Japan (2014)

Degree of reliance on imported energy: 

Japan has limited domestic energy resources. It meets less than 15% of its own total primary energy use from domestic sources. It is the third largest oil consumer and importer in the world behind the United States and China. Furthermore, it ranks as the world's largest importer of liquefied natural gas (LNG) and second largest importer of coal behind China.

Main sources of Energy: 

Total installed electricity capacity (2012): 225.667 GW

Japan was the third largest generator of electricity in the world after the USA and China.

Total electricity generation (2011/12): 955 GWh.
- Thermal: 78.9%
- Hydroelectric: 9.0%
- Nuclear: 10.7%
- Renewables: 1.4%

Peaking in 2004 at 522.5 Mtoe, the total primary energy demand of Japan has been declining since with an average annual rate of –1.9% through 2011, when it reached 458.1 Mtoe. The contributing factors to the negative growth differ by period. From 2004 to 2007, when the economy registered a positive growth rate of 2.1% per year on average, energy intensity improvement—attributed to the deployment of efficient technologies and shifts in industry structure toward services— resulted in a moderate decline of primary energy demand at –0.5% per year. At the same time, from 2008 to 2009, the impacts of the global economic recession were felt greatly, causing a decline in primary energy demand at –4.7% per year. The economic recovery in 2010 increased primary energy demand by 5.2% in 2010, but the impacts of the Great East Japan Earthquake were severe and primary energy demand contracted by 7.8% in 2011.

Of the total installed nuclear capacity at 48 GW, only two units are under operation as of the middle of 2013. The operation of other units has been suspended following regular maintenance. To restart operation of nuclear power plants will require local governments’ approval after passing the stress tests that are approved by the Nuclear Regulation Authority.

Lost nuclear capacities have been covered by the increased use of fossil fuel generation, in particular natural gas-fired generation, which has brought additional costs to the Japanese economy. LNG imports amounted to 85.0 million LNG tons in 2011 and in 2012 were estimated to reach 90.0 million LNG tons, up from 70.0 million LNG tons in 2010. In parallel with the rising LNG price in the Asia and the Pacific market, LNG imports expanded the trade deficit to 6.9 trillion yen in 2012. Moreover, to cope with the tight balance between electricity supply and demand, nationwide energy efficiency and conservation efforts called setsuden were carried out in 2011 and 2012 through shifts in industry’s operational hours and days and avoidance of unnecessary electricity use in the residential and commercial sectors to lower peak demand during summer and winter.

Japan had 286 GW of total installed electricity generating capacity in 2011, according to the Japan Electric Power Information Centre, Incorporated (JEPIC). Fossil fuel-fired plants made up a bulk of this capacity, with over 185 GW (65%) of the total capacity. Nuclear capacity was 49 GW, holding 17% of the capacity, although installed capacity fell to 46 GW in 2012 after four reactors were decommissioned in the aftermath of Fukushima. Hydroelectric facilities held 17% of the capacity and have been a steady source of power supply for Japan for several years. The remaining capacity came from wind, solar, geothermal, and small biomass-fired plants.

Although Japan has the second highest demand for electricity in Asia, it has one of the lowest electricity demand growth rates in the region. In 2011, total generation was over 1,000 Terawatt-hour (TWh) and has remained at a similar level for over a decade. Since Japan depends highly on fuel imports to meet its generation needs, the country seeks to ensure an optimal combination of sources based on cost-efficiency, energy security, and environmental stability.

Before most nuclear power generation was removed from service in 2011, Japan had one of the most balanced portfolios of power generation fuel sources of the world's major power consumers. Before the Fukushima disaster and the displacement of much of the nuclear-generated power, Japan was not reliant on any particular source for more than 30% of its total generation, according to the FEPC and IEA. Base load generation was met by non-pumped hydroelectric power (total share of hydroelectric generation was 7.4%), nuclear generation (26%), and geothermal sources (0.3%). LNG and coal were burned as the next sources of base load fuels, and each made up 27.4% of the generation mix according to the IEA data. Pumped hydroelectricity and oil provided peak-load generation. Oil consisted of 8.8% of the electricity generation mix. Other renewable sources include wind, solar, biomass, and waste, which in total were used for about 3% of power generation. Once Japan removed its nuclear generation capacity from operation, other fuels such as LNG and oil displaced it. This shift altered the generation portfolio mix. METI reports that LNG and oil shares rose to 48% and 16%, respectively, of total power generation, as nuclear power's share fell to 2% in 2012.

