The trade ministry released Friday a roadmap to shepherd Japan’s economy away from fossil fuels, and foster growth in green energy industries to bring within reach Prime Minister Yoshihide Suga’s pledge to eliminate net carbon dioxide emissions by 2050.
The report — which calls for strong government spending to subsidize and incentivize emissions reduction, and innovation in more than a dozen industries — details the potential economic growth that can be expected if the country reaches net zero carbon emissions.
Not only does the plan provide a tentative framework to support Suga’s vow in October to achieve decarbonization within three decades, it represents a major shift in the central government’s attitude in treating renewable energy not as a barrier to economic growth but as a catalyst.
“To divest from fossil fuels, shift to renewable energy and eliminate carbon emissions should not be seen as a restriction of economic activity, but as an opportunity to take advantage of inevitable change,” a trade ministry official told reporters Thursday. “The central government will stand behind the private sector in leading the shift to a carbon free society.”
The report designates 14 industries in which significant growth and investment are key to achieve decarbonization. These include offshore wind, ammonia fuel, hydrogen, nuclear energy, cars, shipping, airlines, semiconductors, logistics, agriculture, carbon recycling, housing, energy recycling and the lifestyles of individual people.
According to the trade ministry’s outline, the government aims to raise offshore wind energy output to 45 million kilowatt-hours by 2040, hydrogen power consumption to 20 million tons by 2050, promote nuclear energy abroad but halt domestic projects, decarbonize the agriculture industry and reduce coal-fired power consumption to the point where carbon recycling technology can be developed to nullify the remaining harmful emissions.
By targeting these industries, the trade ministry aims to mobilize more than ¥240 trillion in private sector savings through investment, regulation, subsidies and tax incentives. In doing so, it expects the cumulative economic impact to reach ¥90 trillion in 2030, and ¥190 trillion by 2050.
While the plan is tentative, officials said the government would begin to take steps where it could as soon as possible. They added that the plan was only a projection and that its implementation will depend on the country’s energy portfolio, which is decided by a Strategic Energy Plan set to be revised some time before June 2021, pending government discussions that began in October this year.
Still, questions remain concerning the country’s willingness to overhaul the world’s third largest economy and slash harmful greenhouse gas emissions to curtail climate change. Japan is also the world’s fifth largest emitter of carbon dioxide.
The government aims to reduce the more than 1 billion tons of greenhouse gases the country emitted in 2018, according to the trade ministry, to 930 million in 2030 and net zero by 2050.
At the same time, the ministry projects that domestic demand for electricity will grow by between 30% and 50% by 2050. Electricity accounted for 37% of the country’s carbon emissions in 2018, while 25% came from manufacturing, 17% from transportation and 10% from households and businesses.
The government also aims to ban the sale of new gasoline automobiles in the first half of the 2030s. Trade ministry officials said the country aims to announce some time during the summer of 2021 its plan to make all new commercial and passenger vehicles completely electric.
The plan, however, will not ban the sale of hybrid vehicles. The omission has drawn criticism from opponents who say the government is easing into the transition away from gas-powered cars in a bid to appease automobile manufacturers.
Earlier this month, Tokyo Gov. Yuriko Koike announced a nearly identical plan for the city, different only in that the capital will aim to ban sales of new gasoline cars by 2030.
“Tokyo has and will continue to lead the country’s efforts to reduce harmful emissions,” Koike said during an exclusive interview Wednesday. “By setting ambitious goals, the capital can push the country forward.”
Suga’s announcement in October — that Japan would strive to achieve net zero carbon dioxide emissions by 2050, as was demanded of all countries in the 2015 Paris Agreement — was met with skepticism and doubt from supporters and critics alike.
Climate advocates criticized his commitment to nuclear energy and carbon capture technology, while many private sector corporations in the energy industry were resistant to back a plan that would almost certainly upend their business models.
“With the economy and the environment situated as two pillars of the country’s growth, my administration will make the utmost effort to achieve a green society,” Suga said in October. “It needs to be understood that global warming countermeasures could transform the economy and foster growth, not hinder it.”
