Can Japan Reconcile Its Energy Policy Environmental Sciences

Essay add: 11-01-2017, 20:34   /   Views: 101

Japan is an intriguing Country. It is the 3rd largest economy in the World with a GDP of US$ 4.19 trillion. Yet Japan is an acutely energy poor Country with only 4% of its energy supply needs met domestically. Japan's also has the highest Oil dependency for the advance economies. Its level of industrialization has also caused it to produce a high amount of CO2 emissions and it is the 4th largest contributor to CO2 emissions in the World. Japan has ambitious Kyoto protocol obligations that would be very difficult to meet without losing its competitiveness in the Asia region. Japan's nuclear programme, which it viewed as a strategy for CO2 emissions reduction and energy security has been under threat due to recent safety concerns. With these challenges facing it, what strategies can Japan adopt to reconcile its energy policy concerns with its CO2 reduction obligations? Japan's choices come with implications for its economic growth and sustainability of the environment.

Japan is an archipelago Nation located in Northeastern Asia. Japan's four main islands and more than 4,000 small islands cover a total area of 377,872 square kilometers. Japan has a population of 130 million. Japan's GDP per capita is US34, 000 [] . Japan's economy accounts for 7% of Global GDP coming only after the United States (22%) and China (12%). Japan is the home of several iconic manufacturing brands such as Toyota, Nissan, Honda, Sony, and Panasonic. In its domestic market Japan's industries have a virtual monopoly. Japan's research and development capabilities are second to only the United States [] .

Japan is also faced with huge challenges. Japan is an acutely resource poor Country. Japan imports most of its energy needs. In 1977, it imported 77% of its energy needs. By 2005 it was 78% of and by 2020 it is projected that it would reach 82% [] . Since the end of the 1980s, Japan's oil imports Asian countries such as Indonesia and China have decreased; and Japan has been relying to an ever greater degree on oil from the Middle East, which now provides around 90% of Japan's oil imports. It is quite clear that its energy supply structure is even more fragile than any other industrial Nation. Under these conditions, reducing energy risk by securing stable supplies will continue to be a critical issue for Japan's Governments.

Except during the oil crises of 1973, Japan's energy demand has been on the steady increase. Growth in demand has been more predominant in the residential and commercial sectors while the industrial sector demand has remained fairly steady [] . This lack of growth is likely due to a slow GDP growth rate as well as improved efficiencies.

Despite Japans' energy efficiency brought on by the necessity of its imported fuel dependence and well developed research and development capabilities.

Japan is still struggling to remain competitive in a region with economies that are growing at breakneck pace. China, India and Vietnam and South Korea GDP grew 9%; 7%; 6% and 2.02% respectively compared to Japan's -.7% contraction. Maintaining competitive advantage would imply Japan lowering its manufacturing costs as well as developing better products. To lower manufacturing costs, energy costs (as well as other costs would need to reduce) but how can Japan lower its costs when cheaper energy sources tend to be those which contribute the greatest amount to CO2 emissions like Coal and Oil.

Japan also faces the challenge of reducing greenhouse gas emission in line with the United Nations Framework Convention on Climate Change (UNFCCC) Kyoto protocol and the Copenhagen Convention. Fossil fuels account for 81% of Japan's energy needs and it is the world's 4th largest contributor to greenhouse gas emissions. Japan has outlined a strategy for mitigation based mainly on nuclear energy and renewable energy development. Japan has chosen to take a leading role in t the reduction of CO2 emissions and has committed to reducing its emissions to 6% below 1990 levels. It is important to note that when Japan committed to this target it's Nuclear power programme were on course until the two Nuclear plant shutdown incident of 2005 and 2007. Without these incidents Japan had projected that by 2005 it would have reduced its GHG emissions to about 4% below the base Year levels [] . In the emerging renewable industry Japan is equally a relevant player. Japan is also the world's leading manufacturer of solar photovoltaic technology [] and second largest manufacturer of Wind Technology - it would very likely have been first if it were not for its recent economic woes. Japan's research and technology second perhaps only to the United States has a distinct advantage in its ability not to produce new devices and technology but to perfect it [] - a very important advantage when we consider the teething problems of the renewable energy industry that has the technology but are not cost efficient without subsidies.

