R&D Activities ● Systems Analysis GroupRITE Today 2022

Systems Analysis Group
Members (As of Dec. 2021)
Keigo Akimoto, Group Leader, Chief Researcher
Koya Yamada, Associate Chief Researcher
Kenichi Wada, Senior Researcher
Miyuki Nagashima, Senior Researcher
Takashi Homma, Senior Researcher
Fuminori Sano, Senior Researcher
Hironobu Yamakawa, Senior Researcher
Ayami Hayashi, Senior Researcher
Atsuko Fushimi, Senior Researcher
Tsutomu Soejima, Senior Researcher
Noritaka Mochizuki, Senior Researcher (concurrent)

Joni Jupesta, Senior Researcher
Yuko Nakano, Researcher
Naoko Onishi, Researcher
Hitotsugu Masuda, Researcher
Teruhisa Ando, Researcher
Yuko Matsuoka, Researcher
Kiyomi Yamamoto, Assistant Researcher
Misako Saito, Assistant Researcher
Kiyomi Kitamura, Assistant Researcher
Sachiko Kudo, Assistant Researcher

Research Activities in Systems Analysis GroupThe Systems Analysis Group aims to provide valuablechange mitigation model, DNE21+ (Reference 1) andinformation about response measures to global warm-others) in May, 20212). This section introduces the over-ing and energy issues through systematic approaches

view of the scenario analyses.

and analyses. This article presents the analyses on 1) the
response measures for achieving carbon neutrality

1.1. Overview of caron neutrality(Section 1), and 2) the emission reduction efforts includ-The overview of primary energy supply systems toing emission reduction costs for the 2030 emission re-achieve net-zero emissions is shown in Figure 1. Achiev-

duction targets, and the impacts on whole economy

ing CN requires decarbonized energy supply basically,(Sections 2 and 3).

however, energy saving is also important, if the least
cost measures, and technological, social and economic

1. Analysis on scenarios achieving carbon neutrality by

constraints on each energy source are taken into ac-

2050

count. Social innovations including sharing and circular

Then Prime minister Suga stated that Japan seeks car-economy associated with digital transformation (DX)bon neutrality (CN) by 2050 in October, 2022. The CN

will be a key for the CN as well as energy savings of eachby 2050 will be consistent with the emission pathways

technology.

for the below 1.5 C of temperature goal. The new Stra-

On top of that, renewable energy, nuclear power, andtegic Energy Plan, the Climate Change Adaptation Plan,

fossil fuels with CO2 capture and storage (CCS) are re-and the Long-term Strategy under the Paris Agreement

quired as primary energy sources, in principle. In Japan,

were decided by the Cabinet of Japan in October 2021.

because all of these energy sources have cost and po-

According to the request by the Strategic Policy Com-tential constraints etc., hydrogen import from overseas

mittee of Advisory Committee in Natural Resources andwill be also an important option as a cost-efficient

Energy, which had discussed the Strategic Energy Plan,

measure. Hydrogen can be produced typically by re-

RITE provided the analyses results for several scenarios

newables (green hydrogen) and fossil fuels with CCS

for CN by 2050, using a global energy and climate(blue hydrogen). To increase more convenient uses of20

R&D Activities ● Systems Analysis GroupRITE Today 2022

hydrogen, ammonia and synthetic fuels (synthetic me-

5 disaggregated Japan’s regions and one hour timethane and liquid fuels) synthesizing with nitrogen andstep, which was developed by the University of Tokyo

carbon will play important roles.

and Institute of Energy and Economics, Japan (IEEJ). The

Considering several large uncertainties in the outlooks of technologies, social constraints, and so on, sev-

grid integration cost curves of VRE are integrated into
DNE21+.

eral scenarios should be assumed and analyzed having
consistency with total systems and costs, which enables
a mathematical model to analyze whole energy systems
quantitatively and comprehensively.

1.3. Assumed scenarios
Tables 1 and 2 show the assumed scenarios for the
CN in 2050. Here, as well as the CN of GHGs in 2050 inJapan, the globally least cost measures for the 1.5 Cgoal are also assumed (“Offset emission credits of over-【Domestic primary energy supply】
Energy saving or reductionin embodied energy of goods/services(including Society 5.0)

seas” case). In addition, “Synthetic fuel utilization” case

【Use of overseas resources】
Nuclearis analyzed.

