Figure5-4-5 Support Measures Wanted to the Government for the Development of Environmental Businesses

Source: Ministry of the Environment, "FY 2008 Survey on Environmentally Friendly Corporate Behaviors"

consciousness/interest among consumers, etc., "high risk involved in additional investment," "shortage of internal ideas and know-how" and "shortfall of information related to the environmental industry, such as the market size" (Figure 5-4-4). As for support measures businesses want from the government, many respondents cited "preferential tax treatment," "provision of information on the environmental industry" and "educational activities to help enhance consumer consciousness" (Figure 5-4-5).

In order to create the environmental industry through green innovation, not only public financial assistance and preferential taxation measures but the implementation of measures for human resources development, public procurement and industry-academia cooperation comprehensively and in a meticulous manner in accordance with industry characteristics and market sizes throughout the series of processes from research and development to commercialization and industrialization.

## ① Support for research and development and venture businesses, etc

In research and development, since the development of new technologies benefits not only developers but parties other than developers, developers may underinvest in research and development for fear that they may not obtain sufficient first-mover advantages (the so-called "technological spillovers"). It is also conceivable that since research and development work requires a long period of time and involves risks of failure, people cannot make decisions to go ahead and make research and development investment. In addition, as discussed in Section 1, while research and development investment in the environmental field has been increasing, overall research and development investment has been on the decline in the wake of the latest economic crisis. For this reason, the government is providing active support for research and development instead of just leaving it to the private sector, such as preferential tax treatment for private-sector research and development activities, and in particular, subsidies for basic research whose results are unlikely to directly lead to actual businesses. As the New Growth Strategy (Basic Policies) states that "Japan will increase public- and private-sector investment in research and development to over 4% of GDP by 2020," it is expected that research and development investment, including investment in green innovation, will expand further going forward.

In order to foster and support venture businesses that embark on the industrialization of new technologies, etc., the fruits of research and development activities, the government has taken such measures as the angel taxation system (preferential tax measures for investment in venture businesses) and venture funds (capital investment in venture firms in the early stage). The government also submitted to the 174 $ ^{th} $ session of the Diet the bill for the “Act on the Promotion of Businesses to Develop and Manufacture Energy and Environmental Friendly Products (Low Carbon Investment Promotion Act)” for launching a new insurance program aimed at providing low interest rate, long-term funds for developers and manufacturers of low carbon products, such as electric cars, storage batteries and solar panels, and also at encouraging small and medium enterprises to introduce low carbon equipment through leases.

## ② Development of environmental human resources

As it has been often pointed out that the large increase in science and technology-oriented human resources in the 1960s successfully provided the foundation for innovation in Japan in the high growth period, it is extremely important to secure research and technological human resources with science and technology expertise in order to promote technological innovation through green innovation. On the other hand, in addition to the falling birthrates and the aging of the population, the ongoing phenomenon of the so-called “alienation from science” among young people could result in a qualitative and quantitative shortage of research and technology human resources.