1 Thinking About Japan’s Energy & Environmental PolicySumiko Takeuchi International Environment and Economy Institute (IEEI), Director & Senior Fellow The 21st Century Public Policy Institute (21PPI), Deputy Project Leader University of Tsukuba, Visiting Professor
2 The basics, and current situation, of Japan's energy policy
3 Picture of Japan’s Power Generation Capacity Post 3/11Only 3 nuclear power plants in operation → About 30% power generation capacity lost. Excluding hydroelectric power, renewable energy in 2015 accounted for 4.7%, a sharp increase of 3.2% from the previous year.（2013：2.6％→2014：3.2％→2015：4.7%） Fossil-fuel power plants replaced nuclear generation → Fossil Fuel Power accounts for 90% of power generation. Transition of power generation sources following 2011 Tohoku earthquake and tsunami (general and wholesale power generation; ratio of power generation) Fossil % Nuclear Hydro Oil etc. LNG Coal Nuclear % 2010 2011 2012 2013 Aug. 2014 Jan. Source: author’s power industry surveys and interviews.
4 Changes since FukushimaITEM BACKGROUND NOTES Energy self-sufficiency 20％ ⇒ 6% In 2012, self-sufficiency was the lowest level amongst developed countries. Fossil fuel dependency rate 60% ⇒ 90% Deviation of resource-supplying countries Dependent on 83% oil and 29% LNG from Middle East countries. Imported fuel costs apprx 3.6 trillion yen increase (10 billion yen/day, 100,000 yen/second) In 2015, approx 2.3 trillion yen increase. Estimate of thermal power generation with nuclear power plants stopped. Cost of power generation Approximate 10% rise Replacing all of Japan’s thermal power plants with nuclear power – from "Japan's Economy “, Japan Government Cabinet Office estimates. Real GDP Reduction of 0.39 to 0.60% From “The Cost of Power Generation in Japan’s Economy “, Japan Government Cabinet Office estimates. Electric bill About 20% rise for the home About 30%.rise for the Industries Inter-regional energy gap US natural gas prices are 1/3 of Europe’s, and 1/5 of Japan’s If the October 2013 time → continued energy-intensive industries date, lose the export share of one-third to match EU (IEA estimate) Greenhouse gas emissions 83 million tons increase Value obtained by comparing general electricity utilities 29 million tons reduction with general electric utilities 112 million ton increase (fiscal 2012 CO2 emissions compared to 2010). Source: Material based on Japan’s government Basic Energy Plan.
5 Self-Sufficiency Ratio of Primary Energy in Major CountriesEach country has worked to improve its self-sufficiency ratio since the oil crisis experienced in the 1970’s-80’s. England became an oil exporter in the 1980’s following the development of the North Sea oil and gas, but recently its self sufficiency ratio is declining due to reductions in production. Ever since the oil crisis, France has improved and maintained its energy self-sufficiency ratio by promoting nuclear power generation. Although the U.S. experienced a decline in energy self-sufficiency and increased dependency on imported oil from the 1980’s, the figures are now improving due to shale gas production. Source: Material by Ministry of Economy, Trade and Industry