Nuclear
Domestic renewables
Measures of grid to expand
renewables (including storage battery)

Renewable energy

DecarbonizedenergyUse of renewables surplus
for hydrogen

Table 1 Scenarios assumed for model analyses

Use of overseas renewables (green hydrogen) (importof hydrogen, ammonia, and synthetic fuels (CCU))
Use of overseas CO2 reservoir (pre-combustion CO2
capture) (import of blue hydrogen (including ammonia))

Fossil fuels w/CCS

Fossil fuels + CCS

Remainingfossil fuels

Fossil fuels
w/o CCS

Domestic CO2 storage

BECCS, DACCS

Use of overseas CO2
reservoir (postcombustion)

Forestation, mineralization (concrete CCU)

Negative emission technologies (NETs)【Use of overseas
resources】

Figure 1 Overview of achieving net-zero emissions

1.2. Overview of model
Using a global energy systems model DNE21+ (Dynamic New Earth 21 plus), the emission reduction
measures for carbon neutrality by 2050 are analyzed.
DNE21+ is a global model with consistencies across 54
countries and regions, and intertemporal years up to

GHG emission
reduction in 2050

Technology assumption(cost / performance)

Offset emission credits of overseas(The least-cost measures in the world =Equal marginal abatement costs among
nations)

Domestic emission
reductions areendogenously
determined.

Standard case

Reference case

▲100%

Assuming highshare of RE
under Standard
case
Assuming eachtechnology isfurther
accelerated or
expanded.

1. Renewable
Energy 100%
2. Renewable
EnergyInnovation
3. Nuclear Power
Utilization
4. Hydrogen
Innovation(For other thanJapan, ▲100% foreach westerncountry, and▲100% for theothers as a whole)(Note: It is premised that RE is
diffused due to suspected
inertial force in high share RE
scenario.)

Acceleration of RE cost
reduction
Expansion of nuclear power
deployment
Acceleration of hydrogen cost
reduction

5. CCS Utilization

Expansion of CO2 storage
potential

6. Synthetic fuelUtilization

Acceleration of RE cost red. +Constraints of CO2 intern’ltransportation

7. Demand
Transformation

Expansion of car-/ride-sharing

2100. In the model, global warming response measures
for approximately 500 specific technologies can beevaluated in detail; energy supply technologies, such as
electricity and hydrogen-based energies, CO2 capture,utilization and storage (CCUS), and energy demandside technologies in iron and steel, cement, paper andpulp, chemical, aluminum, transport, and some appliances of building sector are modeled with bottom-up
treatments.
For analyzing large deployments of variable renewable energy (VRE) in Japan, the grid integration costs of
VRE are estimated using a power systems model having

21

R&D Activities ● Systems Analysis GroupRITE Today 2022

Table 2 Scenarios regarding technology assumptions
Scenario

Cost ofrenewable energy

Ratio ofnuclearpower

Cost of hydrogen

CCUS(Storage potential)

1400

Fully autonomous
driving(car- & ride-sharing)

DACCS
Non-CO2 GHG

1200

Process CO2

Offset emission credits of overseas(The least-cost measures in the world =Equal marginal abatement costs among
nations)

GHG Emission [MtCO2eq/yr]

Standard cost

Max. 10%
6. Synthetic
Fuel Utilization

Pulp & Paper
CementIron & Steel
7. Demand Transformation

6. Synthetic fuel Utilization

Standard assumption:
no fully autonomouscars

5. CCUS Utilization-400

Offset emission credit areused in the case of offset
emission credits ofoverseas.
Residual GHG emissions
are offset by NETs optionsin the other cases.

2050

Figure 2 GHG emissions in Japan for CN by 2050

Domestic: max. 91Mt,
Overseas: 0Mt

Low cost

Standard
cost

Chemical2015

Standard cost

7. Demand
Transformation

Other industry-200

Domestic：max.
273 MtCO2/yr;
Overseas：max.
282 MtCO2/yr

5. CCS
Utilization

Road transportation

0

Hydrogen production
such as waterelectrolysis,hydrogenliquefaction facility
cost: halved

Standard
cost

Domestic aviation

200

4. Hydrogen Innovation

4. Hydrogen
Innovation

Max. 20%

Other domestic transportation

3. Nuclear Power Utilization

3. Nuclear
Power
Utilization*2

Domestic storage:
max. 91 MtCO2/yr;
Overseastransportation：
max. 235 MtCO2/yr

Max. 10%

Residential & Commercial

2. RE Innovation

Low cost

Power generation

400

1. RE100

2. Renewable
EnergyInnovation

0%

Other energy conversion▲63% relative
to 2013600

Reference Case

1. Renewable
Energy 100%

LULUCF CO2

800

Offset emission credits
of overseas

Assuming eachtechnology isfurther
accelerated or
expanded.

Max. 10%
Standard
cost

Reference Case
Assuming highshare of RE
under standard
case

1000

Domestic: max.
91 MtCO2/yr;
Overseas：max. 235 MtCO2/yr

Realization and diffusionof fully autonomous
driving and expansion ofcar- & ride-sharing after
2030, and decrease inmaterial production due
to reduction of thenumber of automobiles

Figures 3, 4 and 5 show primary energy supply, electricity generation, and final energy consumption in Japan, respectively.

