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Japan faces high costs in achieving Suga’s 2050 carbon neutrality

  • November 9, 2020
  • , The Japan Times
  • English Press



It’s like shooting for the stars.

That’s how energy experts describe Prime Minister Yoshihide Suga’s pledge for Japan to achieve net carbon neutrality by 2050. In short, many are not sure if it is an achievable goal for Japan.


Looking into the country’s current energy mix and energy usage, it becomes clear that it is indeed challenging.


When thinking about how to become a carbon-free society, what comes to mind is for Japan — the world’s No. 5 emitter — to reduce its reliance on low-efficiency coal-fired plants and boost renewables. But that’s addressing only part of a bigger problem, because electricity accounts for only about 25% of final energy consumption in the country.


“Considering a range of options such as nuclear, renewable and hydropower, decarbonizing the power sector might be achieved relatively easily,” energy analyst Akira Ishii said. “But what’s more difficult is to achieve carbon neutrality in the remaining 75% of areas that do not use electricity.”


Ishii said the costs for realizing a carbon-free society would be so prohibitive, if not impossible, that it would dent economic growth and significantly lower people’s standards of living.


Japan, which previously had committed to an 80% carbon reduction by 2050, joined the European Union and the U.K. in the ambitious net-zero by 2050 goal, putting it ahead of top emitter China, which in September aimed to peak carbon emissions by 2030 and achieve carbon neutrality by 2060.


Claiming that all developed nations should adopt a similar target, Suga laid out his landmark climate pledge in his first policy speech before the Diet on Oct. 26, winning praise internationally, including from the United Nations, with South Korea following suit two days later.


But the stakes for a carbon-free society are high. The International Energy Agency says that to put global carbon dioxide emissions on course for net zero by 2050, primary energy demand would need to fall by 17% by 2030, to a level similar to 2006, even though the global economy is twice as large now. The IEA said global investment of $71.3 trillion (¥7.37 quadrillion) would be needed by 2040 to achieve the Paris agreement’s goal of limiting global warming to 1.5 degrees Celsius.


“A large number of unparalleled changes across all parts of the energy sector would need to be realized simultaneously, at a time when the world is trying to recover from the COVID-19 pandemic,” the IEA said last month in its World Energy Outlook 2020.


A typical recipe that countries would turn to in achieving zero net carbon is to expand electricity usage in energy consumption, but no country has come up with a clear blueprint, says Ken Koyama, chief economist at the Institute of Energy Economics, Japan.


“It remains unclear how much investment or cost burden would be required for achieving carbon neutrality, and it looks as though we are sailing on an uncharted voyage,” he wrote in a report.


The net-zero goal is set to bring sweeping structural change to various industries in Japan.


“There are many firms that have in-house coal-fired power plants, such as steel firms, and reducing their carbon footprint would literally be a matter of survival for some companies,” Mari Yoshitaka, principal sustainability strategist at Mitsubishi UFJ Research & Consulting Co., said.

In the transportation sector, which accounts for about 19% of final energy consumption, 98% of cars, trucks and airplanes run on petroleum. The iron and steel industry, which emits some 15% of carbon dioxide emissions in the country, says that the industry is faced with an uphill battle, as it is difficult to kick the habit of burning coal and iron ore in the steel-making processes.


“It goes without saying that achieving carbon neutrality by 2050 is a very difficult challenge,” Hiroaki Nakanishi, chairman of the country’s top business lobby, the Japan Business Federation, said in a statement. “To balance this with economic growth, the development and dissemination of innovative technologies — in other words, innovation — is indispensable. This will lead to the strengthening of Japan’s industrial competitiveness.”


The government last month began discussions on revising its 2030 power mix plan with the aim of increasing the share of renewable energy — from the current 22% to 24% — to make it the main power source over nuclear and others. Though the share of renewables in the power mix is currently around 19%, Japan is ill-equipped to aim for the same ambitious renewable targets as other countries, Ishii says.


That’s because two-thirds of its land is covered with mountains and forests, compared with 7%, 15% and 28%, respectively, for the U.K., France and Germany, which limits its ability to find plenty of optimum places for solar and wind farms, Ishii says. Japan also has plans to build offshore wind farms that would be equal to 10 nuclear reactors in output by 2030, but offshore wind turbines would need to be built more strongly than the ones in Europe to withstand typhoons and tsunamis, he said.


“Even if Japan flattened all the land in the country and set up renewables, that would not be enough to achieve 100% renewable energy no matter what the technological advance outlook may be,” he said. “Probably the renewable energy ratio in the power mix would be 30% to 40% max.”


Former energy minister Hiroshige Seko last month said the building of new nuclear reactors, which emit zero carbon emissions during power generation, should be considered in light of the carbon neutrality target, although Suga maintains that the government is not considering building new nuclear plants.


“Japan decided to go carbon-free, so it would have to leave it as an option even though nuclear plants could put people in danger,” Ishii said, referring to the 2011 Fukushima meltdowns.


Amid growing momentum to cut greenhouse gas emissions, Japanese energy firms including Tokyo Gas and top power producer Jera Co. had already planned to turn carbon free by 2050. Jera, which is responsible for roughly 10% of Japan’s carbon emissions, is also considering importing hydrogen and ammonia as feedstock for its thermal power plants to achieve zero carbon within the next three decades.

Hydrogen and ammonia do not produce carbon emissions when used as fuel for power generation. But they have their own drawbacks, industry sources say.


Hydrogen can be produced by splitting water into hydrogen and oxygen via electrolysis, but the electricity generated using hydrogen produced this way is only a fraction of electricity used to split the water due to a conversion loss.


Ammonia, meanwhile, is highly toxic. If ammonia leaked due to a collision in Tokyo Bay involving a vessel transporting it, many could die instantly, observers say.


But for Japan to achieve the 2050 carbon neutral goal, the government needs to introduce a system that will encourage businesses to slash emissions, such as carbon pricing, experts say.


Already in place in Europe and the U.S., carbon pricing provides incentives to companies shifting to environmentally friendly fuel and allows companies to trade emissions allowances.


In Europe, for example, carbon pricing has spurred many to switch to gas from coal, since gas is cheaper after taking emissions prices into account.


Yoshitaka, who has been involved in “environmental, sustainable and governance” financing for more than 25 years, says Japan should also introduce carbon pricing to push Japanese companies to reduce greenhouse gas emissions.


And that would be beneficial for financial institutions setting aside funds for sustainable financing. The Mitsubishi UFJ Financial Group, for instance, plans ¥20 trillion worth of sustainable financing by 2030.


“Without the carbon pricing data, we and other financial firms don’t have a clear idea on which companies to extend financing to spur innovation for decarbonization,” said Yoshitaka.

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