importer stipulat ed in Article 10.1 of the Act can apply for the 
loan.  
 With respect to the second question, the answer is "yes".   
 Question 3 
 
 How does the subsidy reflect in the pricing of cost of petroleum for the ultimate 
consumers?  
Reply 
  Since this liability guarantees program is appli cable to the purchase of petroleum and LPG for 
stockpiling, the purchase cost does not di rectly affect the consumers' cost. 
 
Subsidy for the Rationalization of Petroleum Refinery 
Question 1 
 
 What are the eligibility criteria for defining beneficiaries of this subsidy? 
 Reply 
 
Beneficiaries of this subsidy sha ll satisfy the following conditions. 
 
A private company which: 
 
(1) can operate the project described in the response of Question 2 and has adequate human 
resources 
(2) has sufficient knowledge of oil refinement to operate the project effectively 
(3) has developed well-organized cooperation w ith related industries and related groups   G/SCM/Q2/JPN/52/Suppl.1 
 Page 5 
 
 
  (4) has experienced operation of related projects 
(5) has a fiscal basis, general capability for accounting and a competent management system 
 
Question 2 
 
 What are the activities that have benefitted from this subsidy? 
 
Reply 
 
The activities that benefit are: 
 (1) R&D of new technology to generate high- octane number gasoline base material and 
petrochemical feedstocks by resolving heavy oil. 
(2) R&D of new technology to refine unconventiona l oil resources such as extra heavy oil and oil 
sand oil and produce (a) gasoline, kerosene, light oil which conform with Japanese quality standards 
and (b) petrochemical feedstocks. 
 
Question 3 
 
 What is the impact of the subsidy on cost of fuel to consumers? 
 Reply 
 
 There are no statistical data available in this regard.  It is impossible to calculate the impact of 
the subsidy on the cost of fuel to consumers. 
 
 
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