The global trend of assessing companies by looking at their use of renewable energy is spreading to the Japanese industrial sector. Leading domestic manufacturers plan to increase their use of renewable energy by 20% for the four years through fiscal 2020. But their use of renewable energy is projected to stay slightly below 4% of their total electricity consumption and the rate remains much lower than that of their European and U.S. rivals. Japan’s manufacturers face the urgent task of reducing implementation costs, which have continued to be an obstacle to the wider use of renewable energy, and improving infrastructure.
The Nikkei Shimbun asked 144 leading Japanese manufacturers about their plans to use renewable energy in their domestic plants and offices in its 21st environmental management survey, and tallied their responses. The collated data includes the amount of electricity they plan to directly source from solar power and other renewable energy power generation facilities as well as the use of a credit program, which assumes they used electricity generated from renewable energy.
The total amount of renewable energy the surveyed firms plan to use in fiscal 2020 rose 23.1% from what they consumed in fiscal 2016 to 8.391 billion kilowatt-hours. The use of renewable energy among the 80 firms that gave valid responses increased 3.9% on average, from 2.4% in fiscal 2016.
The sectors that were particularly enthusiastic about increasing the use of renewable energy included precision machinery makers, electronic machinery manufacturers, automobile-related firms, and food producers, which have already established a solid presence overseas.
It is difficult for Japanese firms to obtain electricity generated from renewable sources at home. In Japan, most renewable energy electricity is sold to utilities via a feed-in-tariff (FIT) program and is supplied to consumers without differentiating it from electricity generated from fossil fuels. Power companies opt for selling electricity via FIT rather than directly selling to businesses as the FIT price is set higher than in other countries. This limits the amount of renewable energy that companies can directly source.
It is also difficult for them to build renewable energy power facilities on their own. The implementation cost for solar panels and other power generation equipment, for example, is two times higher than in Europe. The FIT program hampers price competition among equipment makers. The cost of connecting to power grids is also higher than in other countries.
The Japanese manufacturing industry may lose its global competitiveness without an environment that makes it easier to source renewable energy. (Abridged)