Japans Climate Policy

Will We be able to Achieve the Target?

October 19, 2007

Yurika Ayukawa
WWF Japan, Climate Change Programme

Japanese GHG Emissions and Plans for Reduction

1357 +7.6%
. %

MtCO2

1360 7.8%
. % (+5.5%

Graph made by Ministry of Environment, May 29, 2007, translated by WWF Japan
8.4%more emission reduction needed

1,30 0

1261

(+4.8%
Temporal increase due to nuclear power plant shutdown

1,20 0

Sinks 3.8% Kyoto Mechanism 1.6%

1,10 0

1,00 0
Base Year (1990) 2004 2005 Kyoto Target 2008 2012

Kyoto Target Achievement Plan(2005)

Main Policies

Energy Conservation Law (incl. Top Runner Program) Mandatory GHG Emissions Accounting, Reporting, and Disclosure (all large&middle sized facilities) More Nuclear Power (by 2010, 2 new NPP in addition to the current 55) Renewable Portfolio Standard(2014Target: 1.63% of Total Electricity Supply, revised Jan.29, 07)

Voluntary Actions
Keidanrens Voluntary Actions (Covers 40% of Japans Total Emissions) Team Minus 6% (for the general public) Green Logistics Partnership (Transport) Home Energy Management System, Building Energy Management System (ESCO)

Whats Wrong with the Plan?

Mainly based on Voluntary Actions which do not guarantee real reductions Mostly targeted to improve carbon intensity per production, sales turnover, or energy consumption, and not to reduce absolute amount of emissions Totally dependent on more nuclear power plants to reduce the carbon intensity per kilowatt hour of electricity No market-based instruments such as carbon tax or emissions trading scheme No scheme for the big emitters No incentive scheme for the increasing sectors such as office buildings, households, and transport

Review Process of the Kyoto Target Achievement Plan

Review Committee comprised of committees from METI and MOE held more than 20 meetings since last November. Related stakeholders from the government, industries, academics, NGOs were invited to make statements and proposals on the current policies, achievements and insufficiencies. The Points of Discussion were publicized in April, and put to public consultation. Additional measures were discussed and an Interim Report was publicized in August and put to public consultation. Final Summary is due in November Final Report due in December The New Plan will be adopted by the Cabinet in March, 2008.

The Review Process is Totally Insufficient

Although the Report admitted that the current policies were not enough to meet the Kyoto target, the measures discussed are still on voluntary schemes, and no mandatory schemes or economic measures are discussed. The main pillar of the New Plan will be to expand the boundaries of Voluntary Actions to all sectors. There is no scheme for the big emitters except Keidanrens Voluntary Actions There is still no incentives for the increasing transport, commercial and household sectors Renewable Energies are not regarded as an essential part of the CO2 reduction policy. Totally dependent on nuclear power. Though there has been many accidents, frauds, and earthquakes which forced the nuclear power plants to shut down, it still plans to increase the operational rate up to about 88%, which is absolutely unrealistic and dangerous.

Where does Japanese CO2 emit from? Direct Emissions for 2005
Households 5% Commercial 8% Waste 3% Power Generation 32%

Transport 19% Industrial Process 4%

Total of the Blue part is 65

Industry 29%

Made from Greenhouse Gas Inventory Office, May 29, 2007

Indirect Emissions Sources

compared to 1990
600 500

1000 tCO2

400 300 200 100 0

In du st ry m er ci al

Industries say these sectors are the problem, not them

1990 2005

eh ol ds

Se ct or

ce ss al Pr o

or t

ns p

Tr a

Po w

om

In du st ri

ou s

er

Greenhouse Gas Inventory Office of Japan, May, 2007

as te

CO2 emissions and activity data by sector

Emissions by sector should be considered with activity data Activity in the industrial sector has leveled off, but in the commercial and domestic sectors it has risen sharply
Changes between 1990-2005 by sector in CO2 emissions and economic activity>
Changes in CO2 emissions; changes in activity (1990=1 1.5 1.4 1.3 1.2

1.1 1 0.9 0.8 industry passenger travel freight transport commercial domestic

Changes in CO2 emissions

Changes in activity

Indices of activity are IIP, traffic volume of passenger transport and freight transport, floor area, number of households, respectively.)

Source Institute for Energy Economics Japan (IEEJ) Energy and economic statistics survey 2007 and tentative figures for 2005 GHG emissions

Is Japan the Most Efficient Country? Trends in industrys energy efficiency

Final energy consumption of each countrys industrial sector/Real GDP (based on exchange rates): changes between 1960-2004
140 Unit: toe / $US million 120 100 80 60 40 20 0 1960 1970 1980 1990 2000 Japan EU15 US Germany UK France Italy

Japans superior performance in the 1970-80s is clearly starting to be overtaken, with the UK surpassing Japan in 2004
Source IEA (2006) Energy Balances of OECD Countries 2003-2004. IEA/OECD

Japanese manufacturing industrys energy efficiency

Changes in energy intensity based on IIP Indices of industrial production) 19702005
120 110 100 90 80 70 60 50 40 1970

FEC/ I I P ( 1973= 100)

Manufacturing Industry Steel Chem ical Cem ent Paper and Pulp

1975

1980

1985

1990

1995

2000

2005

Fiscal Year

Following the oil shock, energy efficiency improved After 1990 it has stagnated (and somewhat worsened)
Source: IEEJ. (2007) Handbook of Energy and Economic Statistics in Japan (2007 edition). Energy Conservation Center, Japan.