1.4. Results

As seen in Figure 3, energy savings are important for

The GHG emissions in Japan are shown in Figure 2.

all of the scenarios, and approximately 25% of primary

Under the globally least cost measure for the 1.5 C sce-energy savings can be observed. Renewable energy,

nario, the 2050 emissions in Japan are estimated to be

CCS, and nuclear power will play important roles for the-63% compared to 2013. This is because there are larger

CN. The maximum constraints are assumed for the de-potentials with smaller costs of CO2 removal technolo-

ployments of CCS and nuclear power, and the maximum

gies (CDR) (or negative emission technologies: NETs) in

deployments of both two will be the cost-efficient

the world than in Japan. Particularly the regions andmeasures for the CN in Japan (only except for CCS

countries where large potentials of bioenergy, VREs,

transport to overseas in the CCUS utilization case). Alt-and CO2 geological storage exist could serve the oppor-hough the cost reductions of VREs are assumed, thetunities of CDR such as bioenergy with CCS (BECCS) andcosts also increase as larger deployments of VRE, anddirect air CO2 capture and storage (DACCS) cost-effi-wide ranges of costs are estimated for VREs accordingly.

ciently.

Thus, according to the estimations under the least cost

While recognizing the emissions reduction opportu-

of whole energy systems, combinations of deployments

nities in overseas, the domestic emission reductionof several emissions reduction measures including

measures should be considered. Even for achieving the

DACCS and imports of hydrogen, ammonia and syn-CN within Japan, DACCS will be an important measure.

thetic fuels can be estimated.

However, if CO2 storage potentials including the oppor-

As contrasted with primary energy, electricity gener-tunities of transport of CO2 to overseas are limited, theations increase compared to the current levels in almost

contributions of DACCS are reduced and the roles of

all the scenarios. Electrification is an important option

synthetic fuels (synthetic methane and synthetic liquid

for the CN. However, only in the RE100% case, electrifi-

fuels) will increase. Meanwhile, there are no feasible so-

cation cannot be observed due to considerable increaselutions for the 2050 CN in Japan for any assumed sce-of electricity including the grid integration costs of VREs.

narios under the socioeconomic and other assumptions

Balanced electricity mix will be a key even for the CN.

without DACCS.

22

R&D Activities ● Systems Analysis Group

Primary energy supply [Mtoe/yr]

450

Gas: non-energy use

400

Oil: non-energy use

350

Imported hydrogen andammonia
Imported biofuel

300

Solar thermal
Solar PV

250

Wind power

200

Nuclear power
150

Hydro and Geothermal
Biomass w/ CCUS

100

Biomass w/o CCUS

50

Synthetic methane2015

Gas w/ CCUS

7. Demand Transformation

6. Synthetic Fuel Utilization

5. CCUS Utilization

4. Hydrogen Innovation

3. Nuclear Power Utilization

2. RE Innovation

1. RE100

Reference Case

Offset emission credits
of overseas

0

RITE Today 2022

estimated to be 168 $/tCO2 in the globally least costmeasure case for the 1.5 C scenario (“Offset emission
credits of overseas” case). On the other hand, the costis estimated to be much larger and 525 $/tCO2 in the
Reference case which assumes to achieve the CN do-

Gas w/o CCUS
Synthetic oil
Oil w/o CCUS

mestically. The costs can be reduced if several techno-

Coal w/ CCUS
Coal w/o CCUS

logical and social innovations are achieved, and it is

All are offset with CDR
in ▲100% scenarios

necessary to seek the opportunities to induce innova-

2050

Note 1) Conversion rates of primary energies correspond to IEA statistics.
Renewable energies except biomass : 1 TWh = 0.086 Mtoe, nuclear : 1TWh = 0.086 / 0.33 Mtoe
Note 2) Fossil fuels without CCS are offset with NETs, thus serving as carbon-neutral fossil fuels.

Figure 3 Primary energy supply in Japan for CN by 2050

tions.

1600

1.5. Implications from scenario analyses

Solar PV w/o gridWind power w/o gridElectricity generation [TWh/yr]

1400

Gas and hydrogen /Coal and ammonia
Hydrogen and annmonia

1200

DACCS will be able to play an important role under

Solar thermal

1000

Solar PV
Wind power (offshore)800

the CN as a back-stop technology. For achieving the CN

Wind power (onshore)
Nuclear power

600

Hydro and Geothermal

400

internally, domestic DACCS will be also a cost-effective

Coal and Biomass w/ CCUS
Biomass w/ CCUS

200

Coal and Biomass w/o CCUS

option. For achieving the CN in the world, it will be more

Biomass w/o CCUS2015

7. Demand Transformation

6. Synthetic fuel Utilization

5. CCUS Utilization

4. Hydrogen Innovation

3. Nuclear Power Utilization

2. RE Innovation

1. RE100

Offset emission credits
of overseas

Reference Case0

Gas w/ CCUS
Gas CGS

cost-effective to deploy DACCS using affordable VREs

Gas w/o CCUS

Oil w/ CCUS
Oil w/o CCUS
Coal w/ CCUS
Coal w/o CCUS

2050

Figure 4 Electricity generation in Japan for CN by 2050

and CO2 storage potentials outside of Japan and offset
the residue emissions of Japan through the emission
credits. Since it is unclear that such options can work or
not, the hedging strategy having several potential

