Japan evades promises on climate protection: Last year, the participating governments at the United Nations climate change conference in Glasgow agreed to end "inefficient subsidies for fossil fuels" more quickly.

Japan was there in Glasgow.

But contrary to the promises made, the country will activate a new oil subsidy for the first time this week.

Patrick Welter

Correspondent for business and politics in Japan based in Tokyo.

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From Thursday, the government will pay the country's oil wholesalers and oil importers a subsidy of 3.4 yen (3 eurocents) per liter of gasoline to keep gas prices down.

The reason is the steep rise in oil prices, which is angering the country's motorists.

A liter of gasoline in Japan currently costs the equivalent of 1.31 euros or 23 percent more than a year ago.

That's more than it has been for more than 13 years.

Industry Minister Koichi Hagiuda told reporters in Tokyo that he hopes the subsidy will limit the rise in the wholesale price.

The government will continue to try to minimize the impact of the price increase on people's lives.

The ministry is counting on wholesalers' lower prices reaching gas stations and customers.

Subsidy rule is temporary

As of Monday, the national average price of gasoline had reached 170.2 yen ($1.51) per liter, exceeding what the government said was a ceiling.

Subsidies for petrol, diesel, kerosene and heating oil, which the government decided in November, are now taking effect for the first time.

The wholesalers receive the subsidy for one week.

Then the payment is checked, adjusted or stopped again depending on the gas price.

The subsidy rule is limited to the end of March.

The government has earmarked 80 billion yen ($700 million) for payments through the end of the fiscal year in March.

The subsidy isn't the government's only attempt to depress oil prices.

In December, in a coordinated international action, it brought stocks from the national oil reserve onto the market in order to curb the rise in oil prices.

The direct intervention in price determination on the oil market with subsidies has been criticized in Japan as a populist measure by the government of the new Prime Minister Fumio Kishida, which sends the wrong signal for phasing out fossil fuels.

The government is reacting to the inflationary pressure, which is moderate by international comparison, which is arising in Japan with rising energy and food prices and scarce primary products such as semiconductors.

This is where another criticism of the petrol price subsidy comes in.

The economists Gunther Schnabl and Taiki Murai from the University of Leipzig accuse the government in Tokyo of trying to hide the inflationary pressure in Japan by subsidizing the price of oil and other price regulations.

Inflation was 0.8 percent in December.

Excluding temporary special factors, however, it is estimated at around 2 percent.