Green Economy Policy in Japan: After East Japan Disaster and Fukushima Nuclear Accident

1. International Workshop on Green Economy Ministry of Environmental Protection of China & UNEP Beijing, 30-31 October 2012 Green Economy Policy in Japan: After East Japan Disaster and Fukushima Nuclear Accident Xin Zhou, Ph.D., Deputy Director & Satoshi Kojima, Ph.D. , Director Economy and Environment Group Institute for Global Environmental Strategies (IGES) Institutefor Global Environmental Strategies

2. Outline • Green economy and green investment • Green economy policy in Japan • Lessons learned from east Japan disaster and Fukushima accident • New policy directions for Japan • Strengthening collaborations on green investment in China, Korea and Japan Institutefor Global Environmental Strategies

3. Green Economy and Green Investment • UNEP gave the working definition of a green economy asone that results in improved human well-being and social equity, while significantly reducing environmental risks and ecological scarcities. • The essence of a green economy is to pursue harmonization of inclusive economic growth and environmental sustainability. • Green investment is vital in gradually changing the fundamental structure of conventional economic infrastructure, create new jobs and help economic recovery. Institutefor Global Environmental Strategies

4. Green Economy in the Context of Japan • On 31 October 2011, Japan gave its definition to a green economy for the first time in its preparation for the Rio+20. • A green economy is “an economic system which promotes sustainable growth while improving human welfare, by pursuing economic growth and the environmental conservation in tandem, properly utilizing and conserving natural resources and ecosystem services”. • A green economy is regarded as “a useful tool to achieve Sustainable Development”. • Government of Japan (2011) Input to the Rio+20 Outcome Document [http://www.mofa.go.jp/mofaj/press/release/23/10/1031_05_01.pdf] Institutefor Global Environmental Strategies

5. Japan’s Policy Aiming at Green Economy • 3 pillars in the vision of “becoming a leading environmental nation in the 21st century” (2007) • Low carbon society (Challenge25: 25% reduction by 2020) • Sound material-cycle society(3R initiative) • Society in harmony with nature (Satoyama Initiative) Low Carbon Society Society in Harmony with Nature Sound Material-Cycle Society Green Economy Institutefor Global Environmental Strategies

6. Japan’s Green New Deal Minister of the Environment announced “Green Economy and Social Change” (Japanese Green New Deal)in April 2009. • Greening social overhead capital (public investment) • Renovation of public buildings e.g. schools to eco-building • Renovation of transportation/city to eco-friendly system • Investment in forestry for carbon mitigation • Greening consumption (mainly through eco-point schemes) • Promotion of energy-saving home electric appliances • Promotion of next generation eco-housing • Promotion of next generation vehicles and biofuels • Greening investment (through carbon market and green tax) • Introduction of domestic cap-and-trade • Greening tax • Carbon offsetting, carbon foot-print Institutefor Global Environmental Strategies

7. Japan’s New Growth Strategy • Cabinet approved “New Growth Strategy” as the direction of Japanese economic/industrial policy on 18 June 2010. • Aim to create new demand and employment in 4 priority areas • Economic growth through green innovation Institutefor Global Environmental Strategies

8. Green Innovation in New Growth Strategy • ＜Energy Sector＞ • Renewable energy • Nuclear power plant • Efficiency improvement in power generation • Smart grid • ＜Transportation＞ • Promotion of modal shift • Next-generation vehicle • Targets by 2020 • 50 trillion of environment related new market • 1.4 million new environment related employment • Emissions reduction by 1.3 billion t-CO2 at the global level • ＜Resource＞ • Promotion of recycling • Invention of alternative materials for rare metals • ＜Building＞ • Energy-saving home electronics • Eco-house • Heat-pomp • LED and organic EL • Environmental concierge Institutefor Global Environmental Strategies

9. Contributions to Green Economy in Asia • Utilise green innovation in Japan to greening economies in Asia • Promote infrastructure development, e.g. Shinkansen for urban transportation, water infrastructure, energy infrastructure, and eco-city. • Not only increased exports of green products but also consequent economic growth in Asian countries will provide large markets for Japanese producers. • Clean Asia Initiative (Ministry of the Environment) • Help achieve the transition towards green economy (low carbon economy, sound material-cycle economy and economy in harmony with nature) in Asian countries through ODA. Institutefor Global Environmental Strategies

10. Classification of Green Industry • Matured industry: • well-developed technology • market share in both domestic and foreign markets • Example: hybrid car Supportive: Industry which support industrial sectors listed left for their contributions to green activities Example: Financial institution, Trading company • Matured industry with limited market share • well-developed technology • home markets • no entry or only a recent entry in foreign markets • Example: energy (nuclear energy), transportation (high-speed rail), construction (low-carbon housing), water, recycling Premature industry: Industries with small domestic market Example: electric cars, biomass energy Institutefor Global Environmental Strategies

11. Lessons from 3.11 and Fukushima • Japan is still vulnerable to serious disasters • Japan is very advanced in seismic engineering and technologies. • Have experienced serious Tsunami damages nearly every 50 years and have rich experiences in preventing Tsunami damages. • Still, more than 20,000 died and Japan did not prevent the Fukushima accident. • Precautionary principle is key to avoid uncertain catastrophes • Immediate cooling by sea water could have avoided hydrogen explosion of Fukushima No.1 reactor, however nobody could have made such a decision without a social acceptance of the precautionary principle. Institutefor Global Environmental Strategies

12. Lessons from the Rolling Blackout of TEPCO • Overconsumption of electricity • After adapted to darker illumination in stations and trains, many people think previous illumination was too bright. • Rolling blackout raises general awareness in energy saving. • Vulnerable electricity supply to lifelines and medical services • TEPCO’s rolling blackout seriously affected lifelines such as railway services, car traffic due to no traffic signals, etc. and medical services in hospital as well as at home. • Disadvantages in centralised and monopolistic electricity system are presented. Serious discussions started on the separation of electricity generation from distribution and transmission as well as introduction of decentralised generation and distribution system using renewable energy. Institutefor Global Environmental Strategies

13. New Policy Directions for Japan • Discussions are ongoing including • Ecological tax reform to promote investment in renewable energy and smart grid that enable more renewables in the energy mix. • Not only resource efficiency improvement but also reductions in absolute resource use should be achieved such that economy and life style is compatible with the carrying capacity of our planet. • Application of payment for ecological services and green accounting to support sustainable agriculture and green supply chains. • Key success factors: • Development paradigm shiftingfrom economic efficient growth to ecologically resilient growth based on precautionary principle. • Progress indicators reflecting quality of life and resilience (or vulnerability) of the society and economy. Institutefor Global Environmental Strategies

14. Strengthening Collaborations on Green Investment in China, Korea and Japan • Japan and Korea represent developed countries and China is an emerging economy. The three countries have different visions and priorities in achieving a green economy. Experiences from the three countries can be referred to other countries. • Proposal for a comparative study on green investment in China, Korea and Japan • IGES are conducting several projects related to green economy, e.g. SDG, pathway of low carbon growth, resource management and recycling, and indicators, etc. The Economy and Environment Group applies several analytical tools, CGE, MRIO, GIS, MESSAGE models, to conduct policy assessment.

15. Output Effects of New and Renewable Energy Investment (preliminary estimation)

16. Income effects of New and Renewable Energy Investment (preliminary estimation)

17. Thank you for your kind attention! Zhou@iges.or.jp; Kojima@iges.or.jp http://www.iges.or.jp Institutefor Global Environmental Strategies