Japan's Path to Net Zero Greenhouse Gas Emissions by 2050: "The Next Decade will Determine if We Succeed" (Part 1)

Japan has taken the first step towards transforming its economy and society. On October 26^th, 2020, Prime Minister Yoshihide Suga announced in his policy speech that Japan will embrace a growth strategy cored with a "virtuous cycle between the economy and the environment" and aim to achieve net zero greenhouse gas emissions by 2050. In the global movement of transitioning to a carbon-free economy, many international NGOs and domestic youth organizations have urged Japan to adopt more aggressive climate change measures. Until recently, Japan has not put forth a national climate change policy, while companies have also been slow in implementing associated measures, such as transitioning to renewable energy. This announcement will have an impact on the lives of future generations and could be a turning point for Japan's economy. As the attention shifts to the concrete measures that will be undertaken, we interviewed companies to learn more about their thoughts.

Japan is the world's fifth-largest CO2 emitter following China, the United States, India, and Russia

While the Japanese government had finally announced the policy of seeking to achieve net zero greenhouse gas emissions by 2050 in October 2020, according to the Ministry of Economy, Trade and Industry (METI), 122 countries and regions around the world, including the European Union (EU), have already signed on to the goal of achieving net zero emissions by 2050. It can be said that Japan's signal to its commitment towards this global endeavor has been long-awaited.

In order to meet the objectives of the Paris Agreement, which aim to limit the rise of the global average temperature to 1.5°C above pre-industrial levels, it is imperative for the world to achieve net zero greenhouse gas emissions by 2050 after accounting for the emissions absorbed by forests and oceans. However, Japan's previous targets of a 26% reduction from 2013 levels by the year 2030 and an 80% reduction by 2050 have been heavily criticized by other countries as being in violation of the spirit of the Paris Agreement.

Given that Japan's energy sector is responsible for approximately 40% of the country's total carbon dioxide (CO2) emissions, any serious effort to achieve the goal of net zero emissions by 2050 must include plans to decarbonize electric power in Japan.

Countries around the world have already expedited their transition to clean energy and other investments in this area in view of this collective goal.

In January 2020, the European Commission announced the European Green Deal Investment Plan, which aims to invest a massive sum of at least 1 trillion euros (around 120 trillion yen) towards renewable energy and other sustainable initiatives in both public and private sectors over the next 10 years.

China, the largest emitter of , is also the largest producer of renewable energy. Around 70% of China's total investment in the energy sector is towards renewable energy, and in September of 2020, President Xi Jinping announced China's goal of achieving net zero emissions by 2060.

In the U.S. President Joe Biden, has announced a US$2 trillion (214 trillion yen) investment plan aimed at creating a clean energy economy, in addition to setting the ambitious goal of transitioning America's power sector to one that is carbon-free by 2035 as one of his policy promises during the election. With Biden now in the White House, it is likely that U.S. energy policy will undergo a seismic shift.

Japan's Agency for Natural Resources and Energy is currently in the process of reviewing the Fifth Basic Energy Plan that was passed by the Cabinet three years ago in July 2018. Under the current plan, the energy mix in 2030 is set to be 22-24% renewable energy, 26% coal-fired thermal power, and 20-22% nuclear power. There remains a large gap between these targets and the goal of achieving net zero emissions by 2050 announced by the government. It appears that a review of this proposed energy mix is inevitable.

According to a study conducted by the Ministry of the Environment, Japan has massive potential with regard to the introduction of renewable energy. The ministry estimates that this potential is more than six times larger than the demand for electricity and about twice as large in an economically viable scenario. Yet, despite the availability of resources, technology, and funding, the sluggish growth of renewable energy in Japan until now has been largely due to the lack of policy-based incentives and support. Conversely, the government's new goal of achieving net zero emissions by 2050 will serve as a powerful tailwind for the growth in renewable energy and the transition to a carbon-free economy.

"Being carbon-free" as a prerequisite for international competitiveness

Companies that are unable to take full advantage of renewable energy will suffer greatly in their international competitiveness. Currently, the cost of generating energy from renewable sources has already fallen below that of coal-fired thermal power. According to a report published by the International Renewable Energy Agency (IRENA), more than half of the renewable capacity added in 2019 achieved even lower power costs than the cheapest new coal plants.

Moreover, with the EU reviewing the possibility of implementing a "border carbon tax" levied on products from countries that have failed to adopt adequate measures to address global warming, it has become risky for companies to not attempt to reduce their carbon emissions. In the U.S., Apple has required its supply chain to source 100% renewable energy for the company's business operations. In other words, being carbon-free has become a prerequisite for companies to remain competitive in the international arena.

The local governments of 163 municipalities, including Tokyo, the , and Yokohama, have already pledged to achieve net zero emissions by 2050. In addition, more than 500 companies and local governments are now participating in the Japan Climate Initiative (JCI) launched by companies and local governments in July 2018, and they have been urging the government to sign on to the goal of achieving net zero emissions by 2050 for some time.

The government's announcement of this climate goal is not only consistent with the Paris Agreement but can also be largely attributed to the fact that it can no longer ignore the powerful voices of companies, local governments, and consumers.

Companies are also pinning their hopes on the government's new policy. Kao (one of the largest chemical and cosmetics companies in Japan), for instance, told us that they "look forward to Japan's strong leadership in tackling the common challenge of climate change the world is facing." They explained, "Achieving our carbon-free and zero-waste targets are among the key priorities of our company's ESG strategy. This is an opportunity for us to step up our efforts through cross-industry joint initiatives. As a manufacturer of everyday necessities, we hope to pursue and embrace greater collaboration with partners within and outside the industry and provide products and services that can relieve the burden on our everyday life as much as possible as we transition to an economy with net zero emissions."

Minna Denryoku (Setagaya Ward, Tokyo), a new electric power company, told us, "We can tell that the government is serious about the proposed regulatory reforms aimed at tackling climate change and achieving a carbon-free society. To achieve net zero emissions, local governments and influential companies must get consumers involved and create mechanisms for the consumers themselves to achieve zero CO2 emissions. We hope companies can promote the idea of going "carbon negative" (absorbing more CO2 than they emit), and we also look forward to a larger inflow of ESG venture capital that invests in venture companies working on climate change measures from a long-term perspective. At the same time, electricity is responsible for around half of the total CO2 emitted by households, so we hope there can be a greater push for everyone to recognize this and approach the climate crisis as a problem on a more personal level by switching to the use of renewable energy."

Read more on: Japan's Path to Net Zero Greenhouse Gas Emissions by 2050: "The Next Decade will Determine if We Succeed" (Part 2)