This research was performed by the Environment Research and Technology Fund (JPMEERF20201002
and JPMEERF20192008) of the Environmental Restoration and Conservation Agency of Japan.

Challenges of Decarbonization Polices and Technological Innovation
toward Carbon Neutral Society in Japan
Toshihiko Masui
Go Hibino, Shuichi Ashina, Diego Silva Herran and Yuko Kanamori
National Institute for Environmental Studies

Pre‐Conference of Society for Environmental Economics and Policy Studies 2021

Challenges of Decarbonization Polices and Technological Innovations
toward Carbon Neutral Societies in East Asia
OnlineSeptember 24, 2021

International Network of AIM(Asia‐Pacific Integrated Model)

The 26th AIM International Workshop in 2020 (Online)• Asian countries will update their mitigation target and roadmap to achieve the 2/1.5
degree target reflecting their issues to be solved and the resources to be endowed.
• Model can be a collaboration tool between science and decision making process. Fromthe long‐term viewpoint, each country will need the capacities to develop model andscenarios by itself.
• AIM (Asia‐Pacific Integrated Model) has supported Asian countries to develop theintegrated assessment model and their long‐term low carbon/decarbonized scenarios.
• https://www‐iam.nies.go.jp/aim/index.html
2

GHG emissions [Gt‐CO2eq]

Past trend and future targets of GHG emissions in Japan
1.5
1.4
1.3
1.2
1.1
1.0
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0.0

26% reduction
to 2013 level★

Previous
emission path

46% reduction
to 2013 level

Latestemission path1990 1995 2000 2005 2010 2015 2020
CO2 Energy industries
CO2 Commercial
CH4
PFCs

CO2 Industries
CO2 Residential
N2O
SF6

2030

2040

★
★
2050

CO2 Transportation
Non‐energy CO2
HFCs
NF3

Data source:
Greenhouse Gas Inventory Office of Japan, NIES, https://www.nies.go.jp/gio/en/index.html
Japan's NDC, https://www.env.go.jp/press/files/en/828.pdf

4Present policies toward decarbonized society in Japan• 2030: Nationally Determined Contribution• 2050: Japan's Long-term Strategy under the Paris Agreement
 Individual vision toward carbon neutral in 2050
Energy: Energy Basic PlanEconomy: Green Growth Strategy
Local: 2050 Zero Carbon Cities in Japan
Food: Green Food System Strategy
Land: Land Infrastructure and Transport Green ChallengeTechnology: Environment Innovation Strategy

Keidanren and individual company show their own visions andstrategies toward the net-zero emission by 2050

5

Direction of actions to achieve a carbon neutral society• Major directions toward low carbon society: ① Reductions in energy consumption; ② use of lower carbon
energy sources; and ③ energy transition (electrification).
• To achieve carbon neutrality, in addition to ① – ③ measures, negative emission technologies will beneeded.
① Reductions in energy consumption

Energy consumption

CO2 intensity② use of lower carbon energy sources

Electricity

strengthening of ① to ③ measures

Heat

②
①

Present CO2 emissions③ energy transition (electrification)

②

③

①

CO2 emissions in 2050
Negative emission technologies

Source: MOEJ (2015) Report of committee on mid‐long term GHG reduction※ Negative emission technologies are technologies, practices and approaches for artificially recovering or absorbing CO2 from theatmosphere and sequestering the CO2 in forms that will not be emitted again for the long term. These include afforestation andreforestation, biochar, soil carbon sequestration, wetland and coastal regeneration (blue carbon), bioenergy with carbon capture andstorage (BECCS), accelerated weathering, direct air capture (DAC), ocean alkalinity enhancement, and carbon mineralization. (Reference:
Minx et al. (2018), Negative Emissions—Part 1: Research Landscape and Synthesis, UNEP (2017), The Emissions Gap Report 2017) 6

2

How to achieve the net zero GHG emissions in Japan in 2050
• Preliminary study: Assessment of 2050 using 4 scenarios
1. LED: Social Transformation Scenarios for a Decarbonized Society in 2050
Low energy and material consumption through changes in lifestyles, work styles, and material
consumption and circular economy.
2. ELE: Electrification Scenario
The massive introduction of renewable energy generation and thorough electrification.
3. H2: New fuel scenario
The production of hydrogen through the massive introduction of renewable power generation,and synthetic fuels produced from hydrogen and CO2
4. Zero: Net zero emission scenario
Combining all above measures, including social transformation, electrification, and promotionof new fuels, as well as expansion of CO2 capture targets and negative emission technologies.