The Japanese government and electric utilities have taken several steps to ensure power supply meets demand following the Fukushima crisis. Some of these measures for power plants using fossil fuels include restoring some of the disaster-affected plants, relaxing regulations on inspections, and restarting mothballed oil-fueled generation units. Also, the government promoted power restrictions for consumers in the disaster-affected areas in 2011 and 2012, invoking a 15% power reduction on end users of Kansai Electric Power Company (KEPCO) during the summer of 2012 and encouraging other demand-side measures especially during the peak summer seasons. As power generation from fossil fuel sources increases and power demand moderates, there is less need for electricity rationing.

Following the Great East Japan Earthquake in March 2011 and the subsequent Fukushima Daiichi Nuclear Power Plant Accident, the Japanese Government decided to review its Strategic Energy Plan. In June 2012, the Energy and Environment Council of the Japanese government announced “Options for Energy and Environment.” The Energy and Environment Council showed three scenarios for the share of nuclear energy in the power generation mix in 2030, namely, (1) a 0% scenario, (2) a 15% scenario, and (3) a 20-25% scenario.

Country: 

Japan

Extent of the network: 

Electrification rate (2004):  100%

Electricity transmission in Japan is divided in two regions each running at a different mains frequency. Eastern Japan runs at 50 Hz; Western Japan runs at 60 Hz. This originates from the first purchase of generators from AEG for Tokyo in 1895 and from General Electric for Osaka in 1896. This frequency difference partitions Japan's national grid; and the limitations of these links has been a major problem in providing power to the areas of Japan affected by the Fukushima nuclear accidents.

“Smart grid” has been introduced in order to realise efficient use of power as Japan actively increases the introduction of new energy in electric power generation.

Capacity concerns: 

Amid a solar power boom in Japan, there are concerns the country's electrical grids cannot support proposed projects. In a survey by the Japan Renewable Energy Foundation of companies involved in solar projects, 20% of the respondents said they were denied access by local utilities because of overcapacity and 37% said they would experience limits on the amount of electricity the utilities could accept.

In April 2013, regional utility Hokkaido Electric Power said its transmission system, onto which large solar systems are interconnected, had received four times as many applications as it could manage. While this situation has yet to occur in other parts of Japan, experts say the country's electricity system will need to be revamped soon if the solar boom continues.

Potential for Renewable Energy: 

The renewables boom of 2012 to 2013 was largely driven by the energy gap created by this anticipated shift away from nuclear, supported by generous tariffs introduced in July 2012. It was never expected that renewables would fil the gap immediately, necessitating an increase in fossil fuel imports (such as LNG from Australia) to meet demand in the short term. But the nuclear gap undeniably established a long-term goal for domestic, and clean, energy supplies.

Japan currently sources approximately 9% of its energy from renewable sources. There has been a significant push to develop renewable energy in Japan in order to boost energy self-sufficiency and to move away from nuclear power in the wake of the 2011 disasters. However, with the recent election of the Liberal Democratic Party it is expected that Japan will no longer seek to decommission all nuclear power plants.

Solar
Japan currently has the fourth-largest PV market in the world and is the third-largest producer of PV panels. Japan formerly had one of the largest programs in the world to promote rooftop solar panels. However, the domestic solar industry has since fallen somewhat behind the international market leaders.

Wind
The topographical features of Japan present challenges in wind development. Hokkaido and Tohoku are two of the regions where large-scale wind farms continue to be constructed. In 2010, the total installed wind capacity was 2,304MW.

Hydropower
65% of Japan’s 34 GW of hydropower reserves have already been tapped into.

Biomass
By July 2009, 218 towns were established as biomass towns as part of the Biomass Nippon Strategy.

Biofuels
The Japanese Government predicts that Japan has the capacity to produce 6 Gl per year of biofuels by 2030. Use of abandoned arable land (386,000 ha) could produce resource crops equivalent to 6.2Gl of oil.

Geothermal
Japan’s geothermal capacity is 2,470 MW and in 2011 more than 540 MW of installed capacity was producing power.

Potential for Energy Efficiency: 

Japan continues to pursue energy efficiency improvements as a cornerstone of its energy policy.  As a result, energy intensity in terms of TPES per unit of GDP is the lowest among IEA countries when market exchanges rates are used. Since the oil shock of the 1970s, the economy has achieved an energy intensity improvement of around 30%. However, since the mid-1980s, this improvement has leveled off somewhat. The government is now aiming for an improvement of at least 30% in terms of final energy consumption per unit of GDP by 2030 compared with 2003.