This research paper would consider certain important themes in outlining a possible scenario or strategy that would be taken by Japan to assure that its economy remains competitive.

1.2 SIGNIFICANCE OF STUDY

The Study of Japan due to its intriguing history and the present challenges it faces. In September 2009, Japan elections produced a new Government. The Democratic Party of Japan (DPJ) replaced the Liberal Democratic Party (LDP) which had ruled Japan for the most part of the past 50 years. The Government was elected on the desire for improvements in the Japanese economy. This paper will look into the options faced by Japan's manufacturing sector which produces the bulk of its GDP.

1.3 METHODOLOGY

This paper will conduct an analysis of Japan's energy situation in order to identify its shortcomings especially with regards to its ability to meet the Countries CO2 reduction targets under the Kyoto Protocol. It will conduct this analysis first by determining if Japan is on the way to meeting its Kyoto protocol carbon emission reduction targets for 2008 and 2012 using a trend analysis to analyze a business as usual scenario. Based on this scenario, it will attempt to determine the level of fossil fuel use it would have to curtail or diversify from if it is to move current and carbon emissions reduction targets. The paper will also attempt to offer recommendations on possible options for Japan to reduce its high dependence on oil.

JAPAN'S ENERGY BACKGROUND2.1 JAPAN'S ECONOMY

The Story of Japan's economy is intriguing. Japan is a technological advanced Country with a large manufacturing sector that. Japan's economy grew by an average of 10% in the 60s; 5% in the 70s and 4% in the 80s [] . This phenomenal growth made it the second (and later third) largest economy in the world. But an asset bubble in the real estate and stocks markets in the late 1980s marked the end of Japan's phenomenal growth and ushered in two decades of stagnant economic growth [] . Japan's Real GDP grew by an average of 1.5% from 1991-1999, compared to an annual average growth of 4% in the 80s. Growth in Japan throughout the 1990s was slower than growth in other major industrial Nation except Russia. The Liberal Democratic Party (LDP) Government's efforts to revive economic growth met with little success and Japan's growth was further hampered by the slowing of the global economy. In 2008, due to the global financial crisis, the economy of Japan was strongly hit and shrank 0.7% and is expected to shrink some 5% in 2009.

Though Japan is still experiencing economic difficulties, it remains a leader in the manufacturing sector has a high concentration of advanced industries. Japan's research and development strengths provides it with distinct advantages in the production of consumer electronics, vehicle manufacturing, semiconductor manufacturing, optical fibers, optical media, facsimile and copy machines. It has also developed expertise in fermentation processes in the food and biochemical's industry.

Figure 1: Japan's Energy Self-Sufficiency Compared to Major Countries

Source: Ministry of Economy, Industry and Transport (METI)

Japan faces two issues: How to continue to maintain its economy and how to reduce CO2 emissions.

2.2 Japan's Oil and Nuclear Dependency

Japan's severe energy shortage dominates its energy policy. Japan has the lowest energy self sufficiency ration among the major industrialized Countries [] Japan's energy supply choice will be constrained by the Country's lack of energy resources to meet its demand and by adequate delivery networks. Japan has an outstanding dependency on Oil for its energy needs. Japan has depended on Oil as a source of energy moved from 70% in the 70s to 40% today. The Japan Institute for Energy Economics in its projections stated that by 2030 Japan will still depend on oil for 37% of its energy supply [] . Japan also faces fuel transportation issues ranging from its power grid which is isolated from the Asian continent and insufficient pipelines to transport oil and natural gas which has left it vulnerable to supply disruptions.

Figure 2: Japans Energy Mix 1990/2008 (In Percentages)

2008

Source: IEA

2.3 Dependence on Middle East Oil

Japan is also reliant on the Middle East for 80% of its oil import needs which leaves it vulnerable to supply disruptions in this possible volatile region. Japan is gradually increasing its use of natural gas, which it sources from closer and more reliable suppliers such as Brunei and Indonesia. Natural gas provides about 15% of Japan's energy needs, steadily increasing from 2.7% in 1975. Japan's shift to natural gas would also contribute to CO2 reductions especially in its electricity sector.

