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Japan turns from leader to laggard in emissions reduction

Erstwhile innovator left behind by developments in renewable energy

Dong Energy has won contracts for wind power projects recently in Germany and the U.K. (Photo courtesy of Dong Energy)

TOKYO -- While Japan has long regarded its place in the world as among the highest in environmental protection, this is more myth than fact nowadays as other industrialized nations have made strides in embracing renewable power such as solar and wind.

The country's power sector is only getting dirtier, in terms of carbon dioxide emissions per kilowatt-hour.

In 1990, Japan's power plants produced 452 grams of that greenhouse gas with every kilowatt-hour of electricity, the International Energy Agency says -- less than any country except France, which relied heavily on nuclear power. Other advanced nations such as the U.S., U.K. and Germany clocked in around 600 grams to 700 grams.

By 2014, those countries cut emissions to between 400 grams and 500 grams per kilowatt-hour, while France had moved even closer to zero. But Japan had climbed to 556 grams.

Japan's carbon dioxide emissions per unit of gross domestic product have held steady for decades while those in Europe, the U.S. and China have fallen. After boasting the second-lowest per-GDP emissions in the Organization for Economic Cooperation and Development in 1995, Japan plunged to 18th place by 2014, the Environment Ministry says.

Fading after fast start

The two oil crises in the 1970s put Japan to work on energy savings earlier than many other countries, and the nation's manufacturing sector became nearly 40% more energy-efficient during a two-decade period. But progress has stalled since 1990.

"A strong yen made for stable resource prices, sapping a will to conserve energy," said Junko Ogawa, senior researcher at the Institute of Energy Economics, Japan. Companies also have moved production facilities overseas in recent years, making energy-saving investments at home a low priority.

And as Japan's nuclear power plants went offline in the wake of the March 2011 meltdowns at Tokyo Electric Power Co. Holdings' Fukushima Daiichi plant, more fossil-fuel facilities went into service to supply the country's energy needs, producing 10% more emissions than if all of Japan's nuclear plants had remained in operation.

Nor has the country kept pace with others' slow but steady shifts away from fossil fuels. Japan "is far behind on introducing renewable energy," said Eiichiro Adachi, a member of the Japan Research Institute's advisory staff. Renewable sources other than hydropower provided just 6.5% of Japan's electricity in 2014, compared with 24.5% in Germany and 18.5% in the U.K.

Virtuous cycle

Though renewables once were fairly costly, many nations have introduced subsidies to make these power sources more affordable and widespread. The resulting market growth has lowered prices for related materials, while standardized manufacturing and installation procedures have slashed construction costs. As production of renewable energy begins to rival conventional sources in terms of profitability -- reducing the need for government assistance -- interest will grow and costs will decline further.

In an auction held by the U.K. government on Sept. 11, a team led by Denmark's Dong Energy won a contract to build an offshore wind farm that will sell power for 0.057 pound (8 cents) per kilowatt-hour -- half the subsidized price from two years earlier. In April, Dong Energy was awarded German offshore wind projects that will receive no government subsidy -- an indicator that, under the right conditions, renewables plants can make it on their own. This "zero subsidy bid" was made possible by factoring in lower costs and technological advancement by around 2025, when construction is set to begin, said Samuel Leupold, CEO of wind power at Dong Energy.

Meanwhile, a massive solar farm that Japanese trading house Marubeni and China's JinkoSolar are building in the United Arab Emirates will sell power for as low as 2.42 cents per kilowatt-hour thanks to the falling cost of panels, heavy sun exposure and the project's scale, which rivals that of a nuclear plant. Prices in other countries have fallen to 3 or 4 cents in some cases.

Stuck in the past

But not in Japan, where the price of wind power is 60% above the global level and solar goes for double or triple its price elsewhere. Both prices are the highest among the 22 leading nations examined in an International Energy Agency study. Also, environmental assessments for wind power projects in Japan take four to five years, inflating overall costs. In the U.S. and Europe, where countries and localities designate appropriate sites for such projects ahead of time, such assessments can take as little as a year.

High construction costs and inefficient parts distribution add to solar power's price. But the larger problem is one of policy. Japan's feed-in tariff program, which mandates that utilities purchase renewable power at a high, government-set price, ensures many solar power projects receive returns in excess of 10%, giving builders and operators little incentive to stringently control costs.

While the notion that tough anti-emissions measures hinder economic growth has become accepted wisdom in Japan, the facts say otherwise: The U.S. and European economies have kept expanding even as nations have slashed carbon dioxide emissions. Even China is drawing closer to that group. Japan keeps struggling to structure its economy in a way that makes environmentalism and growth a viable mix.


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