Since 1973, Japan’s imports of oil have decreased despite a doubling of tits economy. The average fuel economy for vehicles in Japan is 47 mpg, double that of the United States. On the manufacturing side, the country is a model of energy efficiency and sustainability. Paper mills, for example, use their own waste and other alternative energy for 38 % of their energy.  Japan’s steel industry uses energy 20% more efficiently than the United States and 50% more so than China.

Total energy consumption in 2008 was 22.3 quadrillion Btus, of which oil accounted for the largest share at 45%, followed by natural gas at 18%, nuclear at 11%, hydroelectricity at 3% and other renewable at 1%. Japan is the third-largest consumer of nuclear power in the world after the USA and France. Hydroelectric power and renewable energy account for a relatively small percentage of total energy consumption in the country.

Industry

  • Energy Conservation Law: Comprehensive EE regulations on designated industries: financial incentives, standards in machinery, product labelling.  
  • Tax reductions and subsidies since 1970s.
  • Law on Rational Use of Energy (last amendment 2009): benchmarks for  energy-intensive industries, including energy management.
  • For large industries >500kW: restriction of electricity (consumption 15% less compared with same period in the previous year). Penalties are imposed for each hour in which the target is not met. Some are shifting operations to evenings/weekends.

Utilities

  • Low-interest loans for CHP installation.
  • Promotion of ESCOs.
  • Every 13 months nuclear plants are shut down to undergo routine maintenance.

Transport

  • Top Runner program (est.1998): freight and passenger vehicle EE standards.
  • Green taxation for vehicles (until April 2015).
  • EE regulations on carriers and consigners.
  • Transportation demand management.
  • Telework and modal shift.

Residential

  • Top Runner programme: EE standards for products. Reviewed every 2/3 years. 23 categories by 2009.
  • EE standards for buildings and houses and annual reporting on EE measures.
  • National EE labelling and Energy Star label.
  • Retailer assessment system (2003).
  • Home energy management systems: Kyocera.
  • Broad range of financial EE incentives.

Public

  • Nationwide institutional system for EE: Energy Conservation Centre and NEDO.
  • Green Procurement Law.

Ownership: 

The electricity market is dominated by regional monopolies, with 85% of the country’s total installed generating capacity produced by 10 privately owned companies.  The General Electric Utilities are full-service electric power companies providing users (customers) with electric power generation, transmission, and distribution; namely, Hokkaido Electric Power Company, Tohoku Electric Power Company, TEPCO, Chubu Electric Power Company, Hokuriku Electric Power Company, Kansai Electric Power Company, Chugoku Electric Power Company, Shikoku Electric Power Company, Kyushu Electric Power Company and  Okinawa Electric Power Company.

Structure / extent of competition: 

  • In the past, the electric power business in Japan was dominated by the General Electric Utilities, which had monopoly control in their respective service areas. After a revised Electric Utilities Industry Law came into effect in 1995 (along with two later revisions), the situation has been changing significantly, starting with the liberalisation of power generation and partial liberalisation of retail sales.
  • Wholesale Electric Utilities are businesses having supply capacity of 2 GW or above and supplying electricity to General Electric Utilities. Examples are J-Power and the Japan Atomic Power Company.
  • Wholesale Suppliers (including IPPs) are businesses other than Wholesale Electric Utilities supplying electricity to General Electric Utilities, contracting with them for supply of 1 MW or more for at least 10 years, or for 100 MW or more for at least five years.
  • PSs are businesses supplying electricity to customers contracted for 0.05 MW or more, using the power line networks of General Electric Utilities. PPSs are new  entrants in the liberalised retail electricity sector.

Renewables integration is also expected to be boosted by the much-awaited reform of Japan’s electricity market, which is currently dominated by 10 regional utilities. In November, legislators approved the first step in reforms to introduce greater competition and scope for more distributed energy. The new legislation will create an independent body to coordinate supply and demand across the nation’s electricity grids, with further legislation to liberalize the electricity market by 2016 expected soon.