The Paris Agreement calls on nations to keep global warming from exceeding 2 degrees Celsius above pre-industrial levels, a critical benchmark that scientists say would trigger the beginning of a collapse in many of Earth’s ecosystems and spell disaster for humankind.
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Toronto stock exchange tsx gains on energy boost, upbeat economic data
Toronto stock exchange index rose on Friday, as energy stocks gained on higher crude prices and upbeat economic data bolstered optimism over an economic rebound.
* The energy sector climbed 0.8% as U.S. crude prices were up 0.2% a barrel, while Brent crude was unchanged. [O/R]
* At 09:36 a.m. ET (13:36 GMT), the Toronto Stock Exchange’s S&P/TSX composite index was up 39.12 points, or 0.2%, at 20,088.59.
* Statistics Canada said the country’s industries ran at 81.7% of capacity in the first quarter of 2021, up from a upwardly revised 79.7% in the fourth quarter of 2020, while the nation’s net worth jumped by a record 7.7% in the first quarter to C$15.0 trillion ($12.40 trillion).
* The financials sector gained 0.1%. The industrials sector rose 0.4%.
* The materials sector, which includes precious and base metals miners and fertilizer companies, added 0.2% as gold futures fell 0.5% to $1,885.4 an ounce [GOL/]
* On the TSX, 114 issues were higher, while 102 issues declined for a 1.12-to-1 ratio favouring gainers, with 9.72 million shares traded.
* The largest percentage gainers on the TSX were miners Hudbay Minerals Inc, up 3.8%, and First Quantum Minerals Ltd, up 3.7%.
* Enghouse Systems Limited fell 7.6%, the most on the TSX, after the software provider missed second-quarter estimates and the second biggest decliner was real estate investment trust NorthWest Healthcare Properties, down 1.3%.
* The most heavily traded shares by volume were those of Hut 8 Mining Corp, Canadian Natural Resources Limited, and NorthWest Healthcare Properties.
* The TSX posted 16 new 52-week highs and one new low.
* Across all Canadian issues there were 76 new 52-week highs and 2 new lows, with total volume of 22.41 million shares.
(Reporting by Amal S in Bengaluru; Editing by Shailesh Kuber)
Canadian dollar hits 2-week low as greenback broadly rallies
The Canadian dollar weakened against its U.S. counterpart on Friday, extending a weekly decline, as the greenback broadly rose and domestic data showed industries operating at a greater share of their capacity in the first quarter.
The loonie was trading 0.3% lower at 1.2135 to the greenback, or 82.41 U.S. cents, after touching its weakest intraday level since May 27 at 1.2140. For the week, it was on track to fall 0.5%.
The U.S. dollar rallied against a basket of major currencies as U.S. Treasury yields stabilized. Yields fell on Thursday as the market deemed a spike in inflation to be transitory.
“The report tracks the impact of the boom in the housing and resource extraction industries as the economy reflates,” said Ryan Brecht, a senior economist at Action Economics.
On Wednesday, the Bank of Canada said there remains considerable excess capacity in the Canadian economy.
Still, the BoC’s more hawkish stance since April and soaring commodity prices have helped boost the Canadian dollar, with the currency up nearly 5% against the U.S. dollar since the start of the year.
A stronger loonie is usually seen hurting exporters, but the nature of the global economic recovery could help companies pass on their higher costs from the currency to customers, leaving exporters in less pain than in previous cycles.
Oil, one of Canada‘s major exports, rose on Friday to a fresh multi-year high at $70.80 a barrel.
Canadian government bond yields were mixed across the curve, with the 10-year up 1.2 basis points at 1.383%. Earlier in the day, it touched its lowest since March 3 at 1.368%.
(Reporting by Fergal Smith; editing by Jonathan Oatis)
How to Buy a home in Canada
Homeownership can be very exciting, but it isn’t always the best thing for everyone. Before you decide to buy a home, make sure you carefully consider the costs.