CO2 emissions/ GDP ratio: international comparison (exchange rate)

Total CO2 emissions/GDP ratio (exchange rate): direct emissions 2004>
600 500 400
million) CO2 emissions/GDP ratio (tonne / $US

1.0 1.6 2.3 1.7 1.4 1.1 1.7 other

other agricultural domestic commercial transport industry energy conversion
US Ge rm an y UK Fr an ce Ita ly

300 200 100

Ja pa n

In total, Japan emits less CO2 than other developed countries Transport and domestic sectors have particularly low emissions. Industry emits more than the EU, and is comparable with the US. Source Japan, EU, US submissions on GHG emissions to UNFCCC IEA (2006) Energy Balances of OECD Countries 2003-2004. IEA/OECD.

 Total CO2 emissions/GDP ratio (purchasing power parity): direct emissions 2004>
60 0 50 0 40 0 30 0 20 0 10 0
Ger man F ra nce Jap an Ita ly

CO2/GDP ratio (tonne / $US million)

CO2 emissions/GDP ratio: international comparison (purchasing power parity)

1.00 0.92 1.61 1.06

0.91 0.69 0.89

o r the o ra the gricultura l do e m stic co m rcia m e l tra nspo rt industry e rgy co e n ne nv rsio

US

y UK

As a whole, Japans emission intensity is the same as the EUs. Japans transport and domestic emission intensities are low but industrys intensity is high compared with the US and EU Source: Japan, EU, US submissions of GHG Inventories to UNFCCC; IEA Energy balances of OECD Countries 2003-2004 GDP

CO2 emissions by sector: international comparison

CO2 emissions by sector: international comparison (direct emissions, 2004)
0% Japan 15 US Germany UK France Italy energy conversion industry transport commercial domestic other agricultural other 50% 100%

Japan`s industrial emissions constitute a higher proportion of total emissions than in any other G8 country The proportion of emissions from domestic and transport sectors is low compared with other countries Source Japan, EU, US submissions of GHG Inventories to UNFCCC

International comparison of fuel mix in industry sector

International comparison of fuel mixes in industry (2004))

Japan EU15 US Germany UK France Italy 0% 50% 100% coking coal fuel coal oil gas natural gas electricity thermal

Among developed countries,Japan stands out as a heavy user of coal in the industry sector Source: IEA (2006) Energy Balances of OECD Countries 2003-2004. IEA /OECD.

International comparison of coal use between 1990 and 2004 in industry sector
Changes (1990-2004) in coal use in industry: international comparison
0 Japan EU15 US Germany UK France Italy 1990 2004 10 20 30 40 50 60

Reduction rate

Unit 1 million tonnes of oil equivalent

-15% -53% -30% -61% -69% -48% -12%

Since 1990, Japan has not made progress in switching fuels

Source: IEA (2006) Energy Balances of OECD Countries 2003-2004. IEA /OECD.

Energy efficiency distribution of thermal power stations (2003)

45,000 40,000 35,000

Top Runner Factory

Until30,000 power stations have the same high energy efficiency, the claim that there i all
25,000 20,000 15,000 10,000 5,000 0 50-52 48-50 46-48 44-46 42-44 40-42 38-40 36-38 34-36 32-34 30-32 28-30 26-28 Power generation efficiency 24-26 22-24

Generation capacity [1,000 kW]

Source Kiko Networks estimate based on METI Natural Resources Agency, Electricity and Gas Business Section (2005) Summary of Electricity Supply/Demand in 2004.

 Joint Committee (Oct.11,

Government asked to do more in the Voluntary Action
07)
industry
Increased target Achieve Additional compared to 90 d in reduction(Mt level (%) 2006? CO

Government asked to raise the chemical 1020 targets of 13 industries 1320 However, these industries have paper achieved their targets for oil 1013 many years, and some have gas 4659 even achieved the newly established target. cement 33.8 rubber 06 Power Sector and Steel have not achieved their target, glass 1521 but will buy CDM credits to Lime 68 meet their targets, though there is no penalty. dyeing 4040.6 This means that the Voluntary cable 2027 Action is actually Sanitary 2025 Mandatory. In this case, without trading, aluminium 1011 the abatement cost Copper brass 8.69.05 becomes higher.