350

Gaseous fuel: natural gas(non-energy use)
Liquid fuel: oil(non-energy use)

300

Final energy consumption [Mtoe/yr]

Electricity
250

Gaseous fuel: hydrogen
Gaseous fuel: syn. Methane

200

Gaseous fuel: natural gas
150

measures will be required. Hydrogen, ammonia, andsynthetic fuels (synthetic methane and synthetic liquid
fuels) are expensive options as well as DACCS, however,

Liquid fuel: biofuel
Liqud fuel: syn. oil

100
Liqud fuel: oil

all of them can be the cost-effective options for the CN

Solid fuel: biomass

50

Solid fuel: coal2015

7. Demand Transformation

6. Synthetic fuel Utilization

5. CCUS Utilization

4. Hydrogen Innovation

3. Nuclear Power Utilization

2. RE Innovation

1. RE100

Reference Case

Offset emission credits
of overseas

0

All are offset with NETs
in ▲100% scenarios

2050

in Japan. The use of overseas resources should be also
considered as the costs of VREs and CCU in Japan arehigh compared with those in some other countries.

Figure 5 Final energy consumption in Japan for CN by

While VREs are highly important also in Japan, the grid

2050

integration costs as well as VREs are expected to increase according to large deployments of VREs. It is im-

In Figure 5, it can be observed that electrification in

portant to consider the whole energy systems including

final energy is important, and hydrogen particularly for

combinations of energy supply sources and energy de-industry sector, synthetic liquid fuels for transport sec-

mand-side measures as well as seeking the affordable

tor, and synthetic methane for building and a part ofemission reduction opportunities overseas.

industry sectors will be cost-efficient for the CN in Japan.

All options should be pursued in order to achieve the

Meanwhile, considerable uses of natural gas will remain

CN as early as possible, as stated in the Sixth Strategic

thanks to the emission offsets through DACCS.

Energy Plan decided in October, 2021.

CO2 marginal abatement cost (carbon price) is23

R&D Activities ● Systems Analysis GroupRITE Today 2022

2. Evaluations on emission reduction efforts of thealso assessed the interrelationship between the ex-

NDCs

pected global emissions under NDCs and the long-term

2.1. Introduction

emission pathways for the 2 C and 1.5 C targets men-

Under the Paris Agreement adopted at COP21 in2015, all countries pledge nationally determined contri-

tioned in the Paris Agreement, using the model (Reference 5)).

butions (NDCs) for emission reduction targets after2020 to the United Nations, and they are reviewed

2.2. NDCs of major countries(Pledge and review). In 2015, the Systems Analysis

Table 3 shows emissions reduction targets of thegroup analyzed the emission reduction targets of the

NDCs of major countries. Developed countries such as

Intended Nationally Determined Contributions (INDCs)

Japan, the United States, EU, and the United Kingdom

submitted before the adoption of the Paris Agreement

have deepened their emissions reduction targets frombased on various indicators (Reference 3), 4)).

those in the 2015 INDCs. However, since the base year

By around the time of the leaders’ summit on climate

for the reduction targets differs among countries, thein April 2021, the emission reduction targets of NDCs

emission reduction rates provided by each country

had been raised, especially in developed countries. Ja-should not be compared directly for measuring emis-

pan deepened its emission reduction target, which wassions reduction efforts. In addition, China and India

revised from the previous target of -26% (compared toserve CO2 intensity targets, and some countries serve2013) in 2030, to -46%. Furthermore, Japan has de-the targets of emissions reduction from their BAU emis-

clared to tackle to achieve -50% as a further ambitious

sions. To compare the emissions reduction rates based

goal. The Sixth Strategic Energy Plan was formulated,on the unified base year, it is necessary to convert theincluding the energy mix of Japan in response to its

reduction rates which differ among the NDCs of coun-emission reduction target, and the plan for global

tries to those unified in the specific base year. Figure 6

warming countermeasures was revised (decided by theshows the unified rates of emissions reductions com-

Cabinet in October 2021). On the other hand, China, In-

pared to 2013, which is the base year of Japan’s NDC.

