Setting the scene: Japan’s green transformation strategy in a global setting

The Japanese government has begun a substantial commitment to decarbonisation and climate policy. Alongside a commitment to net zero emissions by 2050, the ‘Beyond Zero’ Carbon Strategy and the hallmark ‘Green Transformation (GX)’ policy are propelling Japan to a more sustainable, climate-friendly future. The GX policy is an investment roadmap for 150 trillion Yen (USD 1.1 trillion) via public-private financing over the next 10 years to transform various economic sectors into a carbon-neutral state. 

The GX policy is ambitious, focusing on the innovative, world-first sovereign ‘transition bonds’, meaning that over 10 years, the Japanese government will issue 20 trillion Yen (USD 133 billion) in transition bonds to facilitate the goals of the GX. These include a focus on technologies such as hydrogen supply networks, Carbon Capture, Utilisation and Storage (CCUS), synthetic fuels and small nuclear reactors.  

However, it has also drawn much scrutiny, ranging from investor hesitation towards the transition bonds due to greenwashing concerns, to criticism within diplomatic and scientific circles. This is especially caused by Japan’s focus on controversial decarbonisation avenues that are not aligned with IPCC objectives, including Carbon Capture and Storage (CCS), and a re-initiation of a nuclear sector in Japan, even in a post-Fukushima age. 

In addition, Japanese car manufacturers have shirked from proliferating Electric Vehicle (EV) products. This has made Japan lag amidst the global pursuit of EVs, with neighbouring countries such as China accounting for 20% of all car sales as EVs, whereas Japan tails behind at 2%. 

This also isn’t helped by Japan’s recalcitrant approach to the 2023 G7 climate objectives, requesting for ‘various pathways toward a common goal’ to net zero - arguably obfuscating its hesitation to conduct genuine decarbonisation beyond headlines and press releases. This is showcased by Japan being averse to the G7 target of phasing out unabated coal-fired power plants and pushing back against the Americans and Europeans by emphatically pursuing the declaration of hydrogen and ammonia as low-carbon solutions for power generation, despite these technologies’ relatively unproven and problematic climate credentials. 

Such sentiments beckon the question of how Japan can continue to compete as a green, climate-friendly economy in the 21st century. Is Japan’s unique manner of combating climate change compatible with the global policy agenda, global markets and global financiers? 

Recent history and industrial inertia: a weight on Japanese decarbonisation policies 

Currently, Japan is the world’s fifth largest greenhouse gas emitter - emitting approximately 1.1 billion tonnes of carbon dioxide (CO2) annually from energy generation and process emissions. 

A major barrier to Japan’s decarbonisation is the Japanese government’s desire to stick to the status quo of industrial economic growth via pre-existing industries. Japan’s robust industrial base makes transitioning industrial emissions very difficult, timely and costly. Consequently, Japan is averse to rapidly closing coal-fired power stations and natural gas, and would rather pursue more experimental and critiqued technologies such as CCS to sustain its industrial sector. 

This is particularly in the post-Fukushima era, where Japan has proliferated the use of coal and natural gas to compensate for the lack of nuclear energy providing a baseline power supply to the country. Historically, nuclear energy generated approximately 25-30% of Japan’s electricity, but since the mass downscaling of nuclear energy in 2011, coal and natural gas now account for 73% of energy production in Japan. This is in addition to Japan's lack of available land to deploy large-scale wind and solar energy, and the fact it has to import about 90% of its energy sources. 

This has given rise to the ‘various pathways’ approach mentioned earlier, which has also translated into Japanese climate diplomacy. Japan has been a proponent of ammonia co-firing and CCS among developing countries in Asia, which arguably prolongs the use of coal-fired power across Asia rather than transition beyond these carbon-intensive energy sources. Among G20 nations,  Japan was also ranked first in international public financing for fossil fuel projects between 2019-2021.

Concerns about this ‘various pathways’ approach have also been exacerbated by some key statistics. For example, the carbon intensity of Japan’s energy consumption from industry was 54.2 grams of CO2 per megajoule in 2020, which indicated only a 2% fall since 2010, compared to a 13% fall in China over the same period. 

Therefore, can Japan viably decarbonise its economy in alignment with the rest of the world’s climate ambitions? 

Bottom-up climate transitions: a viable pathway for Japan? 

Despite these concerning figures, one promising avenue for Japanese decarbonisation is to use Japan’s various municipalities and provinces as an avenue for ‘bottom-up’ decarbonisation. This is part of a broader discourse of SDG ‘mainstreaming at the local level’; tailoring sustainable development policies for local particularities and innovations. 

Importantly, Japan’s constitution gives much power to municipalities and mayors, which could empower ‘local autonomy’ in climate action. 

A strong case study of this in Japan is the climate policies of Kawasaki City - a municipality of approximately 1.5 million people. Kawasaki has ambitious targets - including the reduction of emissions by 50% by 2030 compared to a 2013 baseline and a goal of more than 330,000 Kilowatts of renewable energy by 2030. 

This is facilitated by initiatives such as the Kawasaki ‘regional energy companies’, which will hopefully build the momentum of a virtuous circle of renewable energy in the city. This involves using municipal waste power generation, among other sources, to use circular economy principles to simultaneously combat waste and carbon. In addition, these regional energy companies can facilitate a ‘district energy platform’ that can cooperate with private businesses to coordinate supply and demand for renewable power in the municipality. 

Mutsuzawa, in Chiba Prefecture, is also leading the way via  ‘microgrid’ initiative, providing low-carbon, decentralised and resilient power to its citizens. Likewise, Maniwa, in Okayama Prefecture, is using its local biomass capacity to use wood waste from forest thinning to generate energy; once again demonstrating the use of circular economy principles to pursue a low-carbon economy. 

From a sustainable urbanism perspective, Toyama City also demonstrates the potential for bottom-up decarbonisation in Japan, particularly through its innovative, sustainable urban design. This is particularly through the Toyama ‘Compact City’ design - demonstrating the G20 principles of Quality Infrastructure Investment. Importantly, the Compact City design leads to less emissions, due to less vehicle travel, and more economic efficiency, due to less congestion and travel times. 

So are Japan’s municipalities and provinces the way forward for a climate-friendly Japanese economy? What role can bottom-up decarbonisation have on Japan’s green economy credentials, even amidst a problematic set of top-down climate policies from the national government?

Conclusion 

Japan’s pursuit of a more unique, Japan-centric method of decarbonisation has faced much scrutiny from diplomatic, scientific and policy circles. Its desire to maintain its industrial edge and not upset the status quo is making the pursuit of a low-carbon economy difficult. Beyond policy statements such as the GX and the ‘Beyond Zero’ Carbon Strategy, what actually lies ahead for Japan’s climate ambitions? Does Japan face geopolitical risks, or even economic risks, by not aligning its decarbonisation to global standards and norms? Can Japan’s municipalities and provinces pick up the pieces? 

Only time will tell, but for now, Japan leaves its G7 presidency with a sour taste in its mouth and many questions about its future climate credentials on the global stage.

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