• Detailed analysis: Dynamic assessment considering local and 1 hourelectricity supply and demand to assess availability of renewable energies
For more information, please visit the following URL;
https://www‐iam.nies.go.jp/aim/projects_activities/
prov/index_j.html
7

(Preliminary study)

Final energy consumption and electricity demand• By 2050, final energy consumption will be 22‐41% lower than in 2018.
Consumption of fossil fuels, especially petroleum products, decreases significantly.
Electricity and synthetic fuels account for a large share: electricity accounts for 55% in ELE, and synthetic fuels,hydrogen, etc. account for 35% in H2.

Heat
-38%

-29%

-22%

-41%

Electricity
Synfuel/hydrogenBiomass

55%

Gas
35%

Oil

Electricity demand (TWh)Final energy consumption (PJ)

• Electricity demand increases in all scenarios.
In ELE scenario, electricity demand is larger than in the other scenarios.
H2 scenario has a large electricity demand to produce hydrogen and synthetic fuels.

Othertransformation
Synfuel/hydrogenTransportation
Residential
Commercial
Industry

Coal

Final Energy Consumption

Electricity Demand8

(Preliminary study)

Electricity generation•

According to the Ministry of the Environment*, the economically viable amount of renewable energy power
generation that can be introduced is up to 2581.2 TWh, which is more than the total amount of electricity
generated in the Zero Scenario.

•

In 2050, solar power and wind power will be the main sources due to their large potential.
3000
3000
2581.2 TWh Other
2581.2
TWh
2500
2500
Renewables
Biomass &
waste
2000
2000
Hydro
Nuclear, gas with CCS
1500
1000
500

& Ammonia
Gas
Oil
Coal

Electricity Generation (TWh)

In 2050, almost all power sources are decarbonized in all scenarios.

Electricity Generation (TWh)

•

1500

Geothermal

1000

Offshorewind
Onshore
wind
PV

500
0

0

Electricity Generation

Electricity Generation from Renewables* http://www.renewable‐energy‐potential.env.go.jp/RenewableEnergy/doc/gaiyou3.pdf

96

(Preliminary study)

MtCO2eq

GHG in Japan in 2050

By combining zero‐emission
options including socialtransformation and negativeemission technologies, net zero
emissions in 2050 will be realized.
10

(Detailed analysis)
Given the assumptions of economic growth and population, the future macro frame is quantified using
Computable general equilibrium model (①). Then, Energy demand model (②) is used to estimate the futureenergy demand. The annual electricity demand estimated in ② is extended to hourly demand by region, and thepower generation facility configuration and supply configuration are estimated using Power supply model (③) that
can take into account the coincidence and interregional interconnection constraints. The results are fed back to
the energy demand model to calculate Japan's overall energy supply and demand and CO2 emissions.
Extension to hourand local equilibrium

Technology‐related data

Technology‐related data

② Energy demand model[Industry] Products[Building] Air
conditioning, lighting, etc.
[Transport]
Transport volume

Tech.
selection③ Power supply model

Electricity
demandMarket adjustment

Fuel demand

Elec. suppy

Energy demand & CO2 emission
Technology selection based on economic rationality
considering capital cost, operating cost, energy andcarbon cost.

curtailment/storage

Energy demand,
Electricity supply,
CO2 storage

Selectionofpower
supply

LNG thermal
LNG thermal with CCS・・・・PVOnshore wind
Offshore wind・・・・
other regions (Consideringinterconnection cost)

A power supply model for 10 regions in Japan that optimizes theintroduction and operational resolution of power generationequipment, energy storage equipment, and interregional
interconnection lines under hourly coincidence constraints.

macro frame

Power supply model takes into accounts interregional power convergence, output
curtailment, power storage using pumped storage and storage batteries,
transmission and recharging losses, hydrogen production using surplus power, etc.