dia, and Russia have not deepened their emissions re-Here, emissions in 2030 are calculated based on the his-

duction targets. However, as China has the NDC target

torical records, the submitted emissions reduction tar-of CO2 intensity of GDP and the outlook of GDP growthgets, and the future GDP growth scenario for the coun-is lower than that estimated in 2015, the actual efforts

tries having intensity targets. Compared to 2013, the UK

on emissions reduction could be more ambitious thanhas the lowest emissions among the major countries,

the expected efforts estimated in 2015.

followed by Switzerland and New Zealand. As discussed

Therefore, under the latest socioeconomic conditions

in Reference 3), the future population and economic

including the impact of COVID-19 and their effects onoutlooks vary across countries, and emissions reduction

baseline emissions, the emissions reduction efforts ofrates from the base year are estimated to be small in

the latest NDCs were evaluated by employing multiple

developing countries, whose economic growth rates areindicators. The emissions reduction costs were esti-

higher than in developed countries. Thus, even if themated using a global assessment model for energy andemissions reduction rates compared to the base year ofclimate change, namely DNE21+ model, which has beendeveloping countries are smaller than those of devel-

developed by the Systems Analysis Group. This study

oped countries, it should not be necessarily evaluated24

R&D Activities ● Systems Analysis GroupRITE Today 2022

that emissions reduction efforts are insufficient. Even

2.3. Evaluations on emission reduction efforts of thefor the comparisons of NDCs among developed coun-

NDCs using a global assessment model for energy andtries, the emissions reduction rate compared to theclimate changebase year will not be an appropriate indicator for meas-

Figures 7 and 8 show international comparisons ofuring emission reduction efforts, because the histori-

CO2 marginal abatement costs and emissions reduction

cally cumulative efforts for emissions reduction differ

costs per GDP, respectively. For Japan, the achieve-

across countries.

ments of the power generation mix suggested in the
Sixth Strategic Energy Plan (renewable energy: 38%, hy-

Table 3Emission reduction targets of major countries

Submitted emission reduction targets

drogen/ammonia: 1%, nuclear power: 20%, LNG: 20%,
coal: 19%, Oil: 2%) are assumed.

in 2030 of NDCs

While the revised outlooks of production activities ofJapan-46% compared to 2013

several industries and transportation service demands

United-50% to -52%

Statescompared to 2005

were smaller than the previous ones including the im-

EU27-55% compared to 1990

United-68% compared to 1990

pacts of COVID-19, many developed countries deepened their emission reduction targets as mentioned
above. As a result, the estimated CO2 marginal abate-

Kingdomment costs and emissions reduction costs per GDP in

Russia-30% compared to 1990

China

-65% of CO2/GDP compared to 2005

many countries are higher than the previous estimates

India-33% to -35% of GHG/GDP compared(Reference 4)). The CO2 marginal abatement costs into 2005

New Zealand are very high (546 $/tCO2). Although theshare of methane emissions in GHGs is high in New

United Kingdom
Switzerland
New ZealandJapan
United Sates
EU27+UK
NorwayCanadaSouth Africa
South Korea
UkraineAustralia
MexicoThailandKazakhstan
China
RussiaBelarus
India

Zealand, the reduction potentials are limited according

-54.6
-49.4
-49.0
-46.0
-45.6
-40.8
-40.6
-40.4
-33.3

to the estimations by the US EPA, which are based on
this study for the assessments of non-CO2 GHG emission reduction measures. Therefore, significant emis--23.7

sion reductions of energy-related CO2 are needed, and

-23.0
-18.4
-0.4

the estimated marginal abatement costs rise consider-

7.0
8.6
14.1

ably. If the emission reduction target of New Zealand is

51.8
62.7

99.2
100

80

evaluated only for CO2 emissions, the CO2 marginal
60

40

20

0

-20

-40

-60

-80

Emission reduction rate compared to 2013 [%]abatement costs are estimated to be 406 $/tCO2, which

Figure 6 International comparison of emission reduction

those costs are close to those of the United States andrate from the base year of 2005 for the NDCs

Canada. In particular, the estimations for land-use CO2
and non-CO2 GHG emission reduction costs are not

We also estimated emissions per capita, emissions

easy, and careful treatments will be necessary.

per GDP, and emission reduction rate compared to BAU

Although China did not change the emission reduc-when the emission targets of NDCs are achieved. Emis-tion target, allowable emissions are smaller than that insions under BAU were estimated using the DNE21+

the previous estimation, because China has a CO2 inten-

model.

sity target, and the outlook of GDP growth was changed25

R&D Activities ● Systems Analysis GroupRITE Today 2022

downward. Then, the estimated CO2 marginal abatement costs are higher than the previous estimates.

Figure 9 shows the global GHG emissions outlook under baseline up to 2050 (zero marginal abatement sce-

The emissions reduction costs per GDP include thenario), and the emissions in 2030 under the NDCs, as

impacts of net cost increase due to the decrease in ex-

well as the emission pathways under 2 C (>66%) andport for fossil fuel exporting countries, and large in-

1.5 C (>66%).

creases in the costs can be observed in such countries
like Russia.

