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Japan’s new climate pledge for 2030 puts pressure on power, transport industries
At the US-organized climate summit in April, Japan made one of the most substantial new GHG emissions reduction commitments, raising its target to a 46% cut from a 2013 baseline—a goal that seems aggressive, but achievable, based on the country's track record over the last six years.
Japan's prior commitment was for a reduction of 26% from 2013 levels, backed by a net-zero commitment for 2050.
Japan's total GHG emissions in FY 2019 were 1,212 million mt CO2e, a reduction of 2.9% from FY 2018, according to its annual emissions inventory published in April. This represents a reduction in emissions of 15% since FY 2013, according to information submitted to the United Nations on 31 March as an update to Japan's nationally determined contribution.
Previously, its goal for 2030 was 1,042 million mt CO2-equivalent, but the new target will be about 761 million mt CO2e.
"Their target before, relatively speaking, wasn't incredibly ambitious," said Anna Mosby, IHS Markit principal research analyst. "The new target is significantly more ambitious. They can meet this new target if they maintain that pace," she said.
However, she added that under IHS Markit's global scenarios for business-as-usual operations, "we do not see Japan meeting this more aggressive target."
The new 2030 goal represents an aim to front-load emissions reductions, as encouraged by the International Energy Agency and the United Nations in recent reports. Yet, Japan will have to engage in new policies and/or incentives to make it happen.
That was the promise of Hiroshi Kajiyama, head of the Ministry of Economy, Trade, and Industry (METI), in comments on 23 April after Japan's new goal had been announced at the Biden climate summit. "We intend to increase renewable energy [generation] as much as possible, and nuclear power will also constitute a share, although there are reactors which have restarted, or not been restarted amid some issues over trust," he said.
Japan uses 2013 as its baseline rather than the 2005 starting point used by most countries because its 2013 CO2e emissions were 1,408 million mt, compared with 1,381 million mt in 2005. This makes it slightly easier for Japan to achieve reductions on a percentage basis, Mosby explained.
Power, transport sectors
Looking at the country's emissions profile today, Mosby said the power sector, which includes power for manufacturing, is likely to have to carry much of the added burden. "They have a lot of gas- and coal-fired generation," she said. "Coal power is probably going to be the largest single source [of emissions] that they have to work on."
The GHG inventory for FY 2019 shows solid fuels (coal) responsible for nearly 43% of Japan's CO2 emissions; liquid fuels (refined products such as gasoline, diesel, and propane) at 37%; and LNG and natural gas at 19%.
Prior to the recent announcement of the stiffer GHG target, Japan was already seeking to reduce emissions from coal, headlined by an announcement by METI in July 2020 that 100 pre-1995, less-efficient coal-fired power plants will be closed by 2030. This isn't the first time that coal seemed to be on its way out, as it had dwindled a decade ago to providing about 15% of the nation's annual energy production. But in the wake of the 2011 tsunami that damaged the Fukushima plant, Japan closed its nuclear power plants for safety reviews and has reopened only nine of them. Coal power returned in force, accounting for about 33% of Japan's power in 2019, according to IHS Markit.
The good news about Japan's need to reduce emissions from the power sector is that this is familiar territory for the world's developed economies, as the US and many European countries have demonstrated by shifting from coal power to natural gas and renewables. "The power sector in general is the lowest-hanging fruit in terms of emissions reductions because there are affordable lower-carbon alternatives that countries are using at scale," Mosby said.
Next in line is the transportation sector, which accounts for nearly 22% of Japan's annual CO2e emissions (almost 237 million mt CO2), according to IHS Markit. Half of that is light-duty vehicles, followed by heavy-duty vehicles, aviation, and shipping.
The Natural Resources Defense Council (NRDC) said Japan can and should do more, given that it is the world's eighth-largest GHG emitter and third-largest economy. "A target of only 45-46% below 2013 levels is not in line with what this moment demands. It is way too low to be credible and serious. Instead, the Japanese government should commit to a target of 52% below 2013 levels," it said.
How will it get there?