Figure 3: Japan's Oil Import Sources by Country 2008

Source: International Energy Agency

2.4 Diversification to Nuclear Energy

In the 1970s, with the experience of the 1973 and 1979 oil crises [] Japan made a deliberate effort to develop its domestic energy resources with emphasis on Nuclear power. An analysis of Japan's energy supply shows that Japan increased the share of Nuclear power in its energy supply from 12% in 1990 to 14% in 2008 (See Figure 2). Japan currently has 55 active nuclear reactors that are generating 33% of its electricity and 10% of its total energy needs. This is it planned to increase to 41 per cent by 2014. But this plan has encountered several challenges in recent times. First, between 2002 and 2003, Japan's nuclear utility company -TEPCO was compelled to shut down 17 of its nuclear reactors. The forced shutdowns were due to reports of concealment of scars on the shrouds (supporting devices) of the nuclear rods inside plant reactors. Again in 2007, the 8,212 MW Kashiwazaki-Kariwa Nuclear Power Plant which is the biggest nuclear plant in the world was completely shut down for 21 months following an earthquake close to the plant [] . One unit of the plant was reopened in May, 2009, after undergoing seismic upgrades. The near incident could have had catastrophic consequences possibly as serious as the Chernobyl, Ukraine nuclear accident in April 1986.

Figure 4: Japan's Nuclear Energy as % of Total Energy Supply 2008

Japan's Nuclear Component in the Energy Mix is among the Highest in the World

Source: EIA Data2.5 Natural Gas

Natural Gas has grown be 17% of Japans energy from 10% in 1990. Natural Gas is important in Japan's energy policy because it represents the "bridge" or "transition" fuel between fossil fuels and Renewables. Natural gas emits 50% less CO2 than conventional coal and 32% less than Oil. However Japan has experienced difficulties in securing reliable supplies of Natural Gas. Presently Japan is the biggest importer of natural gas in the World, importing 3,385.22 billion cubic feet of Gas in 2007 [] . secures Gas resources through expensive "take or pay" liquefied Natural Gas (LNG) contracts from several Countries including Qatar, Equatorial Guinea, Oman, United Arab Emirates, Australia, Malaysia, Indonesia and Brunei. Japan's Government in order to assure supply plans to support the construction of a gas pipeline from Sakhalin in Russia to Niigata, near Tokyo. This proposed pipeline would provide a more reliable and less expensive source for natural gas when compared to LNG shipping.

2.6 Renewable Energy Strategy

Renewable energy currently constitutes 3% of Japan's total energy supply, up from 2% in 1990 [] . Japan plans to increase its share of Renewables to 5% by 2020. According to its Ministry of Energy Transport and Industry, Japan is focused on utilizing Solar Power and the development of Hydrogen fuel cells for it renewable energy sources. Japan leads the world in the development of solar power development with its research into photovoltaic technology and produces 40% of worldwide photovoltaic products. Domestically it has undertaken a number of programmes to support the use of solar energy including the New Sunshine Project and the Residential PV System Dissemination programme [] .

These programmes are being undertaken under Japan's New Energy policy [] . The New Energy Strategy includes a long term strategy for renewable energies such as photovoltaic; thermal; biomass and wind energy as well as efficiency improvements in the use of fossil fuels such as hydrogen fuel cell development, cogeneration and recycled fuel energy such as waste power generation. In spite of Japan's goals on renewable energies, according to IEA statistics [] non-nuclear renewable energies have grown by just 1% since 1990. Renewable energies have remained at just 3% of its primary energy supply.

2.7 Japans CO2 Reduction Obligations

Under the Kyoto Protocol, Japan has committed to reduce its output of Green House Gases (GHG) by 6% below its 1990 levels. Due to its focus on Nuclear energy (see Figure 4) [] .

Figure 5: Carbon Intensity of G7 Nations

Under the third part conference of Parties to the United Nations Framework Convention on Climate Change (UNFCCC) the Kyoto Protocol was established to commit Countries to GHG emissions reduction. Kyoto especially targeted targets industrial Countries and economies in transition which contributed 55% of Global GHGs to legally binding GHG emission caps which were to be achieved between the first commitment periods of 2008 to 2012 [] .

