Basic Act on Energy Policy
The Basic Act on Energy Policy was enacted in June 2002 and seeks to set out the country’s fundamental and overall energy policy direction after approval of the Diet. The core principles of Japan’s energy policy are: 1) Energy security, 2) Adaptability to the environment, and 3) Use of market mechanisms.The law directs the government to draft a Basic Energy Plan based on these principles to formulate energy demand related policies in a long-term and comprehensive manner and to review the Plan ever three years.The Basic Energy Plan was established in 2003. It indicated comprehensive basic guidelines for future energy policies and affirmed continuous promotion of nuclear as the core energy source. The Plan was revised in 2007. In June 2010, the revised Strategic Energy Plan of Japan was formulated in consistent with the “New Growth Strategy”. It articulates the fundamental direction of energy policy in Japan, based on the Basic Act on Energy Policy above. The basic points of view in energy policy are energy security, environmental protection and efficient supply. In the revision, two new points of view were added, namely energy-based economic growth and reform of the energy industrial structure. Japan will fundamentally change its energy supply and demand system by 2030 through achieving several targets:Doubling the energy self-sufficiency ratio, and the self-developed fossil fuel supply ratio, and as a result, raising its “energy independence ratio” to about 70%;Raising the zero-emission power source ration to about 70%;Halving CO2 emissions from the residential sector;Maintaining and enhancing energy efficiency in the industrial sector ay the highest level in the world; andMaintaining or obtaining top-class shares of global markets for energy-related products and systems.By achieving these targets, domestic energy related CO2 emissions will be reduced by 30% or more in 2030 compared to the 1990 level, if policies are promoted sufficiently.Special Measures Law on Use of New energy, etc., by Electric Utilities (known as the Renewable Portfolio Standard (RPS))The 2003 Renewable Portfolio Standard (RPS) seeks to increase new energies in the field of electric power. A part of the hydroelectric and geothermal power generation is designated as the target power sources in the RPS law. It established procurement quotas to increase the volume of electricity generated from RES (excluding hydro) from 7,3 billion kWh in 2003 to 12,2 billion kWh in 2010 (equivalent to around 1% of total electricity generation).Under the RPS law, an obligation rate is assigned to each of Japan’s ten electric utilities, along with new entrants such as power producers and suppliers (PPSs). In 2007, a target of 16 billion kWh was set for 2014, while the obligation rate applied to each utility to achieve the target was set as a percentage of its electricity sales in the previous year. The Japanese RPS allows for trading between utilities. As in other RPS models, Japan separates the so-called “green” portion of electricity generation as a specific product form the electricity itself. Renewable electricity generators create green RPS credits form their generation and can sell the credits in the RPS market while selling the electricity to the power market, to different buyers.New National Energy StrategyIn 2006, the New National Energy Strategy was launched containing a program of action to 2030 placing considerable emphasis on achieving energy security. Its five targets are further EE improvements of at least 30%; increasing the share of electric power derived from nuclear energy to more than 30%–40%; reducing oil dependence in transport to about 80%; raising Japanese investment in oil exploration and development; and reducing oil dependence below 40%.The Strategic Energy Plan was revised again in 2010. It is required to be reviewed at least every three years, and to be revised if needed. In this revision, two new principles—‘energy-based economic growth’ and ‘reform of the energy industrial structure’—were added to the three existing principles of ‘energy security’, ‘environmental suitability’ and ‘economic efficiency’.The Strategic Energy Plan aims to fundamentally change the energy supply and demand system by 2030 and has set ambitious targets for 2030:Doubling the energy self-sufficiency ratio (18% at present) and the self-developed fossil fuel supply ratio (26% at present) and as a result, raising Japan’s ‘energy independence ratio’ to about 70% (38% at present)Raising the zero-emission power sources ratio to about 70% (34% at present)Halving CO2 emissions from the residential sectorMaintaining and enhancing energy efficiency in the industrial sector at the highest level in the worldMaintaining or obtaining top-class shares of global markets for energy-related products and systems.Energy Conservation Frontrunner Plan (2006)The Energy Conservation Frontrunner Plan sets a strategy to achieve the EE target of the National Energy Strategy through strategic planning in the medium and long term. It establishes a plan to develop energy conservation