① Computable general equilibrium model

It does not take into account energy storage facilities such as electric vehicles andelectric HP water heaters, demand‐side energy management using dynamic
pricing, intra-regional power transmission and distribution networks,

①

11

11

(Detailed analysis)

Future scenario"Technology" scenario: net‐zero emissions are achieved through the diffusion of decarbonization technologies
such as energy conservation, renewable energy, and electrification.
"Technology + social transformation" scenario: the diffusion of decarbonization technologies is combined withthe progress of digitalization and circular economy.

Technology〇 Energy efficiency improvement
technology〇 Renewable energy〇 Electrification (electric cars, heatpumps, etc.)〇 New fuels (hydrogen, synthetic
fuels, ammonia, etc.)〇 CCUS〇 Negative emission technology

×Social transformation〇 Efficient use of materials• Improve product and material utilization rates throughsharing and recycling.
• Reduction of production of mineral resource-derived
products (steel, cement, etc.) through long service life,
resource-saving design, and use of wood.
• Reduction of paper production by digitalization, etc.

⇒ Production in industrial in 2050: -15%
〇 Reduction of work and commuting travel• Transportation alternatives using virtual reality, etc.

〇 Reduction of freight transportation and improvementof logistics efficiency• Reduction of freight transportation through efficient use ofmaterials.
• Improvement of logistics efficiency through utilization ofadvanced ICT and 3D printer.

⇒ Passenger & freight transport volumes in 2050:12-20%

12(Detailed analysis)

Macro framework
Future outlook

Notes

Population

126.440 （2018） → 101.923 (2050） mil. people

National Institute of Population and Social Security
Research

Number ofhouseholds

53.889（2018） → 47/241（2050） mil. households

National Institute of Population and Social Security
Research and estimated based on its outlook

GDP growth rate

1.7%/year (2020-2030)
0.5%/year (2031-2050)

Crude steel
production

102.89 （2018）→ 85.70 （2050） mil. ton

Cement production

60.23 （2018）→ 60.39 （2050） mil. ton

Ethylene production

6.18 （2018）→ 5.41 （2050） mil. ton

Paper & paperboard
production

26.03 （2018）→ 23.48 （2050） mil. ton

Machinery production

100 （2015）→ 141 （2050） index

Business floor space

1903 （2018） → 1671 （2018） mil. m2

Passenger transport

1,459 （2018） → 1,179 （2050） bil. person-km

Freight transport

411 （2018） → 419 （2050） bil. ton-km

2020-2030: Estimated by Cabinet Office2031-2050: SSP2

Estimated by AIM/CGE based on the above GDP
assumptions.

Estimated by AIM/CGE based on the above GDP
assumptions and population structure
Estimated from population trend
Estimated by AIM/CGE based on the above GDP
assumptions.
13

13

(Detailed analysis)

Energy consumption in household sector
Energy consumption in household sector in 2050 will be 53% lower than in 2018.
The share of electricity will increase from 51% in 2018 to 74% in 2050 due to the promotion ofelectrification of air conditioning and hot water supply.
Energy consumption for heating, hot water supply, and lighting was significantly reduced.
‐ Energy efficiency improvement‐ Zero‐carbon electricity‐ Synfuels
Lighting & Others:‐ HEMS‐ LED: 100% in 2050
Hot water & cooking:‐ Electric heat pump: 80% in
2050
Cooling & Heating:‐ Highly insulation house: 40%(stock) in 2050
‐ Heating by Air conditioner: 80%
in 2020

Energy consumption
by energy type

Energy consumption
by enduse service

14

14

(Detailed analysis)

Energy consumption in commercial sector
Energy consumption in commercial sector in 2050 will be 51% lower than in 2018.
The share of electricity will increase significantly from 54% in 2018 to 93% in 2050* due to the promotion ofelectrification of air conditioning and hot water supply.
Energy consumption for heating and cooling, hot water supply, and lighting was substantially reduced.
* The ratio of electricity to energy consumption for energy use excluding non‐energy use.

