“Japan deserves significant praise for its technology leadership – which is helping drive enhanced energy security and climate change mitigation throughout the globe. The government continues to raise the profile of energy technology, including international collaboration and transfer, and has placed energy, climate change and sustainability at the top of its agenda for the G8 meetings it is hosting,” Executive Director Nobuo Tanaka of the International Energy Agency (IEA) said today in Tokyo.
After attending two ministerial meetings this weekend in Japan (G8, China, India and Korea Energy Ministerial Meeting, and Five-Country Energy Ministers Meeting), Mr. Tanaka presented the key findings of the new IEA report Energy Policies of IEA Countries – Japan 2008 Review in the country’s capital.
“Faced with considerable challenges given its location and limited natural resource endowment, the government remains vigilant in enhancing energy security, as it was when it pioneered liquefied natural gas imports. In short, the country continues to balance the three 'E’s' of good energy policy – environmental sustainability, economic efficiency and energy security,” Mr. Tanaka said.
To build on the work the government is doing, the new report provides guidance on how to improve both existing and developing policies. “We urge the government to enlarge its suite of measures to enhance energy efficiency in the interest of further improving the functioning of the energy sector and environmental sustainability. Additionally, existing energy and environmental policies should further be complemented with stronger options, including benchmarks, standards, regulations, taxes, trading schemes and other market-based policies for greenhouse gas emissions” said Mr. Tanaka. “Energy savings through sectoral approaches (efforts aimed at particular sectors) is a part of Japan’s overall policy mix. Greater gas and electricity market integration would also benefit energy security.”
Already an active member of the Asia-Pacific Partnership on Clean Development and Climate (APP) and Asia-Pacific Economic Co-operation (APEC) forum, Japan places great importance on international collaboration – particularly in the technology realm. The government and Japanese companies engage in technology transfer internationally, in Asia in particular. As a major manufacturer and exporter of consumer appliances and vehicles, the benefits of Japan’s advances in technology, especially energy efficiency technologies, have spilled over globally, reducing the world’s energy demand and greenhouse gas emissions. In addition, the government continues to devote significant resources to funding basic and applied energy R&D and, under its Cool Earth Promotion Programme, has committed to injecting about USD 30 billion into environmental and energy sectors over the next five years. The IEA applauds these actions, as technology development is one of the keys to solving the world’s energy and environmental challenges. This will not be achieved if governments do not follow the lead of Japan and pledge significant financial resources to funding energy R&D.
Complementing existing voluntary measures
To give flexibility to Japanese companies, the government often relies on voluntary approaches to implement energy and environmental policies, particularly in the industrial sector. Given the vigilance of Japanese companies in meeting voluntary targets, often the results are the same as if the measures were, in fact, mandatory. This is the case with the agreements by the Japanese Business Federation (Keidanren) with industry, where companies have a good record of fulfilling their goals and are working hard to continue this tradition in the future. Nevertheless, the IEA encourages the government to complement this success with other measures, especially in the housing sector, where the voluntary approach leaves room for efficiency improvements. Though slower to materialise, the benefits of efficiency improvements in this sector (lower greenhouse gas emissions and reduced energy consumption) are some of the largest and most cost-effective available. Also, the IEA is pleased to see Japan’s recent trial with a voluntary trading scheme and discussion of a proposed carbon offset scheme aimed at small and medium-sized enterprises, as these are policies that help strengthen the value for greenhouse gases throughout the economy.
Strengthening energy security by further integrating gas and electricity markets
The government should work to strengthen regulations to ensure competition in the gas and electricity sector – rules that would level the playing field and bring more participants to the market. Finally, irrefutable clarity on the nuclear regulator’s independence from the government would benefit public perception and investment in the sector. It could also help enhance energy security, economic efficiency and environmental sustainability by allowing less conservative but safe operation of nuclear power plants – bringing operational levels in line with world best practice.
To increase transparency, better integration across the natural gas and electricity networks in the country could improve the efficiency of operations (allowing regions to rely on supply from other locations), strengthening energy security overall for Japan. Creating more integrated networks may require investments in physical capacity – and the costs and benefits of these investments must be properly and transparently assessed. Optimising market rules and regulations across regions could bring greater security and operational efficiency to the energy sector at a very small price.
“I hope that Japan will continue to make its best effort to balance the three 'E’s' of energy policy and enhance its leadership in the international arena,” Mr. Tanaka concluded.