6 ‘Voices from Industry’Soaring Price of Electricity Since 2011, electricity prices for industry and household have increased by 40% and 25%, respectively at 2013. Since SMEs and very small businesses cannot pass along the increase in the price of electricity, businesses are closing and bankruptcies have arisen. Industrial Sector ‘Voices from Industry’ (Points taken from results of The Japan Chamber of Commerce and Industry survey) Casting 80% of SMEs affected Accelerated bankruptcies & business foreclosures (12 companies in 2012, 14 companies in 2013) Forging More than 90% of SMEs affected Companies increasingly resorting to layoffs, salary and headcount reductions as means of reducing labor costs in order to deal with increasing electricity costs. Metal Heat Treating Most are very small businesses, or microbusinesses with an average of 26 employees. Two companies at the end of last year and one company this spring have closed their factories or divisions. 電気料金は震災前比、標準世帯モデル料金の全国平均で約２割（東京電力管内では約３割）上昇している。これはあくまで標準・平均であり、産業部門を中心とする自由化分野の需要家、電力多消費の中小企業においては平均を大幅に上回る深刻なコスト増が生じている。
7 Increasing CO2 Emissions from Power SectorTotal emissions of FY 2015 (preliminary figures) were 1,321 million tons (-3.0% compared with the previous year, 6.0% compared to 2013, -5.2% compared to 2005) Improvement of basic unit due to progress in energy conservation, restart of nuclear power plant in Kagoshima prefecture (2015) Energy-related CO2 emissions peak in 2013. t 3% decrease over the previous year (QE)
8 Our Future Energy Policy Toward Global Warming
9 4th Strategic Energy Plan (April 2014)3E+S Multilayered, Diversified and Flexible Energy Demand Supply Structure Each energy source should exert its advantage and complement others’ drawback Various players can participate and various alternatives are prepared Self-sufficiency should be improved by developing domestic resources. Energy Security (Stable Supply) Economic Efficiency (Cost Reduction) Environment Safety Global Perspective Economic Growth + The fourth Strategic Energy Plan was developed amid these multiple challenges. The Plan first has underlined 3E + S, namely, energy security, economic efficiency, environment and safety. In addition, it has emphasized Japan’s energy policy needs to take full account of global perspective and economic growth. Bearing these principles in mind, the Plan aims at multi-layered, diversified and flexible energy supply/demand structure.
10 Japan’s Electricity Demand and Power Supply 2030Energy Demand Primary Energy Supply Power generation total Energy savings 1,961 billion kWh est. (17% reduction compared to previous policy) 12,780 billion kWh est. Energy savings 17% Power generation total Includes transmission loss Hydro % Solar 7.0% Wind 1.7% Biomass % Geothermal 1.1% Economic growth 1.7% / year 10,650 billion kWh est. Energy savings + Renewable energy 40% Renewable 19-20% Renewable 22-24% Nuclear 17-18% Nuclear 20-22% Power generation 9,666 billion kWh Power generation 9,808 billion kWh LNG 22% LNG 27% Coal 22% Coal 26% Oil 2% Oil 3% Base load rate 56% est. 2013 actual 2030 estimate 2030 estimate Edited source: 10th Long-Term Energy Demand – Japan Government Sub-Committee
11 Comparison of GHG Emissions Reduction Targets▲ represents decrease Compared to: 1990 2005 2013 Japan ▲18.0% (by 2030) ▲25.4% (by 2030) ▲26.0% (by 2030) USA ▲14～16％ (by 2025) ▲26～28％ (by 2025) ▲18～21% (by 2025) EU ▲40％ (by 2030) ▲35％ (by 2030) ▲24% (by 2030) China Compared to 2005, CO2 emissions per GDP decreased 60-65%. 2030 seen as peak of CO2 emissions. Seeking to accelerate reaching peak emissions. India Compared to 2005, GHG emission reductions per GDP of 33-35% by 2030. South Korea By 2030, reductions of 37% under BAU (“business as usual”) Russia Compared to 1990, reductions of 25 to 30% by 2030.