‐ Energy efficiency
improvement‐ Zero‐carbon electricity‐ Synfuels
Lighting & Others:‐ BEMS‐ LED: 100% in 2050
Hot water & cooking:‐ Electric heat pump: 100% in
2050

Energy consumption
by energy type

Energy consumption
by enduse service

Cooling & Heating:‐ Highly insulation building:
70% (stock) in 2050
‐ Heating by Air conditioner:
100% in 2020
15

15

(Detailed analysis)

Energy consumption in transportation sector
Energy consumption in transportation sector in 2050 will be ‐74% to ‐79% of that in 2018.
The share of electricity and hydrogen will increase significantly from 2% in 2018 to 62%‐63% in 2050* due to thesignificant expansion of electric vehicles and fuel cell vehicles.
‐ Efficiency improvement‐ Zero‐carbon electricity (EV &train)‐ Synfuel and bio‐fuelPassenger cars:‐ Reduction of traffic volume(commuting etc.)‐ BEV & FCV: 100% (stock) in
2050
Motor truck:‐ Logistic efficiency
improvement‐ BEV & FCV: 80% (stock) in
2050

Energy consumption
by energy type

Energy consumption
by transportation mode

Train, ship & aviation:‐ Improvement of travel
distance16

16

(Detailed analysis)

Energy consumption in industry sector
Energy consumption in the industrial sector in 2050 will be 22‐33% lower than in 2018. The share of electricity will
increase significantly from 20% in 2018 to 34% in 2050*.
* The ratio of electricity to energy consumption for energy use excluding non‐energy use.

‐ Zero‐carbon electricity (EV &train)‐ Synfuel and bio‐fuel‐ BAT‐ Demand reduction throughefficient material use
Steel:‐ Electric furnace‐ Hydrogen reduction method‐ Blast furnace with CCS
Chemical:‐ Decarbonized organic chemical
production process

Energy consumption
by energy type

Energy consumption
by sector

Others:‐ Reduction of cement & clinker
use‐ Electrification of heat
‐ Hydrogen burner1717

(Detailed analysis)

Final energy consumption
Final energy consumption in 2050 will be ‐42% to ‐49% of that in 2018.
The share of electricity will increase significantly from 26% in 2018 to 49%‐51% in 2050.
(Excluding non‐energy use)
(Mtoe)(Mtoe)

Non-energy(synfuel & bio)
Non-energy(fossil fuel)Transportation

SynfuelElectricity

Residential

Renewables
Commercial

Gas
Oil

Tech +Social

Industry

Coal

Energy consumption by energy type

Tech +Social
Energy consumption by sector18

18

(Detailed analysis)

Electricity demand
Electricity demand will increase substantially from 2030 onward, rising 30‐46% in 2050 compared to that in2018.
Demand in the final consumption sector will remain flat or decrease, but demand for new fuel production(mainly for electrolysis to produce hydrogen) will surge.
(TWh)Private power generation in industry sector
Home consumption in energy conversion sector
Production of new energy
Transportation sector
Residential sector
Commercial sector
Industry sector

Tech +Social＜Electricity demand＞

19

19

(Detailed analysis)

Electricity supply
Share of decarbonized power sources in electricity supply changes from 25% in 2018 to 100% in 2050.
Share of electricity supply from renewable energy sources is expected to increase from 17% in 2018 to 73‐76% in
2050. Solar and wind power will account for a large share of electricity generation, with solar power at 403‐450
TWh in 2050, onshore wind power at 133‐226 TWh in 2050, and offshore wind power at 205‐276 TWh in 2050.
(TWh)