technology and to develop and disseminate benchmarking, so that the energy conservation effect can be quantitatively verified.In 2010, the revised Strategic Energy Plan set these initiatives:Enhancing Japan’s energy efficiency (already the highest level in the world) through introducing the most advanced technologies for replacing equipment in the industrial sectorMaking net-zero-energy houses available by 2020 and realizing net-zero-energy houses as the average across the economy by 2030Setting compulsory energy-saving standards for houses and compiling compulsory standardization targetsReplacing 100% of lighting with highly-efficient lamps (including LED and organic EL lighting) on a flow basis by 2020 and on a stock basis by 2030Introducing new integrated standards for energy consumption in all buildings for implementation in two yearsEnhancing support and regulatory measures (including top-runner standards) to increase the take-up of energy-saving consumer electronics, energy-saving information technology equipment, heat pump water heaters, fuel cells, hybrid construction machines and other highly efficient equipmentRaising next-generation vehicles’ share of new vehicle sales to up to 50% by 2020 and up to 70% by 2030 by mobilizing all possible policy measures.Fukuda VisionThe federal government originally established a long-term energy goal to install 4.82 GW of PV by Fiscal Year 2010. Although this goal is likely to be unachievable, it has been replaced by more ambitious "vision" created by the former Prime Minister Fukuda in June 2008. The Fukuda Vision of energy and environmental policy in Japan includes a long-term GHG reduction target and effective policy measures. They include: a long-term GHG emissions reduction target of 60-80%, relative to current levels by 2050; in the medium term, a reduction of GHG emissions by 14% by 2020, relative to 2005 levels as a feasible largest reduction; a target that “zero emission electricity” (such as generated from renewable and nuclear resources) be more than 50% of total generation by 2020, up from the current level of about 40%; amongst others. To achieve the “zero emission electricity” target, increasing the cumulative PV installed capacity by 10 times, from the 2005 level, to 14 GW by 2020 and by 40 times to 53 GW by 2030 are planned. The former Prime Minister also pledged to install PV systems on 70% of newly built homes by 2020.In response to the Fukuda Vision, three policies toward more renewable energy have been announced. The Ministry of Economy, Trade and Industry (METI) restarted a subsidy for installation of solar PV panels for the residential market in January 2009. Income tax credits for installation of solar panels at the same time as renovation of a home were to begin in April 2009. A policy similar to a ‘feed-in tariff’’ is also being implementedFeed-in tariff systemIndirectly related to the RPS, some solar PV also receives direct assistance similar to feed-in tariff. The rate for solar PV was JPY 19 to JPY 23 per kWh in 2006. Under the excess power purchasing menu, electric utilities voluntarily purchase excess power primarily from residential generators that self-supply and sell excess power back to the grid.Research and developmentBoosting the use of RE depends in part on technological advances, an area where Japan excels. Although total research and development (R&D) outlays on energy fell slightly between 1996 and 2006, Japan’s R&D on renewables more than doubled over that period. Clean energy investment in Japan totalled less than $1 billion in 2009, placing it in 15th position. Japan is a leader in solar capacity, with 1.7 GW backed by feed-in tariffs. Japan has ambitious targets to source 28 GW from solar and 5 GW from wind by 2020.Cool Earth 50In 2007 the Government announced a cooperative initiative with major greenhouse gas emitters to reduce emissions by 50% from current levels by 2050. The actions required to achieve these goals are set out in the Cool Earth Innovative Energy Technology Program, which includes the Innovative Energy Technology Roadmap and the Technology Development Roadmap.In 2009, the Aso government announced a national GHG reduction target for the post-Kyoto regime to reduce national GHG emissions to 15% below 2005 levels by 2020. Additional policies, such as a doubling of the previously announced PV installation target from 14 GW in 2020 to 28 GW in 2020 were also announced.Japan ratified the UN Framework Convention on Climate Change (UNFCCC) on 28 May 1993 as an Annex I party, and the Kyoto Protocol on 4 June 2002. Japan’s greenhouse gas emissions reduction commitment under the Kyoto Protocol to the UNFCCC is to achieve a level of CO2 emissions only 2.3% higher than 1990 levels by 2012, planned in the Kyoto Protocol Achievement Plan. In order to fulfil the commitment, one of the focuses of current climate change policies could be on development of nuclear energy. METI’s report “Japan’s Nuclear Energy National Plan” confirmed policies including continuing to meet at least 30-40% of electricity supply even after 2030 by nuclear power generation.