The estimated global GHG emissions in 2030 under
the NDCs are about 50 GtCO2/yr, which are consistent
with those estimated by UNEP. The UNEP report em-

New ZealandJapan
Switzerland
United Kingdom
United States
CanadaNorwayEU27South Korea
ThailandAustralia
Malaysia + Singapore
South Africa
Kazakhstan
MexicoChina
RussiaBelarus
UkraineIndia

phasizes the gap between the expected global emis-

546

500

sions in 2030 under the NDCs and the long-term emis-

474
470

sion pathways for the 2 C and 1.5 C goals of the Paris

427
394
376
306

Agreement. However, according to the cost-efficient

213
153

emission pathways under the carbon budget con-

83
79
71

straints, the expected emissions in 2030 under the

69
66
53

NDCs could be consistent with the emission level to

21
0
0
0

0

100

200

300

400

500

600

CO2 marginal abatement cost [$/tCO2]

meet the 2 C or 1.5 C goal, if a certain degree of temperature overshoot is allowed through the deployments

Figure 7 International comparison of CO2 marginalof CDR such as DACCS. The emissions could be in line

abatement costs for the NDCs

with cost-effective emission pathways if large deployments of CDR are feasible.
4.9

3.5
3.2

80

3.1

Emission outlook underbaseline by RITE (CO2
marginal abatement cost
zero)

2.0

70

1.9
1.6
1.6

NDCs assumed to be
implemented by RITE

60

1.4
1.4

GHG emission [GtCO2eq/yr]

New ZealandRussiaThailandKazakhstan
South Africa
CanadaSouth Korea
NorwayUnited StatesJapan
Malaysia + Singapore
United Kingdom
EU27
Switzerland
China
Australia
Belarus
MexicoIndia
Ukraine

1.4
1.2
0.8
0.8
0.6
0.0
0.0
0.0
0.0

50

2℃(>66%), Carbon
budget after 2020: 1150
GtCO2

40
1.5℃(>66%), Carbon
budget after 2020: 400
GtCO2

30

Emissions Gap Report
2021: NDCs
(Conditioned)

20

0.0

0

1

2

3

4

5

6

Emissions Gap Report
2021: 1.5℃ (Median)

10

Emission reduction cost per GDP [%]Figure 8 International comparison of emission reduction
costs per GDP for the NDCs

0
2000

2010

2020

2030

2040

2050

Figure 9 Expected global GHG emissions of the aggregated NDCs

2.4. Interrelationship between the expected global

2.5. Suggestions from NDCs emission reduction effort

emissions in 2030 under NDCs and the long-term emis-

evaluation

sion pathways for the 2 C and 1.5 C goals of the Paris
Agreement

The Paris Agreement employs a “pledge and review”
type framework. Even recognizing the differences in26

R&D Activities ● Systems Analysis GroupRITE Today 2022

capabilities across countries, it is important to seek theon “Economic and Fiscal Projections for Medium toequitable efforts, in order to maintain the Paris frame-Long Term Analysis” published by the Cabinet Office ofwork and to achieve effective global emissions reduc-Government of Japan in July 2021, considering COVID-

tions. Our analysis suggests that the emissions reduc-19 impacts partially. We assumed the CO2 emissions intion efforts even under the latest NDCs might still be2020 with zero carbon price and considered the COVID-

huge differences among the countries, and continuous

19 influences through the GDP assumptions.

reviews for the NDCs will be required.

The energy mix of the power sector in Japan in thebaseline is assumed to be constant with that in 2019.

3. Analysis on economic impacts of Japanese NDCs in

The composition of the energy mix under the 46% re-2030

duction target in 2030 is assumed to be 19% for coal

3.1. Introduction

power, 20% for LNG power, and 2% for oil power; 16%

This section focuses on the economic impacts of thefor PV, 15% for wind (with 10 GW for offshore), 12% foremissions reduction targets in 2030. Using a global en-hydro and geothermal, and 20% for nuclear power. The

ergy-economic model, we evaluated the economic im-

costs in the power sector were reflected based on thepacts of the latest Japanese target of 46% emission re-Power Generation Costs Analysis Working Group9). The

duction (compared to 2013) along with the energy mix

unit costs of new power generation were assumedof the latest (Sixth) Strategic Energy Plan for 2030 (Ref-based on the lists of each power source, assuming an

erence 7)). We compared the impacts of the -46% target

annual discount rate of 5%. The integration costs re-with those of the previous target of -26% based on thelated to VRE were also based on the “estimation without

previous (Fifth) Strategic Energy Plan.

considering power source location and grid constraints”(Reference 9)). The NDCs targets of the U.S and EU in

3.2. Methodology
The global energy-economic model, DEARS, which isused for this analysis, has a structure of dividing the2030 were assumed to be 50% reduction (compared to2005) and 55% reduction (compared to 1990), respectively.

world into 18 regions and integrating a top-down economic module and a bottom-up energy system module.