Japan which is considered an Annex 1 Country is the 4th largest contributor to Global CO2 emissions is expected to reduce its CO2 and other greenhouse gases emissions by 6% lower than its 1990 levels during the first commitment period [] . This commitment would impose high economic costs to Japan since 90% of its GHG emissions come from energy use in electricity generation and industry.

Figure 6: Japan's CO2 Emissions by End Use

Source: IEA

PART 3:SCENARIOS ANALYSIS: IS JAPAN ON ITS WAY TO MEETING ITS CO2 REDUCTION TARGETS?

In determining if Japan is on its way to meet its Kyoto Protocol targets the paper analyzed data of its CO2 emissions from 1990 to 2007. Using Table 1 below the analysis shows that Japans CO2 emissions have increased by 1% between 1990 and 2007. When using this average annual growth rate and projecting using a Business As Usual Scenario Japan's emissions would rise by 20% above 1990 levels by 2012which would be the end of the first review period It is likely that this has been due to Japan's unexpected need to utilize gas to replace shortfall in Nuclear supply which resulted from the shutdown of its TEPCO Nuclear Power stations in 2003-2004 and again between 2007 and 2009 [] ., CO2 emissions growth rate for the period 2000 to 2007 is 1%.

Table 1: Japan's CO2 Emissions Growth Rate 1990 - 2007 

CO2 Million Metric tonnes

% change from base Year

1990

1,065

0.000

1991

1,073

0.007

1992

1,083

0.016

1993

1,078

0.012

1994

1,132

0.062

1995

1,146

0.076

1996

1,161

0.090

1997

1,157

0.086

1998

1,126

0.057

1999

1,166

0.095

2000

1,181

0.109

2001

1,167

0.095

2002

1,203

0.129

2003

1,210

0.136

2004

1,211

0.136

2005

1,218

0.143

2006

1,202

0.128

2007

1,236

0.161

IEA Data

The forecast was carried out using the Growth rate based method which is very simple to understand and practical. The formula used to derive growth rate for a forecasted period is given below:

Et = Eo (1 + g)t

Where;

Eo= GDP in year 0 (base year: 1990)

Et =GDP in year t (relative to the base year: 1990)

g = GDP growth rate

The forecasted GDP that was derived using the above formula was during the period under consideration is represented in Table 2 below:

Table 2: Japan's Projected CO2 Emissions 2008-2010YearCO2 Emissions in Mtons

2008

1,247.78

2009

1,247.78

2010

1,247.78

2011

1,247.78

2012

1,247.78

The results were verified using the trend analysis method. From the data in Table 2, the linear relationship is Y=9.598x-18025 where x is the Year. Using the forecast year as X in the above relation, the forecast was obtained. The fitted trend has achieved a good level of fit as is evident from the R2= 0.9006 results.

Figure 7: Japans CO2 Emissions with Projections up to 2012Data Source: IEATable 2: CO2 Target and Likely ScenarioCO2 1990 Level(Mt of CO2)Projected Output 2012(Mt of CO2)Differential(Mt of CO2)Differential(% above target)1,0651,28622120%CO Emission Sources by Sector

In order to look for strategies to address the differential it would be necessary to assess where the bulk of CO2 emissions in Japan emanate from. Analysis shows that 47% of CO2 Emissions come from Oil-due to its proportion in Japan's TPES (providing 41% of TPES), while Coal accounts for 36% (which provides 23% of TPES) and Gas accounts for 17% (which provides 17% of TPES).

It is apparent from Table 6 that for Japan to meet its GHG emission reduction targets it would necessarily need to reduce its use of Oil and Coal in its energy supply mix and replace it with Gas especially in the energy intensive industrial sector. Japan is already the World's largest importer of Natural Gas. Japan imported 3,385.22 billion cubic feet (bbcft) of Natural Gas which is three times the next biggest importer South Korea which imported 1,178.99 bbcft [] .

