For Environmentally Sustainable Economy

1. For Environmentally Sustainable Economy Shigetaka SEKI Director for Environmental Affairs METI/Japan 11 December 2002

2. Evolution of Issues • Local Pollution • Domestic Environmental Problems • Global Environmental Problems Policy Issues Policy Approach • Addressing Pollution • Prevention of Environmental Problems • Integration of Environmental Consideration into Economy

3. History of Environmental Issues in Japan #1 • Late 19c- Water and air pollution increased • mining and refinement • combustion of coals • ‘50- Pollution by heavy metals, SOX, NOX • ‘60- Smoke-Emissions Regulation Law ‘62 • Environmental Pollution Prevention Framework Law ‘67 • Air Pollution Control Law ‘68 • Water Pollution Control Law ‘69

4. History of Environmental Issues in Japan #2 ‘70- Noxious sludge in ponds and bays White smog in cities PCB, Pollution of soils by heavy metals Eutrophication of ponds, etc. (e.g., red tide) • Environmental Protection Agency ‘71 • Assessment and Control of Newly Produced Chemicals Law ‘73 • Environmental Protection Law for the Inland Sea ‘1973

5. History of Environmental Issues in Japan #3 ’80 Eutrophication remained, Organic halides in water Waste disposal became a serious problem NOX from automobile remained a problem Ozone hole • Environmental Assessment Ordinances (Tokyo, Kanagawa) ’80 • Quantitative control of total NOX emissions ’81 • NOX emissions control to cover gas turbine and diesel engines ‘87 • Control of tri and tetra chloro-ethanes in water ’87 • Ozone Layer Protection Law ’88

6. ‘90 - Today • Mass production/consumption and disposal • Natural resources consumed in mass • Disposal of noxious substances increased • Capacity for waste treatment limited and illegal dumping increased • Significant negative impacts on ecosystem Still not on a sustainable path!

7. Current Situation of Wastes 1. Wastes from Industry(400mt/year) mining 7％ paper & pulp7％ chemicals 5％ Public utilities 20% construction 19%. agriculture 19% Iron & steel 7% others 13% food 3％ 2.Wastes from General Sources(50mt/year) electric appliances Est.2% automobile Est.10% apparel Est.2% furniture Est.2% Garbage Est. 30% containers Est.25% papers Est.25% others Est.4%

8. Future should be ... Recycle-oriented economy • Reduce the use of resources • Increased use of wastes as resources • Reduction of waste disposal Prevention of damages by hazardous substances • Reduction of chemical use • Improved safety use of chemical products Fully controlled flows of wastes and chemicals • Life cycle monitoring & assessments

9. Path for the Future • Rigorously pursue efficient use of resources • Change products and manufacturing to be recyclable • See the wastes as reusable resources • Use the functions instead of possess the goods • Actively take ex ante measures => 3Rs x 3 Areas

10. #1 Recycle oriented Products and Services Reducethe use of resources by • Increased efficiency of process • Switching to recyclable materials • Designing easy-to-recycle (reuse) products • Greening industrial processes to reduce wastes

11. #1 Recycle oriented Products and Servicescontinued Reuse the products and/or parts by • Efficient disassembling of products into parts • Decomposition of polymers to monomers • Improved assessment of quality and reliability of used parts • Improved repair of products and parts • Extensive standardisation of parts and materials

12. #1 Recycle oriented Products and Servicescontinued Recyclethe products, parts and/or energy by • Improved recovery of reusable materials from waste • Efficient use of wastes as energy sources • Distribution network for recyclable goods and materials • Markets for recyclable goods and material • Expansion of facilities for recycling of and recovering from wastes

13. #2 Mitigation of Climate Change ReduceGHG emissions by • Efficient use of energy • Conversion to less GHG emitting fuels • Efficient energy (and heat) supply systems such as fuel cell • Improved city infrastructure for efficient transportation

14. #2 Mitigation of Climate Changecontinued Replace GHG emitting fuels/substances by • Renewable sources of energy (PV, winds. etc) • Nuclear • Alternative gases for HFH, PFC and SF6 Recovery(plus sequestration) of GHG by • Carbon sequestration • Efficient use of biomass • Use of CO2 as chemical materials

15. #3 Environmentally friendly use of Chemicals Reducethe use of chemicals by • Conversion to biotechnology • Conversion to recyclable materials Replace the chemicals and products by • Environmentally no-affecting substances • Hazardous-metals free substances • Bio-degradable substances Re-mediationof environment by • Improved technology • Detoxification of chemicals • Biotechnology

16. Strengthening the base for environment oriented economy • Through LCA (Life Cycle Assessment) • Strengthening knowledge and technology base • Disclosure of Information

17. LCA (Life Cycle Assessment) • Development of methodologies • Monitoring and assessment of distribution and use and the environmental impacts of products and wastes • Assessment of environmental performance of economy by LCA criteria • Eco-labelling

