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Datawatch

Japan's decarbonization fails to improve for 25 years

Other leading economies slash carbon emissions as renewables surge

Germany has reduced its carbon emissions per unit of gross domestic product by less than half since the 1990s. (Source photos by Reuters)

TOKYO -- The Japanese economy has failed to improve its reduction of carbon emissions over the last quarter-century, Nikkei has learned.

When carbon emissions per unit of gross domestic product are compared by country, the figure for Japan has remained flat since the 1990s. European countries, where use of renewable energy has grown rapidly, have slashed their carbon emissions per unit of GDP by one-half to one-third during the same period. Although the Japanese government has pledged to reduce greenhouse-gas emissions to net zero by 2050, the country now lags other advanced economies in the effort to decarbonize.

Keiko Shiga, Sony's general manager in charge of sustainability, feels the dilemma as a company with factories in Japan. "In Japan, buying renewable energy is challenging. It is difficult to attract investors if we are evaluated on the same basis as foreign companies," Shiga told Nikkei.

Among investors, there is a growing trend to select companies based on "ESG" or environmental, social and corporate governance principles. And carbon emissions, which are easy to measure and compare across companies, have a significant impact on investment decisions.

Japan has not made progress in reducing carbon emissions to create added value in its economy. If greenhouse gas emissions are divided by GDP, Japan produces around 2.5 tons of CO2 for every $10,000 in its GDP, largely unchanged from 1995.

After the Arab oil embargo in the 1970s, resource-scarce Japan improved its technology to enhance energy efficiency and became the world leader in terms of fewest carbon emissions per unit of economic output. Japanese companies also developed clean technologies to control pollution.

However, in the 2000s, France and the U.K. overtook Japan and the gap is widening. The main difference lies in how electricity is generated. In Europe, the cost of producing electricity using renewables has fallen below that of fossil-fuel power plants. In 2018, renewables accounted for 34% of the electricity supply. The increase in low-carbon electricity has pushed the U.K.'s carbon emissions per unit of GDP to fall to about a third of what they were in 1995.

The U.S. has also narrowed the gap with Japan. As it increased production of shale gas, more gas-fired power plants were built. These emit only about half as much CO2 as comparable coal-fired plants. In Japan, renewables only account for 18% of electricity generation and the country's carbon-free nuclear power plants were shut down after the 2011 earthquake in northeastern Japan. This made the country more dependent on coal, which now accounts for 32% of its electricity mix.

On the other hand, although emissions-intensive electricity is a burden for Japan, many companies are striving to improve their standings to tackle global warming.

An annual study called the "A List," by the British non-governmental organization CDP, proves this. The latest study for 2019 rates more than 8,000 companies around the world to measure how they are dealing with global warming. In Japan, 38 companies, including retail company Aeon and Panasonic, rated "A," the highest grade. This figure surpasses the U.S., with 35, and France, with 22.

As for the RE100, a global initiative to achieve zero-carbon electricity, 42 Japanese companies are participating, the second-most in the world. Worldwide, around 270 companies have joined the initiative.

Another reason decarbonization is slow in Japan is related to the country's economic structure.

Several of Japan's big industries, including steel and chemicals, emit large amounts of carbon emissions. "The transformation of the overall economy and industrial sector has been slow; therefore, emissions did not decline," said Yuko Motoki, manager at Mizuho Information & Research Institute.

This could influence the competitiveness of Japanese products abroad since the European Union is considering a carbon "border tax" that would impose tariffs on products from countries deemed not to be doing enough to fight global warming.

The U.S. and Sweden have shifted to an economy driven by high tech, which emits less greenhouse gas per unit of output. According to the U.N., the share of manufacturing in U.S. GDP declined from 15% in 2000 to 11% in 2018.

The EU has announced a green recovery plan to rebuild its economy, which has been hit by the COVID-19 pandemic. The package will promote environment-friendly products and the development of technology.

Japan is also grappling with how to develop more competitive technologies related to clean energy as the momentum for decarbonization grows around the world.

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