[Analytics] The fine print of Japan’s commitment to carbon neutrality

In his inaugural speech before the Japanese Diet, newly-appointed Prime Minister Yoshihide Suga laid out his policy plan for the nation. It included policy responses to the COVID-19 crisis, regulatory reforms, government digitalisation, international affairs and economic policy for rural areas. Masahiro Sugiyama specially for the East Asia Forum.

Among the many issues raised, one caught particular attention: the announcement of a carbon neutrality goal by 2050. Suga has upgraded the previous goal of 80 per cent emissions reduction by 2050, which was formally communicated to the UN Framework Convention on Climate Change (UNFCCC) under his predecessor Shinzo Abe. According to the Japanese media, the pledge is intended to cover all greenhouse gas emissions. But the cabinet is using the term ‘carbon neutrality’.

The announcement was a welcome surprise. Perhaps China’s helped prompt the decision. It indicates that Japan — which won twice at last year’s United Nations climate conference — has finally caught up with other OECD countries such as the United Kingdom, Germany and France.

A number of local governments have already called for carbon neutrality by 2050. And an increasing number of business communities are pursuing net-zero targets. For example, the Japanese business federation Keidanren has begun a program called Challenge Zero, in which the participating firms lay out innovation projects to achieve net-zero carbon emissions.

The pledge is a step in the right direction but it lacks detail. In order to achieve green growth, Prime Minister Suga mentioned regulatory reform and strengthening disruptive energy innovation, including next-generation solar photovoltaics and carbon recycling. Suga also emphasised the need for a mix of renewable and nuclear energy. But he did not touch on carbon pricing or cap and trade — a very politically controversial topic in Japan — let alone concrete renewable targets. Many were left wondering how Japan will achieve this ambitious goal.

The lack of details may present opportunities, as researchers and stakeholders can provide vitally needed input to make the policy goal a reality. The government has already begun the process of revising its strategic energy plan and will submit a new long-term strategy by next year’s UN Climate Change Conference in Glasgow (COP26). The policy has opened a crucial opportunity for discussion.

The short-term debate will be dominated by ratcheting-up the 2030 target and power-sector considerations, as virtually any decarbonisation pathway involves a clean electricity system. There are many crucial issues that need to be addressed. But a net-zero energy system requires more fundamental changes in the energy system. Now is the time to confront .

First, Japan will have to tackle the fundamental constraints of renewables. In Japan, renewables are less abundant and more costly than in the European Union or the United States. This is partly because of Japan’s high population density and the fundamental aerial power-density constraint of renewables.

But Japan also has its own unique challenges. While modelling for the European Union, the United States and Australia shows the potential for a renewable energy mix dominated by solar and wind, Japan may still rely on a significant share of nuclear power in 2050. The result doesn’t mean nuclear is a must — but it does mean nuclear is helpful, and clean electricity sources other than solar and wind are highly desirable.

Second, Japan must address the decarbonisation of its heavy industry, which is one of the most difficult-to-decarbonise sectors. The importance of industrial decarbonisation has been underlined by multi-model research projects. The final energy and CO2 emissions of Japan’s heavy industry sector are significant and render Japan’s overall emissions characteristics closer to those of the G20 average than the G7 average.

If the world aims for global net-zero emissions, there is no point hollowing out or offshoring carbon-intensive industries in Japan to China, other Asian countries or the rest of the world. Japan already has significant projects for industrial decarbonisation, but these projects must be expanded even further. The demonstration projects on imports of blue ammonia from Saudi Arabia and blue/green hydrogen from Australia are a good start.

The existence of difficult-to-decarbonise sectors implies the need for carbon dioxide removal (CDR) technologies as well, including bioenergy with carbon capture and storage and direct air capture. Many CDR techniques rely on carbon capture and storage (CCS), but this faces public acceptance issues. Aside from some demonstration projects in places like Tomakomai, Hokkaido, there has been very little progress. Given the long time required for stakeholder consultation, dialogue should be started immediately.

The government is currently preparing a third extra budget in response to the economic impact of COVID-19. The Japanese stimulus packages so far have not featured plans for a sustainable recovery. This is in contrast to the European Union, which dedicated 30 per cent of its stimulus package to sustainable recovery. Now that the Japanese government has set an ambitious goal for both digitalisation and the environment, Japan should take advantage of the opportunity.

Masahiro Sugiyama is Associate Professor at the Institute of Future Initiatives, the University of Tokyo.