3.3. Results

The model is formulated as having an objective function

Figure 10 shows the GDP changes for the 26% andof discounted global consumption utilities. The eco-

46% reduction targets, respectively, to compare thenomic module has a computational general equilibrium

macro-economic impacts between the previous andmodeling structure with an international input-output

new targets. The estimated GDP change for the 46% tar-

table based on the database of GTAP (global trade anal-

get in 2030 is relatively large at 4.2% decrease (relative

ysis project, Reference 8)) ver.9, representing industrial

to the baseline) while at 0.5% decrease in the 26% tar-and trade structures by region and by sector. The en-get. The carbon prices required for the 26% and 46%

ergy system module represents simplified energy sys-

reduction targets are estimated at 105 and 534 $/tCO 2,

tem flows explicitly and can deal with the constraints ofrespectively. In the 46% reduction case, although there

the energy mix.

is a positive effect of increased investment in low-car-

We assumed the baseline GDP (with average annual

bon energy, the GDP is estimated to decline due to de-

growth rate of 1.4%/year for 2010-2030 in Japan) basedcreases in net exports and consumption. The net export

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R&D Activities ● Systems Analysis GroupRITE Today 2022

decreases represent worsening international competi-

teriorating relative prices. The consumption decreases
result from price increases of goods and services causedby extension of energy price increases for the reduction
target.

Production Changes(relative to the baseline)

tive conditions, mainly in the manufacturing sector, de-

0%
-2%
-4%

0.0%
-1.2%

-0.7% -0.5%-2.7% -2.8%
-3.5%

-3.7%

-3.0%
-4.2%

-6%
-6.6%

-8%
-10%

-12%

26% Emission Reduction+Renewable:24%, Nuclear:
20%, Fossil-fuel:56%< Previous NDC , and the
5th Strategic Energy Plan >46% Emission Reduction+Renewable:38%, Nuclear:
20%, Fossil-fuel: 41%< Current NDC, and the 6thStrategic Energy Plan >-11.7%-14%-14.0%

650

659
−25

640
630

634

Risk on nuclear sharesfrom 20% to 15%:
−6 Trillion Yen

GDP

Service

Machinery

Paper & pulp

−3

Non-Metallic Minerals

662

Iron & Steel

660

Chemical

-16%

670

Figure 11 Changes in sectoral production （Japan, 2030）

610

bills for the 26% and 46% reduction targets. The “effects

600

of carbon price” in the figure stand for price impacts

46% Emission Reduction+Renewable:38%, Nuclear: 20%,
Fossil-fuel: 41%< Current NDC, and the 6thStrategic Energy Plan >Figure 12 shows the potential changes in electricity

26% Emission Reduction+Renewable:24%, Nuclear: 20%,
Fossil-fuel:56%< Previous NDC , and the 5thStrategic Energy Plan >620

Baseline:
Economic Growth Achieved Case
(Energy mix: constant sharesin 2019)

GDP (Trillion Yen)

0.0%

Figure 10 Real GDP in Japan（2030）

due to the penalty against the fossil-fuel power plants
to carbon prices required for the reduction targets under implementations of the energy mix. The electricity
expenditure in the 46% reduction target is estimatedlarger than that in the 26% target. It results from cost
increases by carbon prices in the 46% target rather thanthe energy mix.

The GDP loss and CO2 marginal abatement cost (car-mation assumed the higher baseline GDP at about+0.2%/year of annual growth rate for 2010-2030 than
this analysis and the higher cost of renewable energy
generation.
Figure 11 shows sectoral production changes for the
26% and 46% reduction targets. The productionchanges in the energy-intensive and trade-exposed
sectors such as iron & steel and chemical have adverse
impacts at about 12-14% decreases (relative to thebaseline), more significant than GDP changes corresponding to the sectoral average.

+60%

60%
50%
40%
30%
20%
10%

Effects ofcarbon prices

49%

+17%
13%

4%

0%

11%

Effects of onlychanges inenergy mix

46% Emission Reduction+Renewable:38%, Nuclear: 20%,
Fossil-fuel: 41%< Current NDC, and the 6thStrategic Energy Plan >26% reduction target. This is because the previous esti-

70%

26% Emission Reduction+Renewable:24%, Nuclear: 20%,
Fossil-fuel:56%< Previous NDC , and the 5thStrategic Energy Plan >previous estimates (Reference 10)) even in the same

Household Energy Bill (relative to the baseline)

bon price) estimated in this study are smaller than the

Figure 12 Impacts of household electricity bill （Japan,
2030）

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R&D Activities ● Systems Analysis GroupRITE Today 2022