According to Canada Mortgage and Housing Corporation (CMHC), your monthly housing costs should not be more than about 35% of your gross monthly income. This includes costs such as mortgage payments and utilities.
Your entire monthly debt load should not be more than 42% of your gross monthly income. This includes your mortgage payments and all your other debts.
Saving for your home
To buy a home, you need a down payment. You also need money to pay for the upfront costs.
Make saving part of your monthly budget. Most employers deposit your pay directly into your chequing or savings account. Increase your chances of reaching your savings goals by setting up automatic transfers to a savings account each pay cheque.
Saving with a Tax-Free Savings Account (TFSA)
A TFSA is an account that lets you save or invest your money tax-free. You won’t pay tax on money you withdraw from your TFSA. You can also use your TFSA to help you buy a home.
Saving with a Registered Retirement Savings Plan (RRSP)
An RRSP is an account that allows you to save money for your retirement. You don’t pay taxes on your savings until you withdraw money from the RRSP.
The Home Buyers’ Plan (HBP)
If you’re a first-time homebuyer, the HBP allows you to withdraw up to $35,000 from your RRSPs tax-free to put toward buying your first home.
The First-Time Home Buyer Incentive
This incentive offers 5% or 10% of your home’s purchase price to put towards a down payment.
Using savings and investment
If you plan to buy a home in the near future, focus on building your savings. You’ll want to keep your money protected and easily accessible.
Short-term savings and investment options may include:
- savings accounts
- short-term guaranteed investment certificates (GIC)
- low-risk mutual funds
Ask your financial institution or advisor about the short-term investments they offer and how they work.
Paying for your home
Most people need to borrow money to buy a home. You also need to put some of your own money into the purchase.
When you buy a home, you must put a certain amount of money toward the purchase upfront. This is called a down payment. Your mortgage loan will cover the rest of the price.
A mortgage is likely the biggest loan you get in your lifetime. It’s important that you understand the process.
Check your credit report before you apply for a mortgage
A potential lender considers your credit history before they decide whether or not to approve your mortgage application.
Before you start shopping around for a mortgage:
Shop around for a mortgage
Lenders may have different interest rates and conditions for similar mortgages. Talk to several lenders to find the best mortgage for your needs.
You can get a mortgage from:
Mortgage lenders – These institutions lend money directly to you. Explore the different types of lenders that are available, including banks and credit unions.
Mortgage brokers – They don’t lend money directly to you. Mortgage brokers arrange transactions by finding a lender for you. Since brokers have access to many lenders, they may give you a wider range of mortgages to choose from. The lender pays a commission to the mortgage brokers, so there’s no cost to you.
Get the mortgage that meets your needs
Mortgages have different features to meet different needs. It’s important that you understand the options and features.
Questions you should ask yourself include:
- do you want a mortgage with a fixed interest rate or one that can rise or fall
- how long of a term do you want
- how often would you like to make payments toward your mortgage
Mortgage loan insurance
If your down payment is less than 20% of your home’s price, you need to purchase mortgage loan insurance. In some cases, you may need to get mortgage loan insurance even if you have a 20% down payment.
Mortgage loan insurance protects the mortgage lender in case you’re not able to make your mortgage payments. It does not protect you. Mortgage loan insurance is also sometimes called mortgage default insurance.
Optional mortgage life, critical illness, disability and employment insurance
Your lender may ask whether you would like to purchase life, critical illness, disability and employment insurance.
These products that can help make mortgage payments, or can help pay off the remainder owing on your mortgage, if you:
- lose your job
- become injured or disabled
- become critically ill
There are important exemptions for each of these insurance products. An exemption is something not covered by your insurance policy. Read the insurance certificate before you apply to understand what this insurance covers.
These insurance products are optional. You don’t need to purchase this insurance coverage for your mortgage to be approved. You must clearly agree to sign up for this insurance before the lender charges you for it.
Tax credits for homebuyers
The Government of Canada offers two tax credits for specific types of homebuyers. Your provincial or territorial government may also offer other home-buying incentives.