856.3 217.4 139.3 19 17.8 11.2 10.5 7.1 5.8 5.4 2.4 1.8 0.2

Kiko Network Survey on facilities emissions, based on Energy Conservation Law

Japans Total CO2 Emissions=1259.4 MtCO2(2003)

31% from top emitting 100 facilities which disclosed their emissions 19% from top 80 undisclosed facilities

Small & medium facilities & households

In total, about top 200 facilities emit half of Japans total emissions Including other top facilities, who disclosed (7%) and undisclosed (4%), about 60% come from large emitters

August, 2005 by Kiko Network

Domestic Emissions Trading System for Large Emitters

WWF proposes a Cap&Trade Domestic Emissions Trading System as the most cost effective measure to make a real difference Released the Emissions Trading Scheme For Decarbonizing Japan (January 24, 2007)
Published it into a book (October, 2007)

For other small and medium emitters, tax, and a baseline & credit system to participate in a domestic Carbon Trading Market are proposed as a climate change policy mix for Japan.

WWFs Emissions Trading Scheme For Decarbonizing Japan

GHG coverage: CO2 by Direct Emissions in a Downstream type (Power generation, industry use, industrial processes) Coverage: 64% Cap: 710 million tons CO2 Allocation:Grandfathering + 5% auction + 5% new entrants reserve (in the future,benchmarking+auctioning) Grandfathering to each sector will be based on average of base year 2000-2004 First commitment period: 2008-2012 Allocation to each factory will be a bottom-up approach based on average of base year, using a Compliance Factor to adjust the total amount of allocation

WWFs Emissions Trading Scheme For Decarbonizing Japan

Policy Mix ideas for sectors not directly covered by ETS 1) Tax
Tax on the upstream, with 75% exemption for those covered by ETS At the downstream, the tax will be paid indirectly through increased price shift

2) Baseline & Credit Trading System Sectors, such as commercial, residential, transport and other

small business will do emission reduction projects and sell the reduction credit to those covered by ETS In this case, we propose a Baseline & Credit Reserve in the ETS in order to avoid double counting of reduction from electricity and heat We also propose a Japanese version of the CDM EB to ensure a ton is a real ton

Why Emissions Trading is Essential

Guarantees reduction amount by capping large emitters Abatement cost differs according to companies, enabling
companies to minimize cost by using the trading system

Can sell the amount of efforts, but can also buy when
necessary, so flexibility is guaranteed

Social/Economical structure will change to realize a lowcarbon society

If linked with other regions or countries with similar system,

the abatement cost becomes even lower

ETS essential from an International perspective and National interests

EU has started its internal emissions trading scheme from January, 2005, and plans for the second phase is already established. Norway, Canada, Australian States and 10 Eastern States in the USA as well as California and 5 western states together with 2 Canadian provinces are developing a similar system, aiming to link together with EU ETS. A global network of a regional emissions trading scheme may happen

Japan needs to know that we are about to be left behind!

How are Key Actors in Japan Responding to this?

The Ministry of Environment (MoE)
Considering it positively; implementing an experimental, voluntary scheme since 2005, with subsidies for those who make commitments to reduce. A learning process about marginal abatement costs

The new Environment Minister Kamoshita is forward looking towards Emissions Trading, and has stated that the MOEs voluntary scheme should be used as a policy tool to be expanded to include larger participants, either as incentives or regulation. (September 26, 2007)

Industries are saying

Totally against Emissions Trading System
Emissions Trading System is a controlled economy Voluntary actions would be enough, if not, will buy a lot of Cers Japans energy efficiency is world No.1, cannot do more Marginal Abatement Cost is too high to take domestic actions

However,
More than half of Japans emissions come from 7 largest industries Emissions from the industry have not increased so much since 1990, but this is due to economic depression This means that efficiency has dropped since 1990 There is still much to do in improving energy efficiency Market-based system is beneficial in making reductions at the least cost

METIs Observation
It does not totally reject the idea of ETS. But has serious doubts about the effectiveness of ETS based on their observation about EU ETS. 1.They sent a mission together with MOE and Keidanren to conduct hearings about the situation of EU ETS. 2.Conclusion was, its too early for Japan to introduce such a system. 3.They would try to expand and strengthen Voluntary Actions more, while comprehensively consider about the scheme further.

Renewable Energy not Seriously Considered as an Abatement measure in Japan(International Comparison)

30 25

20

1990 2001

15

2004

10

0
Ja pa n Sw ed en Ki ng do m Un ite d Ca na da Sp ain Au st ra lia De nm ar k Ge rm an y Fr an ce US A

Made from IEA (2006) Renewable Information 2006. IEA/OECD by WWF Japan

Wind Power Capacity by Countries

2000 1800 1600 1400 1200 1 0 1000 M W 800 600 400 200 0 1996 1997 1998 1999 Germany 2000 Spain 2001 USA 2002 2003 2004 Japan 2005 2006

Denmark

Source:Wind Power Monthly, July, 2006 made by WWF Japan

Solar Panel Installation by Countries

140 120 100 1 0 80 M W 60 40 20 0 1996 1997 1998 Germany 1999 Japan 2000 USA 2001 Australia 2002 Netherlands 2003 Spain 2004 2005

Source Solar Generation Association http://www.jpea.gr.jp/4/4-2-4.htm

Energy Technology Perspectives 2006(IEA)

Scenarios and Strategies to 2050

Thank you very much http://www.wwf.or.jp/climate climate@wwf.or.jp

WWF-Canon / Adam OSWELL