Figure 13 shows the GDP losses with sensitivity anal-

consumption due to rising prices of goods and services.

ysis to the emissions reduction levels with shares of re-In the manufacturing sector, which is energy-intensive

newable and fossil fuels in the power generation. The

and vulnerable to international competition, such as the

GDP losses increase substantially when the emission re-steel and chemical industries, the decline in output isduction level changes from 35% to 46%. The result in-

expected to be considerably more significant than the

dicates that in the stringent targets, the potentials for

GDP loss. In the household sector, the results also indi-

mitigation measures on the energy supply side be-cate the possibility of a substantial increase in house-

comes smaller, and the need to respond to measures

hold electricity and energy bills.

on the demand side, including the decreases in production activities, becomes larger.

In this analysis, the solutions after achieving equilibrium are presented by the CGE (computation general

GDP changes(%,relative to the baseline)

equilibrium)-typed model. It should be noted that in the0%-1%−2 Trillion Yen−3 Trillion Yen

real transition processes, the adverse effects may be−4 Trillion Yen−3 Trillion Yen−5Trillion Yen−12 Trillion Yen

-2%
-3%

-4%

−28 Trillion Yen-5%With reduction
constraints(Effects of bothchanges in energy
mix and carbon
prices)50

46% 50%
45

40

35%
35

26%

30

−34
Trillion Yen

25

-6%

Without reduction
constraints(Effects of onlychanges in energymix (with zerocarbon price))more severe in specific industries. In addition, since thedifference in national/regional carbon prices required
for achieving the NDCs is estimated to be extremely
large (see the previous section), the impacts based on
price elasticities will possibly work discontinuously in
specific industries. The sufficient care for such industries
should be taken in interpreting the results.

Emission Reduction Levels (%, relative to 2013)

The international political and business environment,

Figure 13 GDP impacts of emission reduction levels andincluding the finance side, strongly encourages theshares of renewables/fossil-fuelscommitment to more ambitious and stringent emission

Note: In all the cases, share of 20% for nuclear power

reduction targets, making it essential to strengthen ef-

was assumed. The energy mix for 35% and 50% reduc-forts to address climate change. On the other hand, thetion levels were assumed to be interpolated and extrap-

46% reduction target potentially has the risk of signifi-

olated using shares of the Fifth and Sixth Strategic En-

cant adverse impacts on the economy. This result indi-

ergy Plans, respectively.

cates the importance of promoting appropriate transitions with inducing social and technological innovations.

3.4. Summary of economic impact analysis on the NDCs
The Japanese government raised the emissions reduction target for 2030 to 46% in response to calls for

Referencestronger actions for climate change mitigation both do-1） K. Akimoto et al., Climate change mitigation measuresmestically and internationally. The estimated impact isfor global net-zero emissions and the roles of CO2

about 4% GDP loss (relative to the baseline). Although

capture and utilization and direct air capture, Energy

investments for low-carbon energy increase, adverse

and Climate Change (2021)

consequences of trade and consumption are significant,2） K. Akimoto, F. Sano，Strategic Policy Committee ofresulting in decreases in net exports due to worsening

Advisory Committee for Natural Resources and En-

competitive conditions and decreases in household

ergy (13th May 2021)

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R&D Activities ● Systems Analysis GroupRITE Today 2022

https://www.enecho.meti.go.jp/committee/council/basic_policy_subcommittee/2021/043/043_005.pdf (in Japanese)
3） F. Sano, et al., Evaluations on the Japan’s Greenhouse
Gas Emission Reduction Target for 2030, Journal of Japan Society of Energy and Resources, 37(1), 2016
4） RITE Systems Analysis Group, Evaluations on Emission Reduction Efforts of the INDCs and the Expected
Global Emissions, https://www.rite.or.jp/system/latestanalysis/pdf/E-GlobalCO2Emission_INDCs_20151111.pdf
5） F. Sano et al., An Evaluation of NDCs and Carbon Neutrality in 2050 by Using a Global Assessment Model for
Energy and Climate Change, The 38th Conference on
Energy, Economy, and Environment, 2022
6） UNEP, Emission Gap Report 2021
7） T. Homma et al., Economic Analysis on NDCs and Energy Mix of Japan for 2030 Using a Global Energy-economic Model, The 38 Conference on Energy, Economy,and Environment, 2022 (in Japanese)
8） Global

Trade

Analysis

Project(GTAP),

https://www.gtap.agecon.purdue.edu/
9） Agency for Natural Resources and Energy，Report of

the Power Generation Costs Analysis Working
Group, September 2021 (in Japanese)10） T. Homma et al., Analysis of International Competitiveness under the Current Climate and Energy Policies
and the Nationally Determined Contributions, Journalof Japan Society of Energy and Resources, Vol. 41, No.
5, 2020 (in Japanese)30