18. Strengthening knowledge and technology base by • Fundamental principles for environment-oriented design • Development of hazard assessment measures • DB for PRTR(pollutant release and transfer registry) • R&D for 3x3R Technologies • Standardisation

19. Disclosure of Information • Collection and publication of data (e.g., CO2 emissions, PRTR, MSDS) • Environmental labelling

20. Opportunities for the Business Sector Environment means business (200mUSD or 2%GDP in ’97 to 360mUSD in ‘10) • Recycling • Waste treatment to resources • Environmental assessment • Environmental consultants/ESCO • Environmental consideration as a source of competitiveness New products & technologies • Additional value on environment-friendly products • Improved corporate image • New system technology (e.g., HEMS, BEMS) • Repair, reuse, recycle business • Improved productivity

21. Public Policiesfor recycle-oriented economy Promotion of Reuse of Resources Law ‘91 • Environmental consideration in product design • Selective collection of used resources (Waste Separation) • Labelling, etc. Framework Law for Recycle Oriented Economy ‘01 • Basic principles, • Responsibilities of government, business and citizens • National Plan, etc

22. Laws for Wastes and Recycle For wastes: Wastes Treatment Law (amended in ‘01) • Proper waste management • Regulation on facilities and business • Standard Setting For recycle: Effective Use of Resources Law ‘01 • Promotion of recycle • Improved design and materials for recycle • Separation of recyclable goods • Effective use of byproducts

23. Recycle and Green Purchase • Recycle Law for Containers ‘00 • Recycle Law for Electric Appliances ‘01 • Recycle Law for Construction Materials ‘02 • Recycle Law for Foods ‘01 • Recycle Law for Used Automobile ‘02 • Preceded by Used Automobile Recycle Initiative ‘97 Plus sectoral guidelines (35 product areas, 18 industrial sectors) • The Law for Green Purchasing ‘01 • Regional initiative: Eco-towns, 16 areas (‘02/5)

24. Scheme under the Used Automobile Recycle Law ※１ First owner ※１　or current owner authorisation Flows of used car/parts Fee for recycling Used car Money flows Request for payment Fund manger Final Owner ※２The third parties can take the responsibility in the absence of persons with duty payment Delegation of car registration Automobile manufacturers/ importers Transfer obligation Used car licence Dealers hand over, take back of freon (obligation) Used car Transfer obligation Recycle for themselves or by commision recovery of freon gas licence Markets for used parts, metals, etc Fee for recovery Used car Transfer obligation Had over, take back of air-bugs (obligation) Parts for reuse disassembling licence Fee for disassembling Transfer obligation Hand over, take back of shredder dusts metals shredder licence ※２

25. Public Policies forClimate Change Mitigation The Framework Law to Address Global Warming (revised in ‘02) Comprehensive Policy Package of 2002 • Dual goals of environment and economic growth • Step-wise approach • Contribution by all sectors • Efforts by all countries => Policy performance to be reviewed in 2004

26. GHG reduction targets 1. CO2 from Energy Use (+0%) 2. Non CO2 GHG reduction (-0.5%) 3.Innovative Technology and Behavioral Approach (-2%) 4. HFC, PFC, SF6 (+2%) 5. Sinks (-3.9%)

27. Breakdown of Targets for Energy Use/Production End Use Energy Efficiency Improvement (22mtCO2/y) • Industrial Sector • Voluntary Programmes • Introduction of energy efficient technologies • Commercial and Households Sector • Energy Management • Bench-Marking to Top-Runners (products) • Transport Sector • Bench-Marking to Top-Runners • ITS, modal shift to sea shipment, etc. New and Renewables Energy Sources (34mtCO2/y) • Biomass, PV, solar thermal, wind, fuel cells, etc. Fuel Conversion (18mtCO2/y) • Conversion to natural gas • Extension of gas pipeline and grids Nuclear

28. Limitations For industry • Objectivity of criteria for environment-friendliness • Incremental costs > added value • Prisoners’ dilemma • Conflicts between the laws for waste and recycling • Boundary between local governments For nation • Impacts on competition (absence of equal-footing market) • Incomplete loop for recycling due to international trade

29. Solutions (domestic) • Solidify environmental values for environment-oriented market => standards, SRI, disclosure, • Green Purchase • Regulations • Co-ordination with local governments e.g., Environment-friendly industry complex • Economic instruments

30. Solutions (International) • International rules, guidelines, standardisation • Fair, coherent and consistent efforts by all countries • Compatibility of products and materials

31. For Global Collaboration Technology transfer to and Information Sharing with developing countries • Capacity Building (including sharing experiences) • Technology and needs assessment • Business sector involvement New Opportunities • Growing awareness of environmental issues in developing countries • Kyoto Mechanisms: CDM, JI

32. Closing • For Sustainable Development • Environment and Economic Growth: Dual Targets • Environment should mean Opportunity • Environment should mean Business • Environment should be dealt with globally