(TWh)

Mid/small hydroPV (other)

Private powergen. in industry
NuclearPV (roof-top)

Renewables

Geothermal

Gas with CCS

Offshore windGas

Onshore wind

Oil
Coal with CCS

Biomass with CCS

Coal

Biomass

Coal with NH3
Ammonia

Tech+Social＜Electricity supply＞

Hydro

Tech

+Social＜Electricity from renewable source＞(Breakdown of ■in the left figure)20

20

(Detailed analysis)

Electricity production cost
The average power generation cost in 2050 will be almost the same as the current level.
Average power generation cost*
2050 Technology scenario

2050 Technology + Social
Transformation scenario

201811.9 ‐ 12.3 yen/kWh

Capital cost: 7.4 tri. yen
Maintenance cost: 7.8 tri. yen
Fuel cost: 2.2 ‐ 2.7 tri. yen
Electricity generation: 1.5 TkWh

11.8 ‐ 12.2 yen/kWh

Capital cost: 6.5 tri. yen
Maintenance cost: 6.6 tri. yen
Fuel cost: 2.2 ‐ 2.7 tri. yen
Electricity generation: 1.3 TkWh

11.5 yen/kWh

Capital cost: 3.3 tri. yen
Maintenance cost: 1.4 tri. yen
Fuel cost: 6.0 tri. yen
Electricity generation: 0.9 TkWh

* The total capital cost (annual price), maintenance cost, and fuel cost of power generation facilities (including reserve power sources) andenergy storage facilities in operation in 2050, divided by the amount of electricity generated.
The lower value of fuel cost for 2050 is based on sustainable development scenario of IEA WEO2020 , and the upper value is based on
actual price for FY2018.
For coal- and gas-fired power generation in 2018, capital cost is calculated using 70% of capacity utilization rate for each type of power
generation. For oil-fired power, no capital cost is accounted.
The average power generation costs for both years exclude the cost for nuclear power plants.
21

21

(Detailed analysis)Primary energy supply
Fossil fuels currently account for more than 80% of the domestic primary energy supply, but renewable energy
will account for about 70% by 2050.
The energy self‐sufficiency rate is improved from 15% in 2018 to over 70% in 2050.
(Mtoe)

Imported new energy *1
Renewables *2
NuclearNatural gas
Oil
Coal
Self-sufficiency rate *3*1: It is assumed that 30% of synfuel and hydrogen and 100% of ammonia
will be imported in 2050.
Tech +Social*2: It is assumed 30% of biomass will be imported in 2050.
*3: Self-sufficiency rate is estimated from calorific value of General Energy
Statistics.
22＜Total primary energy supply and self‐sufficient rate of energy＞

22

(Detailed analysis)

Energy related CO2 and GHG emissions
Emissions from synthetic fuels (carbon from fossil fuels) will account for a large share of energy‐related CO2
emissions in 2050.
In 2050, some level of emissions will be inevitable even if decarbonization measures are promoted. Therefore,
negative emission technologies will be necessary to achieve net zero GHG emissions.
(MtCO2)(MtCO2eq)

Other NETs
OthersAfforestation

BECCS

BECCS

New energy

CCS

Other energy
conv. sector
Power sector

HFCs

Transportation
sectorResidential
sectorCommercial
sectorIndustry sector

N2O
CH4
CO2 (nonenergy)
CO2 (energy)

Total

Tech

+Social＜Energy related CO2 emissions＞

Tech +Social＜GHG emissions＞

23

23

(Detailed analysis)

Additional investment
In terms of the amount of additional investment needed to achieve a decarbonized society, investment ininsulation of houses and buildings and in renewable energy accounts for a large share.
Net energy imports in 2018 were about 16 trillion yen, but imports will fall by about 12 trillion yen in 2050 due toreduced dependence on fossil fuels.
(tri. JPY)

Negative emission
technologies
Battery(tri. JPY)