Figure 8: Japan's CO2 Emissions by Fossil Fuel SourceData Source: EIADetermining CO2 Reduction by Specific Fossil Fuel Type

In order determine the contribution to CO2 from fossil fuels by fuel source, the CO2 attributable to each fuel source was matched with the fuel source input per annum and averaged over the period 1990 - 2007. The results showed that Coal, Oil and Gas produced 3.78, 2.95 and 2.53 tons per ton of oil equivalents (see Table 7).

Table 3: CO2 Emission by Energy SourceFuel TypeCO2 Emissions 1990-2007 (mtons)*Energy Supply(mtoe)**CO2 Output / Unit of energy for period (mtons)Contribution (% of Mix) ***

Coal/ Peat

355.21

91.85

3.78

23

Oil

644.12

218.12

2.95

41

Gas

154.48

61.21

2.53

17

Data Source: EIA

Notes

*CO2 Emissions 1991-2007 (mmcft CO2) was estimated by averaging CO2 emissions from 1990 and 2007

**Average input of fuel source per tons of oil equivalent (mtoes) from 1990 to 2007

*** Fuel type contribution to primary energy supply 2008 figures

Analysis Findings

Projecting from current trends Japan may not meet its Kyoto Protocol targets by the 1st commitment period ending 2012.

Using a Trend Analysis to determine Business as Usual scenarios considering its current CO2 Outputs and fossil fuels that constitute 81% of its Energy Mix (2008) Japan would exceed its CO2 emission targets by 20%

Considering that the 1st commitment period terminates by 2012 which is 3 years from now, Japan may not be able to meet its target whatever policies it adopts at this time

PART 4: CONCLUSION AND RECOMMENDATIONS

Japan ratified the Kyoto Protocol in June 2002 and the Protocol came into force in 2005. Japan has shown a great deal of commitment to mitigation of climate change in spite of the fact that the cost of climate change mitigation would be higher in Japan than most other G8 Countries [] . Japan is also constrained by its lack of domestic energy sources which makes it vulnerable to supply constraints. Japan has however been able to use its technological prowess to hedge the effects of this dependency by having a disproportionately high amount of oil stocks which helps it withstand supply shocks [] . As can be seen in Figure 5, Japan has also a high level of energy efficiency. When compared to other Annex 1 Countries has maintained exceptionally low energy intensity. Its energy intensity has been consistently lower than Canada, France, Germany, Italy and the United States.

As Japan does its best to remain competitive despite its energy resources deficiency, it stands to gain a lot in a low carbon World. As Countries focus on reducing energy intensity, increasing fuel efficiency and fuel substitution as well as increasing the share of Renewables in their energy mix they will turn to Japan for its technological advantage. Japan will provide leadership in the research and development of renewable technology especially photovoltaic for some Years to come. Japan also undertakes research into other new Renewables and is making inroads into Wind energy, hydrogen fuel cell development, and zero emission fossil fuel technology [] .

RECOMMENDATIONS

The share of Oil in Japan's TPES at 41% is high. If it is to reduce emissions it must continue to move towards Gas. It has made effort in this regard by increasing its Gas utilization by 7% from 1990 to 2008 (see figure

Japan's move to Gas could be further enhanced by the development of Gas pipelines especially from Russia. This would provide more certain supplies than present liquefied Natural Gas shipments.

Japan has already achieved a high degree of fuel efficiency having one but further increases would still be possible utilizing its strong research and development credentials

Due to Japan's strong research and technology credentials place it at as a potential leader in the emerging Renewables sector it needs to continue to explore how to increase the share of renewable in its Energy Mix

Considering that Japan's CO2 emissions come from its Industry, Electricity Generation for Commercial and Household Use as well as transportation especially vehicles, it must policy must be focus on addressing all three areas as follows

Improved energy efficiency: Japan's industrial energy produces 26% of Japan's CO emissions. Though demand has remained stable (reflecting its lack of growth) but gains can be made in energy efficiency.

More Use of Gas in Electric Generation: As earlier noted, 41% of Japan's CO2 Emissions comes from electricity and heat generation, efforts should be made to convert power plants to Gas or Nuclear

The Transportation sector is responsible for 22% of Japan's emissions. Japan's public transportation requires improvements and it would need to improve vehicle emission standards.




Article name: Can Japan Reconcile Its Energy Policy Environmental Sciences essay, research paper, dissertation