Japan's government has not released details on how it will reach its new emissions target, but a look at the country's "Green Growth Strategy," which is its general plan for reaching net-zero emissions in 2050, indicates what the strategies might be.
According to an English translation of the Green Growth Strategy that was published in March, Japan is seeking to triple its share of renewable power to 50% by 2050, is planning to ban sales of new gasoline-only vehicles by 2035, and is trying to rapidly develop a substantial hydrogen power industry. The strategy includes reducing the cost of batteries so that by 2030 electric vehicles will have cost parity with fuel vehicles, and also so that "home-use storage batteries combined with solar panels make economic sense."
METI subsequently announced in April that it's supporting the hydrogen industry with investments of ¥370 billion ($3.4 billion) over the next 10 years. A total of 18 projects were identified for funding in April, aimed at reducing costs in the supply chain, improving efficiency of electrolyzers that make hydrogen, and testing hydrogen-fired or hydrogen and gas co-fired turbines. The ministry's goal is to bring down the price of hydrogen production by two-thirds by 2030.
Japan expects its hydrogen demand will reach 3 million mt in 2030 and 20 million mt/year by 2050.
The Green Growth Strategy also envisions a rapid buildout of offshore wind capacity to 10 GW by 2030 and 30-45 GW by 2040. On 11 May, GE Renewable Energy announced an alliance with Toshiba to build and market GE's Haliade-X offshore wind turbine in Japan, the latest private investment attracted to that space. In April, Spanish renewables company Iberdrola and Japan's Cosmo Eco Power and engineering firm Hitachi Zosen said they will bid on the rights to build a 600-MW offshore wind project.
Japan does have a carbon tax, but that tax rate is very low by international standards, at just ¥289/mt of CO2e, or about $3/mt. For now, the government has not announced plans to increase that tax. Nor has it said it would expand a cap-and-trade emissions trading program for the Tokyo metro region. Mosby pointed out that the Tokyo cap-and-trade program affects only one part of the country and does not include all sources of emissions, so its impact at present is limited.
One open question is what will happen to Japan's nuclear power industry. "For realization of 2050 carbon neutrality, it is important to pursue every option including nuclear power," the Green Growth Strategy stated. It identified as priorities commercialization of small module reactor technology by 2030, use of high-temperature gas-cooled reactors to produce hydrogen by 2030, and research and development for fusion energy.
In the more immediate term, IHS Markit sees challenges in the nuclear sector. In a 2020 report, IHS Markit said that Japan's goal of nuclear supplying 20-22% of power in 2030 would require restarting 27 of the country's 58 nuclear plants, a far cry from the nine operating today.
If nuclear does not meet that targeted threshold, the question is whether renewables can be ramped up quickly enough to fill the gap, IHS Markit said.
As a nation dependent on fuel imports, Japan is also at the forefront of building a carbon-neutral LNG industry, as well as converting ships to burn LNG. It's already experimenting with LNG use to replace fuel oil in ferries, but longer term the Green Growth Strategy states that its aims include "the commercial operation of zero-emission ships by 2028 … and striving to further spread those ships toward 2030. In 2050, the fuel used for ships is expected to be converted alternative fuels such as hydrogen and ammonia."
Coal power remains another open question. Even if the 100 most inefficient plants are closed, METI estimates that Japan will still rely on coal-fired power for about 26% of its electricity needs in 2030. In all, 48-50 GW of coal-fired power will likely still be online.
However, Japan will seek to reduce emissions from these facilities by applying new standards that will require 43% greater efficiency in 2030 than today. METI has authorized construction of 21 new coal units in the next five to 10 years with a total capacity of more than 12.5 GW, which would perform at high efficiency and with low emissions.
Under the new GHG scenario, it's possible those coal investments will be scaled back, or that plans by companies to exit the coal business will be accelerated. To cite one example, trading house Sumitomo announced on 7 May that it will close or sell all of its coal mine assets by 2030 and exit the coal-fired power business by 2040 in Japan and abroad. Sumitomo supplied 4.4 million mt of thermal coal from its mines during the April 2020-March 2021 fiscal year; this was down by 25% from the prior year, with the company attributing more than half of the shortfall to COVID-19 economic impacts.
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