12 Basic policy of Japan toward Global WarmingPrime Minister Abe's speech shortly after COP 21 “Aim for compatibility between economic growth and measures against global warming according to the three principles.” First, innovation. In particular, pursue a solution by innovative technology. Second, encouraging domestic investment and enhancing international competitiveness. Thirdly, seeking public wisdom widely. Cabinet decision on vision of 80% reduction by 2050. Developing a strategy to induce innovation. Particularly formulated a strategy aimed at achieving energy mix by reducing CO2 emissions intensities in energy use. The key is innovative technology development
13 (Establishing in later May 2016)Discussions by the Japanese government on long-term strategy Currently, the Ministry of Environment(MOE) and the Ministry of Economy, Trade and Industry(METI) has started discussion on long-term strategy. MOE’s discussion includes possible effects of introducing large scale carbon tax. METI is studying situations in other countries, sharing knowledge among public, industry and academic sectors in Japan, and summarizing the overall discussion points. Combining the results of these discussions, the Japanese government will formulate a long-term strategy before the end of 2020. The Ministry of Environment The Ministry of Economy, Trade and Industry Round table conference on long-term strategy for Climate Change Informal round-table conference organized by the Minister of Environment, composed of 6 academics. (issued a proposal in Feb. 2016) Platform on long-term measures against global warming Deciding the direction towards “long-term low-emission growth strategy” by sharing discussion points and relevant facts among public, private and academic sectors (Establishing in later May 2016) Central Environment Council Starting discussion in the summer of 2016 to make “Long-term carbon vision” Industrial Structure Council (to be established after 2017) The Government will formulate “Long-term low-carbon development strategy “ (Before the end of 2020)
14 Study on super long term scenariosDiscussion on long-term strategy by METI METI started the discussion on long-term strategy since last May, establishing some subcommittees on specific issues. The study is going on. Major Discussion Points; ・measures against global warming that are compatible to the enhancement of domestic investment ・measures to contribute global emission reduction by utilizing Japanese technologies ・measures to promote public-private collaboration and international research cooperation to create innovation Platform on long-term measures against global warming (Public, Private and Academic) Study on super long term scenarios studying scenarios anticipating global carbon-neutral in the later half of the century TF on Enhancing Domestic Investment TF on Overseas’ Expansion Strategy TF on Investment for Innovation (Energy and Environment Innovation Strategy) measures against global warming that are compatible to the enhancement of domestic investment measures to contribute global emission reduction by utilizing Japanese technologies Measures to promote public-private partnership and international research cooperation to create innovation
15 ？ ？ ？ Road to CO2 Net Zero Emissions by 2050 ElectricityFinal Energy Consumption Primary Energy (Decarbonization) Electricity Non-electricity Biomass Fuel ？ Energy Efficiency Fossil Fuel (+CCS) ？ ？ Renewable Energy (Other than Biomass) / Nuclear Energy Current Status In the Future
16 Road to CO2 Net Zero Emissions by 2050: Power-to-XFinal Energy Consumption Secondary Energy Primary Energy (Decarbonization) Electricity Non-electricity Biomass Fuel Energy Efficiency via Electrification Fossil Fuel (+CCS) Electricity Non-electricity Hydrogen Renewable Energy (Other than Biomass) / Nuclear Energy Electricity (X: Transportation, Heating) (X: Hydrogen) Electrification of Transportation & Heating
17 Trial Calculation Example of Japan’s Energy Balance in 2050Final Energy Consumption in 2050 (1018Ｊ) 13.44 Reduction by 25% from Depopulation, Progress in Energy Saving, etc. 10.25 Additional Energy Saving from Electrification in Areas of Transportation & Heating Non-electricity 7.02 Electricity (1300 TWh) (Source) Trial Calculation by Business Technology Strategy Research Institute, Tokyo Electric Power Company Holdings, Inc. (980 TWh) (750 TWh) Note: Electricity Includes Private & Decentralized Power Sources FY2013 In Case of Current Electrification Status In Case of Maximum Electrification
18 Component of innovationDigitize Open Connect × × Open Data Open Innovation ■sharing ■Connected ■ EV ■self-driving
19 Take leadership in the development of innovative technologiesContributions that only Japan can make （my personal suggestion） Provide knowledge of design and implementation of pledge and review to other countries Sharing experience of voluntary emission reduction effort of Japanese industry sectors Contribute to the emission reduction in other countries using Japanese technologies Expand Japanese Technology using Joint Credit Mechanism (JCM) or public finance scheme Take leadership in the development of innovative technologies Develop a strategy to develop innovative technologies and carry it out Promote international R&D cooperation Working together with the Mission Innovation (established at the COP21 by 20 countries including Japan, US, EU, China, India) Use of Innovation Cool Earth Forum (ICEF), etc. Contribute to develop an international rule of intellectual property rights
20 Thank you for your attention