Hydrogen & Methanation

Ammonia
SynfuelHydrogenBiomass
Natural gas
Oil
Coal

COs capture & storage
Small hydro, geothermal &biomass
Offshore wind
Onshore windPV
Freight vehicle
Passenger vehicle
Energy saving &electronification
Insulation (commercial)
Insulation (residential)
Common tech in industry

Tech+Social

BAT and innovative tech inenergy intensive sectors＜Additional investment (average 2041-50)＞

Tech+Social＜Net import value of energy in 2050＞24

24

Main implications of detailed analysis
Reductions in energy consumption; use of lower carbon energy sources; and energy transition (electrification)
Building sector:• Electrification of heating and hot water supply is progressing, but this will not lead to an increase in electricity
consumption due to higher insulation of houses and buildings and progress in energy conservation ofequipment.
• For the remaining fuel consumption demand, synthetic fuels are supplied, and emissions are approaching zero*.
Transportation sector:• It is necessary to promote use of electric vehicles (battery electric vehicles and fuel cell vehicles) as soon as
possible.
• Cars with remaining internal combustion engines, trains in non‐electrified areas, ships, and aviation use
synthetic fuels, hydrogen, and biofuels. As a result, emissions are approaching zero*.
Industry sector:• Innovative technologies such as hydrogen‐reduced steelmaking in iron and steel industry, clinker substitutematerials in cement industry, and CO2 feedstock conversion in chemical industry have been developed andspread. As for the consumption of remaining fossil fuels, CO2 capture is being carried out, synthetic fuels andproducts are being used, and geological sequestration is being carried out.
• In all sectors, BAT technology is widespread, and for heat use, industrial HP is widespread and electrification isprogressing. For high temperature heat demand, synthetic fuels are being used.
New fuel production:• Hydrogen is produced domestically by electrolysis to meet demand for hydrogen and synthetic fuels in the
consumer, transportation, and industrial sectors. The electricity demand for hydrogen production is relatively
unrestricted in terms of time, so it is possible to produce hydrogen at times when there is enough electricity
supply.
* It should be noted that carbon content of synfuels includes a portion of fossil fuel origin, and thus CO2
emissions are associated with their use.
25

25

Main implications of detailed analysis
Social transformation could increase certainty of achieving decarbonized society.
• It is important to further study benefits and challenges of social transformation scenario. There are technicaland social constraints and uncertainties regarding development and diffusion of new negative emission
technologies and dependence on foreign countries for new fuels.
• Therefore, in order to increase feasibility of a decarbonized society, efforts to transform society into one thatprovides higher benefits and utility with less environmental impact through digitalization and promotion of
circular economy will be important for the realization of a decarbonized society.
（Differences in social transformation）
・Negative emission technologies: 55 MtCO2 → 43 MtCO2 (about 22% reduction)
・Import of new fuels: 47 Mtoe → 42 Mtoe (about 10% reduction)・Difference between reduction cost of net energy import and additional investment cost:
1 tri. yen/year → 2 tri. yen/year
Ratio of renewable energy to total power generation in 2050 will be around 70‐80%. Average power generation
cost will be almost the same as the current situation.
• Solar power and wind power, which will be main power sources in 2050, are highly variable power sources, but
flexibility is ensured by combining various power sources, battery, and implementing inter‐regional flexibility.
In addition, when electricity supply exceeds its demand due to weather conditions, hydrogen and synfuel are
produced using surplus electricity. The average cost of power generation in 2050 will increase by less than 10%
from the current level, as declining costs of solar and wind power and the increasing share of their use offset
the price increase to some extent, despite increasing investment for power stabilization.
Total required investment will be within range of reduction in fuel imports. Decarbonization may have a positive
impact on reducing the outflow of national wealth.
• Annual required investment will be estimated to be about 10 ‐ 11 trillion yen. This investment will significantly
reduce fossil fuel demand. As a result, it is estimated that it will lead to a reduction in net energy imports ofabout 12 trillion yen in 2050.
26

26