Existence of an energy framework and programmes to promote sustainable energy: 

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:

  • Energy security,
  • Adaptability to the environment, and
  • 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; and
  • Maintaining 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 Strategy

In 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 sector
  • Maintaining and enhancing energy efficiency in the industrial sector at the highest level in the world
  • Maintaining 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 sector
  • Making net-zero-energy houses available by 2020 and realizing net-zero-energy houses as the average across the economy by 2030
  • Setting compulsory energy-saving standards for houses and compiling compulsory standardization targets
  • Replacing 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 2030
  • Introducing new integrated standards for energy consumption in all buildings for implementation in two years
  • Enhancing 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 equipment
  • Raising 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 Vision

The 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 implemented

Feed-in tariff system

Indirectly 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 development

Boosting 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 50

In 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.

Current energy debates or legislation: 

Draft proposals released by the Ministry of Economy, Trade and Industry (METI) in early December 2013 stated that, although dependency on nuclear should be reduced as much as possible, it will continue to be used as an important base-load power source, subject to a series of safety measures. Still, this is a far cry from the previous administration’s call to phase out nuclear completely by 2030, something that secured significant public support.

Major energy studies: 

Japan participates in the Asia-Pacific Partnership on Clean Development and Climate (APP), a co-operative network of seven major countries in the region that collectively account for more than half of the total global emissions (Japan, Australia, Canada, China, India, Korea and the United States). The partnership strives to reduce CO2 emissions on a global scale.

The APP has established task forces for the 8 sectors that cover about 60 % of the partners’ energy consumption and CO2 emissions, namely aluminium, buildings and appliances, cement, cleaner fossil energy, coal mining, power generation and transmission, renewable energy and distributed generation, and steel.   

Role of government: 

The Ministry of Economy, Trade and Industry (METI) (http://www.meti.go.jp/) is responsible for formulating Japan’s energy policy. Within METI, the Agency for Natural Resources and Energy (ANRE) (www.enecho.meti.go.jp) is responsible for the rational development of mineral resources, securing stable supplies of energy, promoting efficient energy use, and regulating electricity and other energy industries.

The Nuclear and Industrial Safety Agency, which was responsible for the safety of energy facilities and industrial activities, was abolished in September 2012. Its functions in relation to nuclear energy were transferred to the newly-established Nuclear Regulation Authority with the aim of achieving “the separation on nuclear regulation and promotion.”

The Ministry of Foreign Affairs (MOFA) (www.mofa.go.jp) formulates international policies.

Government agencies in sustainable energy: 

The Council for Science and Technology Policy (http://www8.cao.go.jp/cstp/index.html) is the top decision-making body in Japan energy research and development. The members include the Prime Minister, the Minister of Economy, Trade and Industry and other ministers, along with knowledgeable stakeholders. In addition, there is also the Research and Development Subcommittee under the Industrial Structure Council that serves as an advisory body to the Minister of Economy, Trade and Industry. Japan’s energy technology strategy is developed by this subcommittee.

Additional responsibilities lie with particular government ministries including:
The Ministry of Economy, Trade and Industry (METI), which has a focus on funding renewable energy, energy efficiency, the rational use of fossil fuel and power generation (including nuclear power), and technologies relating to climate change.

The Ministry of Education, Culture, Sports, Science and Technology (MEXT), has a focus on nuclear research and development and basic research in universities and institutes.

Energy planning procedures: 

An entity that engages in construction and operation of generation facilities to supply electricity for consumers must obtain a licence as a General Electricity Business, Specified Electricity Business or Specified Supplier from the minister of ETI or must make filings as a Specified-Scale Electricity Business with the minister of ETI. An entity that engages in construction and operation of generation facilities to supply electricity for a General Electricity Utility must obtain a licence as a Wholesale Electricity Utility from the minister of ETI, but only if it owns electricity generation facilities with an electricity generation capacity of more than 2 million kW.

With respect to the construction and operation of nuclear plants, the EBA requires approval of the construction plan before construction and the inspection of construction before operation by the Nuclear Regulation Authority and the minister of ETI. In addition, an installation of a nuclear power reactor requires the approval of the Nuclear Regulation Authority. For construction of power plants other than nuclear plants, prior filing of the construction plan with the minister of ETI is generally required. In addition, construction of a nuclear plant, a thermal power plant, a hydro power plant or geothermal plant generally requires prior environmental impact assessments.

Energy regulator Date of creation: 

The Ministry of International Trade and Industry (MITI), established in 1951 was reorganized to the Ministry of Economy, Trade and Industry (METI) in 2001 and has separated its policy-making and regulatory functions into two different departments, clarifying its functions in these areas.

