Flash Note: Growing Expectations around Shinjiro Koizumi as a Future Prime Minister
And implications for stock market ...
Shinjiro Koizumi, former Minister of the Environment and current Minister of Agriculture, Forestry and Fisheries, is drawing attention as a leading candidate for Japan’s next prime minister. (**Shinjiro Koizumi is the son of Junichiro Koizumi, Japan’s former Prime Minister (2001–2006).) In a joint opinion poll by the Sankei Shimbun and FNN, Koizumi topped the list of most suitable candidates for the post, overtaking Sanae Takaichi. Long touted as “the next prime minister,” Shinjiro, at the age of 44, has announced his candidacy for the Liberal Democratic Party (LDP) leadership election (officially starting September 12, with voting on September 27). His international academic credentials—he holds a master’s degree from Columbia University—and the large turnout at his campaign meetings have fueled expectations for the birth of Japan’s most academically accomplished prime minister to date.
Policy Focus and Emphasis on “Decarbonization”
At the core of Shinjiro’s agenda is the promotion of a decarbonized society, a cause he has consistently pursued since his time as Environment Minister. His approach, which significantly influences Japan’s energy policy, positions renewable energy as the nation’s “main power source” and prioritizes its maximum deployment. In 2021, he argued that the Ministry of Economy, Trade and Industry’s target for renewables in FY2030 should be “36–38% or higher” and rejected the idea of setting an upper limit. When he took office as minister in September 2019, only four local governments had declared “Zero Carbon City” goals; that number has since grown rapidly, covering more than half of Japan’s population—about 65 million people. In October 2020, he also announced regulatory reforms to promote the installation of renewable power plants within national parks.
Shinjiro has also presented an ambitious economic vision of creating a “sustainable society” and “a nation suited to a 100-year life expectancy,” including a pledge to raise the average salary by ¥1 million within five years. To achieve this, he proposes boosting productivity, promoting investment, fostering technological innovation, and developing human capital. His pledges also include abolishing the temporary gasoline tax rate, revising income tax policy, and implementing measures to counter rising prices.
Key Sectors Poised to Benefit
If Shinjiro becomes party leader and implements his policies, several industrial sectors could see tangible benefits. The renewable energy sector is likely to gain from his plans to make renewables the main power source, relax restrictions in national parks, and promote the spread of solar panels. Business opportunities could expand across a wide range of fields, including solar panel manufacturing and installation, battery storage, and smart grid development. Companies such as Fuji Electric (6504), involved in geothermal power (Koizumi has previously spearheaded efforts to accelerate geothermal development by easing restrictions in national parks), and renewable energy developer Renova (9519) are expected to attract attention.
IT and manufacturing industries may also benefit from his wage-increase target, as demand rises in areas such as digital transformation support, AI and IoT development, industrial robots, and automation. Moreover, higher wages and measures to counter rising prices could boost consumer purchasing power, benefiting retailers, department stores, electronics chains, and restaurants. In agriculture, Koizumi’s experience as Minister of Agriculture positions him to promote “profitable farming,” rice price measures, and safety nets for producers, potentially opening new business opportunities in smart agriculture, agricultural inputs, and distribution and processing industries.
Challenges and Risks in Policy Implementation
However, Shinjiro’s policies come with significant challenges and risks. Expanding renewables may increase surcharges on electricity bills, potentially leading to much higher household electricity costs in the future—raising concerns about “greenflation” and heavier burdens on consumers. Power supply stability is also an issue, as renewable energy’s intermittency could result in more frequent power shortage alerts. In the transition phase, the costs of decommissioning thermal power plants and fossil fuel storage facilities may hinder investors from recouping their investments.
His economic policy goals also face criticism. The pledge to “raise average salaries by ¥1 million in five years” is seen by some as vague and lacking concrete measures, according to some people. Skeptics question whether a politician without an economics background can deliver on such targets, and doubt remains over whether growth-based assumptions are realistic. Rising inflationary pressure could influence the Bank of Japan’s monetary policy and interest rates, making it difficult to balance growth strategies with fiscal discipline.
Strategic Outlook
Shinjiro’s policies could transform Japan’s industrial structure and create significant opportunities in emerging growth areas, especially in green business. The decarbonization trend is likely to continue over the long term, but issues such as increased public burdens from surcharges, power supply stability, and the securing of fiscal resources and discipline are unavoidable. How these challenges are addressed will likely determine the success or failure of the next administration if Shinjiro becomes prime minister.