It summarises Japan’s achievements and challenges in decoupling environmental pressures from economic performance. It analyses the use of market-based instruments, such as environmentally related taxes and charges and emissions trading schemes, to meet environmental and economic objectives, as well as steps taken to remove environmentally harmful subsidies. The level of integration of environmental concerns in Japan’s response to the economic crisis and in its long-term growth strategy is also analysed, particularly the policy mix used to take advantage of the growth and jobs opportunities arising from eco-innovation and the environmental goods and services sector.