The Home buyers’ amount
You get access to this tax credit when you purchase your first home and submit a tax return. It’s an effective means of offsetting some of the upfront costs associated with buying a home. Eligible homebuyers may receive a tax credit of up to $750.
GST/HST housing rebates
Generally speaking, sales of new homes are subject to the GST/HST. You may qualify for a rebate for some of the tax you paid.
You may move into a new home to work or run a business in a new location. You can deduct eligible moving expenses from the employment or self-employment income that you earn in the new location.
Home buying costs
When you buy a home, you have to pay for upfront costs in addition to your mortgage. These are called closing costs. You can expect to spend between 1.5% and 4% of the home’s purchase price on closing costs. You usually pay these costs by the time the sale is completed or “closes”.
You have to pay legal fees on your closing day. This is the day that your home purchase is complete. These fees are usually range between $400 to $2,500 but will vary depending on your lawyer’s or notary’s rates.
A lawyer or notary can help protect your legal interests. They make sure that the home you want to buy does not have a lien against it. A lien is a legal claim over another person’s property that someone files to ensure a debt gets paid.
A lawyer or notary reviews all contracts before you sign them. They also review your offer or agreement to purchase.
You must have home insurance in place as a condition of getting a mortgage.
Home insurance can help protect your home and its contents. It typically covers the inside and outside of your home in case of theft, loss or damage.
Before the sale closes, you’re required to pay to register your property’s title under your name. This may be called a land transfer tax, a deed registration fee, a tariff, or a property transfer tax.
The cost is a percentage of the home’s purchase price. For example, if your land transfer tax is 1.5% and your home cost $300,000, you pay $4,500.
The seller of the home you’re buying may be entitled to adjustments. For example, the seller may have already paid the property tax on the home past the purchase closing date. If that’s the case, the seller receives a credit on the closing date. You must then pay this credit amount to cover the money already paid by the seller.
New build GST/HST
Generally, if you buy a new build home, you pay GST or HST. Some builders include the HST in their sale price while others don’t. Make sure to check. Otherwise, you have to pay this cost upfront on closing day.
Other closing costs
Other closing costs may include:
- interest adjustments (period between your purchase date and your first mortgage payment)
- Certificate of Location cost
- estoppel certificate (for condominium units)
- township or municipal levies (may apply to new homes in subdivisions)
- mortgage default insurance premium (if paying premium up front instead of adding it to mortgage loan)
- provincial sales tax on premiums for mortgage default insurance (applicable in some provinces)
Other home-buying costs
Other costs you may need to budget for include:
Mortgage lenders may ask you to have an appraisal done as part of the mortgage approval process.
An appraiser provides a professional opinion about the market value of the home you want to buy. An appraisal fee is generally between $350 and $500.
An inspector provides a comprehensive visual inspection of a home’s overall structure, major systems and components such as:
- electrical and plumbing systems
- the foundation
- the roof
CMHC recommends that you include a home inspection as a condition when you make an offer.
Before moving in, you may also have to pay for:
- moving costs
- storage costs
- real estate costs for selling your home (if applicable)
- redirecting mail
Once you move in, you may immediately face other costs, including:
- utility hook-up fees
- basic furniture and appliances
- painting and cleaning
- water tests
- septic tank tests (if applicable)
Working with a real estate agent
Using a realtor is optional. A realtor typically searches for homes, negotiates a purchase price, fills out and file paperwork, and more.
The seller pays the realtor’s fees when you buy a home.
Home buying and newcomers to Canada
CMHC has a guide with comprehensive information on housing for newcomers.
Buying a condominium
Condominiums, or condos, are shared properties that contain individual housing units. Each unit has its own owner. Owners share the common areas outside of the unit such as the lobby and parking lot.
There are pros and cons to owning a condo. For example, if you buy a condo, you pay monthly condo fees. However, you may like the idea of sharing the building maintenance costs with the other unit owners.
Buying to rent
You can buy a property with the intention of renting it out. Keep in mind that you have to declare your rental income at tax time each year.