Transport accounts for nearly one-fifth of Japan’s total carbon dioxide emissions, with vehicles making up the bulk of that share. Automotive policy will therefore be central to the government’s target of reducing transport emissions by 35 per cent by 2030 relative to 2013 levels.

The EU offers one influential model for automotive decarbonisation. Its vehicle emissions rules principally use the tank-to-wheel method, which measures carbon emissions only during driving. Based on this method, battery electric vehicles (BEVs) are classed as zero-emission vehicles.

Reflecting this approach, the EU proposed that new cars and vans would be required to meet a zero-emissions standard by 2035, effectively phasing out new gasoline and diesel cars, hybrid electric vehicles and plug-in hybrid vehicles. The measure was adopted in 2023. In practice, the policy strongly favours BEVs.

Many vehicle producers in the EU have been struggling with the transition. Approximately 51,500 jobs were cut in the German automotive sector in 2024 alone. Bavarian Premier Markus Soder criticised the combustion engine ban in September 2025, arguing that such a rapid reduction in emissions is unrealistic.

In response to these criticisms, the EU unveiled a new proposal in December 2025 for the revision of the 2035 combustion engine ban, setting a new target of a 90 per cent cut in carbon dioxide emissions from 2021 levels. Under this proposal, the remaining emissions would be offset by using lower-emissions steel made in the EU and e-fuels or non-food biofuels.

The EU debate also highlights the limits of treating BEVs as zero-emission vehicles. BEVs are not emissions-free across their full lifecycle. Battery production can generate significant carbon emissions — a factor not captured by the tank-to-wheel method. Their environmental performance also depends on the national or regional energy mix. If BEVs are charged using fossil fuel energy, their environmental benefits will be limited or non-existent.

After the EU announced its ban, Japan initially appeared to move in a similar direction. In December 2020, reports emerged that then-prime minister Yoshihide Suga’s government was considering ending sales of new combustion engine cars by 2035. The Japan Automobile Manufacturers Association responded critically, raising concerns about the EU’s BEV-centred shift. This was exacerbated by a lack of clarity over the Japanese government’s definition of combustion engine technology, especially whether hybrid and plug-in hybrid vehicles would be included.

Critics stressed the importance of lifecycle emissions assessment, which, unlike the tank-to-wheel method, measures carbon emissions throughout the whole automotive value chain — from energy use, materials, components and vehicle production to recycling. BEVs do not qualify as zero-emission vehicles when measured through this approach.

The Japanese government and industry appear to have moved towards support for a multi-pathway strategy, initially pursued by Toyota. This approach enables carmakers to pursue different technologies, including hybrids, plug-in hybrids, BEVs, fuel cell electric vehicles and hydrogen-powered combustion engine vehicles. It is presented as a technology-neutral policy based on lifecycle assessment, which considers emissions across the automotive value chain. The argument is that without total reliance on renewable energy, a wider range of vehicle technologies can offer a more practical path to emissions reduction.

Alongside this, the Japanese automotive industry has started developing green supply chain networks that track emissions across each component and production process. This enables carmakers to calculate total carbon dioxide emissions in vehicle production, use and recycling. Toyota’s Sustainability Databook 2025, for example, emphasises lifecycle assessment, green supply chain networks and multi-pathway strategies.

These multi-pathway strategies are important because BEVs alone do not provide a complete solution for carbon neutrality under lifecycle emissions assessment. Japan’s economy is characterised by stakeholder capitalism, based on long-term relationships between firms, workers and suppliers. This has encouraged the Japanese government and industry to pursue a more gradual transition that maintains supply chain networks and employment in the automotive sector. Energy-related issues, such as energy shortages and an unfavourable energy mix due to the limited use of nuclear power after the Fukushima nuclear accident, also support the case for multiple pathways.

Japan’s technology-neutral approach may offer lessons for other Asian car-producing countries, particularly in Southeast Asia. These economies face the combined challenge of reducing emissions while managing fossil fuel-dependent energy systems, combustion engine-based supply chains and diverse consumer needs. A lifecycle approach can help make decarbonisation policy more effective within these environmental, industrial and consumer constraints.

Kaoru Natsuda is Professor in the College of Asia Pacific Studies, Ritsumeikan Asia Pacific University and Visiting Scholar in the Department of Asian Studies, Metropolitan University Prague.

This piece is based on a forthcoming journal article by the author and Martin Schroder in the Journal of Contemporary Asia (Routledge).

https://doi.org/10.59425/eabc.1780653600