- The rapid phasing out of coal-powered energy plants
- The phasing out of coal needs to be executed with clear and feasible non-nuclear, renewable energy expansion and emissions reductions
- Integrate renewables into the power grid more aggressively beyond the government’s current targets for 2030 of 36-38% to +40%
- Enable the existing grid to incorporate instantaneous VRES penetration levels of up to 60% – 70%
- Focus the government’s new Digital Agency on lowering the logistical burdens stemming from the paper-based culture which relies heavily on transportation of paper materials both domestically and globally
- Additional awareness campaigns on climate-impacting Sustainable Development Goals (11, 12, and 13) should be executed to create a national sense of purpose for reducing carbon emissions
- Expand greener investing into transition bond markets which will allow for brown projects as long as they are deemed part of a transition strategy to a green economy
- Make TCFD disclosure mandatory for both listed and unlisted companies which issue securities (e.g., bonds)
While Japan has traditionally been considered as a laggard in aggressive changes needed to tackle the climate change, there are several concrete steps that can be taken in order to reduce emissions rapidly by 50% by 2030.
While the previous Suga administration had stated its goal of phasing out “inefficient” coal-fired power plants by 2030, the current Kishida administration has failed to pledge the phasing out of coal at the recent COP26 in Scotland due to its perceived need to preserve all options for power generation. Moreover, corporate Japan has pushed back against even the phasing out of coal-fired plants that fail to meet minimum efficiency standards.
To reduce emissions by 50% by 2030, the rapid phasing out of coal-fired plants is critically important as 30% of electricity generated is by coal today in Japan. With coal power capacity increasing from 40,000 MW in 2003 to the current 50,000 MW, with 30 new coal-fired power plants under construction or in operation since 2012, Japan seems to be moving in the opposite direction. This said, 13 coal-fired plants have been cancelled and the rate of expansion for coal capacity has slowed down considerably since the crossing the 20,000 MW threshold in 1997 and the 30,000 MW threshold in 2001.
Due to valid historical events, the likelihood of the rapid expansion of nuclear power to fill in energy gaps over the coming decade is highly unlikely. With this, the move away from coal causes great concern regarding the impact on power supply, and the government will need to ensure that phasing out 50,000 MW of capacity over the next eight years gets executed with clear and feasible non-nuclear, renewable energy expansion and emissions reductions.
Plans for such a comprehensive overhaul of power generation surely needs to come from the Cabinet to ensure prompt compliance and needs to be concrete, easily grasped, transparent, demand accountability, and to be accepted as being accretive to the expansion of the Japanese economy which is currently facing daunting demographic problems. The policies need to support and reward the mass deployment of renewable energy and the reduction of energy consumption based on modernizing the energy grid infrastructure as well as capacity and transmission regulations.
Some concrete ideas—beyond the “elephant in the room” that is phasing out coal—follow:
- Integrate renewables into the power grid more aggressively beyond the government’s current targets for 2030 of 36-38% to +40% by ensuring that implementation of renewable power sources is executed to contribute to maintain grid stability by providing fast frequency response enabling the existing grid to to incorporate instantaneous VRES penetration levels of up to 60% – 70%.
- Enhance focus the government’s newly-formed Digital Agency on more than simply “overcoming inefficiency in public administration” to more of a purpose-driven digital transformation initiative that has an immediate positive impact on reducing carbon emissions by lowering the logistical burdens stemming from the paper-based culture which relies heavily on transportation of paper materials both domestically and globally.
- While Japan has been very successful in raising awareness for the UN SDGs via national marketing campaigns, not all of the 17 SDGs are equal in terms of having an immediate impact on reducing carbon emissions. Now that the UN SDGs are a household concept in Japan, additional awareness campaigns on climate-impacting SDGs (11, 12, and 13) should be executed to create a national sense of purpose for reducing carbon emissions.
- Following the GPIF’s leadership, every major financial institution in Japan is now a signatory of the UN PRI. With this, the financial industry which services needs to ensure that their businesses comply with the principles for all asset classes and business activities. While equity portfolios have been “greened” to a certain extent, there is high demand for green, social, sustainable, and transition bonds among the major asset owners such as insurance companies and pension plans, which hold most of their funds in fixed income instruments. The problem is that there is limited supply of such green and sustainable bonds available for these firms to invest in. One way to rapidly expand greener investing is to expand into transition bond market which allows for brown projects as long as they are deemed part of a transition strategy to a green economy. While this new asset is expanding, additional government incentives to accelerate funding for transition projects would accelerate this expansion.
- Nation-wide electric vehicle expansion in line with the goal set in Tokyo with subsidies/incentives for those that will experience short-term pain (auto parts manufactures to retro fit operations, etc.)
- Make TCFD disclosure mandatory for both listed and unlisted companies which issue securities (e.g., bonds) in order to extend sustainability transparency and accountability beyond the current corporate governance approach of “comply or explain” for listed companies.
This Post was submitted by Climate Scorecard Japan Country Manager James Hawrylak