Goals of Japan’s Energy and Environment Policy

1. Goals of Japan’s Energy and Environment Policy

2. Goals of Japan’s Energy and Environment Policy • Climate change policy should be developed and implemented so as to contribute to both the environment and economy by making the best use of technological innovation and innovative ideas in economic circles. • Japan assists developing countries with its climate-friendly technologies. In the short term Achievement of the Kyoto Target • “The Kyoto Target Achievement Plan” (2005) based on review and assessment of the current climate change policy programme In the medium and long term Establishment of Low Carbon Society • on the basis of long-term outlooks for energy and CO2 emissions • through development and diffusion of innovative technologies 1

3. Basic Principles of Japan’s Energy Policy : 3Es (Based on the Basic Law on Energy Policy Making-*enacted in June 2002) Security of Energy Supply e.g.Alternatives to oil Harmony with Environment e.g.Lowering CO2 emission Economic Efficiency e.g. Utilizing market mechanism Master Plan for energy supply-demand *issued in October 2003 Long-term Outlook on Energy Supply-demand *interim report issued in October 2004 (Advisory Committee for Natural Resources and Energy, Energy Supply and Demand Subcommittee) Framework of Japan’s Energy Policy * In utilizing market mechanism, full consideration will be given to other two policy goals. 2

4. Stabilization of global GHG concentrations In order to stabilize the atmospheric concentration of CO2, carbon emissions from the burning of fossil fuels need to be balanced with the terrestrial and ocean carbon uptake. To balance emissions and uptake, emissions must be drastically reduced to less than half of the current level. The IPCC scenario for stabilizing at 550 ppm (WRE550) shows that, although emissions need to be reduced to less than half of the current level, about one-fourth reduction will be necessary in comparison with the future emission peak. Emission scenarios to stabilize atmospheric CO2 concentration (Source) IPCC (2001) 3

5. 2030 Energy Demand-Supply Structure in Japan Energy demand will begin to drop:In the reference case, energy demand will take a downturn in fiscal 2021, mainly due to energy conservation technologies and introduction of efficient equipment along with industrial and socioeconomic structure change. Energy supply structure will gradually change:The spread of distributed power generating systems will increase demand for natural gas to increase its share. Nuclear power will continue to secure a stable share as a power source. Oil, despite a decrease in share, will continue to be an important source of energy that accounts for around 40% of the total energy supply. Given progress in the introduction of new energy technologies, renewables may attain a share of around 10%. Domestic Primary Energy Supply (10^3 kloe) Final Energy Consumption (10^3 kloe) 4

6. Long-term Outlook for CO2 emission • Technologies and nuclear energy are key for reducing CO2 emission • in growing economy • Line 1: As R&D affords considerable potential for energy conservation, CO2 emissions may • begin to fall around 2020 in spite of steady economic growth. • Line 2: Introduction of additional nuclear plants also has enormous impact. • Line 3: Further introduction of advanced technologies has enormous impact which would reduce • CO2 level in 2030 well below 1990 level. • Line 4: GOJ pursues Kyoto Protocol target with additional measures. 【Energy-Related CO2 Emissions】 Line1 Line2 Line4 Line1: Reference case – 10 additional nuclear plants expected. Line2: Nuclear-high case – 17 additional nuclear plants expected Line3: Additional R&D case Line4: Additional measures case for Kyoto Target Line3 5

7. Japan’s Energy Efficiency • Japan has been the most successful in decoupling energy demand from • economic growth. Japan’s level of energy efficiency has been better than • other developed countries. • - Accordingly, marginal abatement cost of Japan is higher. - The manufacturing industry has played a key role for drastic energy efficiency improvement during 1970s and 1980s. Fig: Energy consumption per GDP in EU15, US and Japan Fig: Marginal cost calculation for each country to achieve its Kyoto target Fig: Energy consumption per production of the manufacturing industry in Japan (Source) IPCC (2001) (Source) IEEJ-EDMC, Handbook of energy & economic statistics in Japan (Source) IEA, Energy Balances of OECD Countries 6

8. Key for Success: New Technologies (1) - Innovative technologies are necessary for sustainable development. -The Government of Japan has put emphasis on energy-related R&D with a view to reducing emissions not only domestically but also globally. Fig: Energy-related R&D investment by government Fig: Importance of innovative technologies in CO2 emission reduction GAP (Source) Battelle (2000) (Source) IEA (2002) 7

9. Key for Success: New Technologies (2) Others201.6 MW German277.3 MW World 1327.7MW(2002) Japan636.8 MW US212.2MW • Energy conservation technologies Fig: Total worldwide installations of photovoltaic power system • - Light-emitting diode (Lights for the 21st Century) • Low energy consumption (10% of incandescent lighting) • Long life (10 times fluorescent lighting) • Saving of stand-by electricity consumption • High performance boiler & laser • 17% improvement of thermal efficiency • Photovoltaic power generation • GOJ has been concentrated on supporting R&D program • to contribute to global dissemination of PV. • - Biomass • - 5 million vehicles by 2020 in Japan. • - Clean coal technologies, etc • Renewable energy technologies (Source) IEA PVPS • Fuel cell • Promotion of nuclear power • Carbon sequestration technologies • Clean technologies of fossil fuel 8

10. Key for Success: Efficiency Improvement (1) Fuel Efficiency (km/l) Fuel Efficiency (km/l) Top Runner Program (Stricter energy conservation standard) Conventional energy conservation standard -Energy efficiency is a key for striking a balance between environment and economy. -The “Top Runner Program” was introduced in 1998 as energy conservation standards for home/office appliances and fuel efficiency standards for automotives. Fig. Example of Top Runner Program Table: Examples of covered equipment (18 equipments are covered in total.) 9

11. Key for Success: Efficiency Improvement (2) Average Fuel Consumption for Gasoline Passenger Vehicles TR Ratio -The “Top Runner Program” has -stimulated competition and innovation in the market, -diffused existing technologies, and -enhanced industrial competitiveness -It created “win-win” situation and virtuous cycle. Fig. Average fuel consumption for gasoline passenger vehicles, and Top Runner ratio Fig: Energy efficiency of refrigerator km/L (Source) JEMA (2002) *The target is 23% improvement of efficiency in 2010.(Base year is 1995.) 10

12. Key for Success: Efficiency Improvement (3) Steel industry (Energy intensities in integrated steel plant) Thermal power sector; thermal efficiency (Electricity output per energy input) (Source): ECOFYS(2004), etc (Source): Korea Iron & Steel Association , etc Cement (Energy intensities of clinker) Chemical industry (CO2 emission intensities of ethylene production) (Source): SRI Chemical Economic Handbook etc (Source): Battelle -As for industry sector, incentive for better competitiveness needs to be utilized. • They know their own technologies and facilities best. • Best practices and best available technologies need to be globally shared. • Sectoral approach is effective for this purpose and can make technology • transfer easier. 11