What impressions do you have about Japan's decarbonization efforts? Some readers may know that Japan has been criticized by the international community for underperforming. For example, Japan has received the Fossil of the Day award more than once from the Climate Action Network for "doing the most to achieve the least" in terms of progress on climate change at Conference of the Parties (COP) meetings of the UN Framework Convention on Climate Change.

As revealed by the Fossil of the Day awards, Japan's decarbonization policies have been far from impressive. Recently, however, the situation has at last begun to change especially after a new cabinet was formed by Prime Minister Yoshihide Suga in September 2020. This month's issue of the ISHES newsletter introduces the brief history and recent trends about Japan's decarbonization efforts.

History of decarbonization policy in Japan

Japan's decarbonization policy has been criticized by the international community for two reasons. One is its low targets for greenhouse gas emission reductions, and the other is the promotion of coal-fired power generation.

For example, Japan's reduction target for greenhouse gas emissions as committed under the Paris Agreement was a 26% reduction from 2013 by 2030. Compared with the UK's target 57% reduction from 1990 and France's target 40% reduction from 1990, not only the reduction target but also the baseline is very different. Japan's power generation in 1990 was 739.6 terawatt-hours (TWh), but increased to 1,085.1 TWh in 2013. Also the dependency on fossil fuel generation in 2013 was larger than before the earthquake and tsunami that struck northeastern Japan in March 2011, after which all nuclear plants were stopped for a while. In short, the 2013 baseline makes things relatively easier for Japan.

Coal-fired plants generate significant amounts of greenhouse gas emissions, and while the UK announced that it would stop them all by 2024 and France by 2022, Japan continued with a policy of relying on coal-fired plants, which accounted for about a third of Japan's power generation in 2019. New plants were also planned at that time. According to the Ministry of Economy, Trade and Industry (METI), there were plans to newly construct or replace 17 plants as of the end of June 2020. The Japanese government also has been supporting the export of coal-fired plants, albeit under certain conditions. One Fossil of the Day award mentioned above was given to Japan at COP25 on December 3, 2019 in response to a statement by the minister for METI indicating Japan's plans to continue using coal-fired power plants.

Above we have looked at the decarbonization measures of the Japanese government to date, but the situation has been better in the private sector. For example, as of March 2020, 252 companies had declared that they would comply with TCFD recommendations (described below) and there are many other decarbonization initiatives. Overall, however, Japan had been significantly behind its counterparts in Europe, which is especially proactive in terms of decarbonization efforts.

Rapid shift to decarbonization after late 2020

Central government

The turning point was the formation of the Suga Cabinet in September 2020. On October 26, 2020, Prime Minister Suga declared in a policy speech in an extraordinary session of the Diet that Japan will aim to reduce GHG emissions to net zero, to make Japan a carbon-neutral, decarbonized society by 2050. At the meeting of the Global Warming Prevention Headquarters on October 30, 2020, Prime Minister Suga ordered a swift review of the Plan for Global Warming Countermeasures, Strategic Energy Plan, and the Long-Term Strategy under the Paris Agreement. At the meeting of the Committee on the Growth Strategy on December 25, 2020, the Green Growth Strategy Through Achieving Carbon Neutrality in 2050 was announced. Another related development was the Diet's adoption of a Climate Emergency Declaration in November. The government's policy on coal-fired power plants is also being reviewed, and as of April 2021 there were no plans to start new construction in Japan.

Regarding cooperation between the central and local governments, the outline of a roadmap for decarbonization of all local governments by 2050 was released in April 2021, stating that more than 100 areas across Japan would be selected as leading areas, with the aim of realizing decarbonization by fiscal 2030 in each area.

Furthermore, at the Leaders Summit on Climate hosted online by the United States on April 22, 2021, Japan announced its goal of a 46% reduction below 2013 levels by 2030, and that it would continue making efforts to achieve a 50% reduction. This represents major progress from the previous goal of a 26% reduction by 2030 made by Japan under the Paris Agreement.

As we can see, Japan's decarbonization policies have been undergoing major changes. It is not only the central government making a big shift toward decarbonization. Local governments and private companies are also accelerating their decarbonization initiatives.

Local governments

According to the Ministry of the Environment, as of May 6, 2021, as many as 384 local governments (including prefectures and municipalities) had declared the goal of net-zero carbon emissions by 2050. These local governments account for more than 100 million people, or 80% of Japan's total population. The following data shows the trend in the number of municipalities that have declared the goal of net-zero carbon emissions by 2050. We can see the numbers increasing significantly since 2020, especially since the beginning of 2021.

The corporate world

Companies are also accelerating their decarbonization efforts. Here we mention three global standards and initiatives many Japanese companies are joining: the Taskforce on Climate-related Financial Disclosures (TCFD), Science Based Targets (SBT), and RE100. (The following data are cited from Ministry of the Environment materials.)

TCFD (Taskforce on Climate-related Financial Disclosures)

Upon a request by the G20, the TCFD, established under the Financial Stability Board (hosted by the Bank for International Settlements), has developed a framework of climate-related disclosure for companies. The number of Japanese companies which agree to use the framework increased from 252 on March 31, 2020, to 358 as of March 29, 2021, the most of any country in the world. From the increase of more than 100 companies in just one year, you can see the momentum building.

SBT (Science Based Targets)

The SBT initiative encourages companies to set a greenhouse gas emissions reduction target to be consistent with the Paris Agreement. The number of Japanese companies recognized by the SBT increased from 62 on March 31, 2020, to 94 as of March 29, 2021, the second highest of any country in the world.

RE100

RE100 is a global initiative for companies to commit to 100% renewable energy for the electricity they consume. The number of Japanese companies to join RE100 increased from 32 on March 31, 2020, to 51 as of March 29, 2021, second highest in the world.

Decarbonization has now become a major trend in Japan, to the point that rarely does a day go by without an article in the newspaper about a company's efforts, such as adopting a carbon neutral declaration or a 100% renewable energy goal. For example, Mitsubishi UFJ Financial Group announced its commitment to achieve net-zero GHG emissions including those emitted by its corporate customers by 2050. There are also efforts to link performance indicators with non-financial information on climate change initiatives. Seven & i Holdings (parent company of the 7-Eleven Japan chain of convenience stores and other major retailers) has added a CO2 emission reduction target to its key performance indicators (KPIs) for board members' stock compensation since fiscal 2020, and Toda Corporation (a major player in construction and civil engineering) started linking its directors' and board members' performance-based compensation to achievement of the company's CO2 emission reduction target in fiscal 2019.

This month's issue of the ISHES newsletter has introduced Japan's moves toward decarbonization, which have been slow to date but are now rapidly catching up with the rest of the world. Japan needs to accelerate this decarbonization trend to limit climate change and spread the efforts to every level of society and the economy. We will keep a close eye on further developments and send out news from time to time.