The Agency for Natural Resources and Energy is a sub-division of the METI that has set forth Japan's New National Energy Strategy. The Agency is actively working to realize this strategy.
 

Degree of independence: 

METI’s regulatory department does not have a separate budget or autonomy in the management of human resources.

Regulatory framework for sustainable energy: 

The Basic Act on Energy Policy was enacted in June 2002. The core principles of this energy policy are:

  • energy security;
  • adaptability to the environment;
  • and use of market mechanisms (Article 4).

The Act on the Rational Use of Energy 1979 ensures that factories and appliances comply with strict energy efficiency standards.

The Electricity Utilities Industry Law (which was amended significantly in 1995) sets out the procedures  for an electricity utility to obtain a licence from the Minister of Economy, Trade and Industry.

Act on Purchase of Renewable Energy Sourced Electricity by Electric Utilities (FiT)

The Act on Purchase of Renewable Energy Sourced Electricity by Electric Utilities, which become effective on 1 July 2012, establishes a feed-in tariff regime for renewable energy.

  • All feed-in tariff rates will include 5% sales tax. 
  • The solar rate is about double what is being paid in Europe, but just under the rate the Canadian province of Ontario, is planning to pay.
  • The feed-in tariff rates will be reviewed annually. Trade Minister is responsible for approving these rates. The Government will also be monitoring the profits of renewable energy companies during the first three years. The program is designed to pay a premium price for the first three years to encourage early investment in renewable energies.
  • Once an agreement has been reached between the power provider and power utility, the feed-in tariff rates will not change as a result of future price revisions.

2003 Renewable Portfolio Standard

  • The 2003 Renewable Portfolio Standard targeted solar power, wind power generation, biomass energy, hydropower and geothermal power:
  • the law requires electricity utilities to meet certain annual renewable energy targets set by the Minister, determined as a percentage of electricity sales; and
  • an electricity utility may choose to meet its obligation in the following ways: (i) by generation of electricity itself; (ii) by purchasing the electricity generated from renewable resources from another party; or (iii) by purchasing tradable “Renewable Energy Certificates” from another party. Such Renewable Energy Certificates are granted to utilities that generate electricity from renewable sources.

Regulatory roles: 

The Ministry of ETI has the authority to do the following:

  • issue licences to Electricity Utilities;
  • order General Electricity Utilities and Specified Electricity Utilities to improve their operations;
  • require an Electricity Utility to supply electricity to a General Electricity Utility, Specified Electricity Utility or Specified-Scale Electricity Utility in the event of a disaster or other emergency;
  • order a General Electricity Utility to provide a wheeling service
  • determine the purchase price and the contract period for renewable energy electricity; and
  • warn and order an Electricity Utility to enter into a purchase
  • agreement or an interconnection agreement with a renewable energy electricity producer.

Role of government department in energy regulation: 

NA
 

Regulatory barriers: 

The political instability of successive Japanese Governments is seen by some commentators as a deterrent to renewables investment.

References: 

Ey.com (2014) RECAI Available at http://www.ey.com/Publication/vwLUAssets/RECAI_40_-_February_2014/$FILE/EY_RECAI%2040_Feb%202014.pdf Accessed 16th February

WWF & World Energy Institute (2013): Meeting Renewable Energy Targets: Global Lessons from the Road to Implementation Available at http://awsassets.panda.org/downloads/meeting_renewable_energy_targets__low_res_.pdf Accessed 16th February

DLA Piper (2012): Renewable Energy in the Asia Pacific: A Legal Overview. Available at http://www.dlapiper.com/files/Publication/707b8063-0e73-4bc8-9e81-4ada0d0a5ad0/Presentation/PublicationAttachment/481bba6f-c011-4e5b-9a71-0609d6327f50/renewable-energy-asia-pacific-abridged.pdf Accessed 14th March

UPI.com (2013): Japan's grids can support solar boom? Available at http://www.upi.com/Business_News/Energy-Resources/2013/08/15/Japans-grids-can-support-solar-boom/UPI-77991376591302/#ixzz2ynexR8ti Accessed 13th March

Nishimura & Asahi (2013): Japan Available at http://www.jurists.co.jp/en/publication/tractate/docs/ER2013_Japan.pdfAccessed 13th March

APEC (2013) Energy Overview 2012. Available at http://aperc.ieej.or.jp/file/2013/6/28/APEC_Energy_Overview_2012.pdf Accessed 13th March