Japan’s GX Strategy-Opportunities and Challenges-

8 March 2024
Jun ARIMA
Project Professor, GraSPP, U-TokyoPower Generation Mix under the 6th Energy Plan

Source: METI, IEEJProgress to the NDCs
 While Japan is on the track to its NDC up to now, it cannot be guaranteed

Japan

USEU

Source: METI, IEEJGreen Transformation Strategy (Feb 2023)
Promotion of Green Transformation (GX) withEnergy Security as Prerequisite
 Maximum promotion of EE
 RE as Staple Power Source• Perovskite PV• Floating Offshore Wind etc

 Utilization of Nuclear• Replacing decommissioning NPP with next
generation reactors• Operation for more than 60 years under certainconditions

 Promotion of H2 and Ammonia Bridging
Cost Difference with Conventional Fuels
 R&D, Investment Support and Demand
Creation (Methanation, SAF, Synthetic Fueletc)

Introduction of “Growth Oriented CarbonPricing”
 GX Bond for supporting 20 trillion JPY early
investment in the next 10 years
 Incentivizing GX investment by growthoriented carbon pricing
 New Finance Measures
 International Strategy• Creating green market• Asia Zero Emissions Community (AZEC) GX under Just Transition• Smooth labor Creating green market• Support GX in SME• Support decarbonization in the region andhousehold
Source: METI

“Growth Oriented” Carbon Pricing
GX Economic
Transformation
BondInvestment
Promotion

Future Financial Source

Realizing 150+ trillion JPY
GX Investmet

Investment
Promotion

BAU
Investment
Time Horizon

Source: METI

Government Support Stimulating Public/Private Investment
Government Support in the next 10 yrs
Approx 20 trillion JPY

Public/Private Investment in the next 10 yrs
Approx 150 trillion JPY

Expand H2 andammonia demand
R&D of RE andother newtechnologies
EE, andmaterial/fuel switch
in manufacturingindustries
Nation-widemeasures on
domestic demand
R&D of newtechnologies• Massive introduction of RE• Nuclear (innovative reactor)• H2, ammonia• Promotion of
Non-Fossil
Energy• Industrial
Structure
Transformation
integrating
Supply andDemand• Promotion ofEnergyEfficiency• Resource
Recycling• CarbonSequestration

6-8trillion
JPY•
••

9-12
trillion
JPY

•
•

2-4
trillion
JPY•

R&D, social
deployment of newtechnologies

60 trillion
JPY ～80 trillion
JPY ～Combinedwithregulation

10 trillion
JPY ～• EE and material/fuel switchin manufacturing industries(steel, chemical, cement,paper etc)
• Digital investment fordecarbonization• Battery industries• Next generation vehicles• Houses and buildings• Resource recyclingindustries• Biomass manufacturing• CCS
Source: METI

Challenges: Highly Ambitious Energy Efficiency Goal
 Japan’s energy efficiency level is already high
 Efficiency improvement much higher than 1971-90 period?
Energy Intensity of Major Countries

Efficiency Improvement Trend

AACR(1971-1990) -2.4%

Source: METI, IEEJChallenges: Already Very High Penetration of PV Japan’s installed capacity of solar PV per flat land area is the largest in the world andmore than 2 times larger than that of Germany

Source: METI, IEEJChallenges: Limited Potential of Fixated Offshore Wind
 Areas suitable for fixated offshore wind in Japan far less than northern Europeancountries (1/7 of UK, 1/5 of Denmark Floating offshore wind is much more expensive than fixated offshore wind

Challenges: Slow Pace of Nuclear Restarting 46% goal calls for restarting of 27 NPPs (12 restarted, 5 passed, 10 under review)Source: METI

Challenges: Already High Energy Cost Japan’s electricity tariff is the highest in Asia Pacific Region comprising 80% of Japan’strade

2020$/MWhIndustry
産業用電力料金Electricity Tariff
Japan Korea Thailand Mexico Taiwan Indonesia Canada

USChina

Household
家庭用Electricity Tariff
日本 Australia
豪州 Singapore
シンガポールCanada
カナダ
Japan

米国USタイ韓国 インドネシア
ThailandKorea
Indonesia 中国
China
Source: METI, IEEJGlobal Challenges: Unrealistic Pathway for 1.5 Compatibility
 Japan’s NDC and LTS assumes global endeavor towards 1.5 degree and 2050 CN.
 Global emissions is not at all on the track to 1.5 degree pathway

Actual CO2emissions (Gt)

CO2 emissions pathway
compatible with 1.5 goalGlobal Challenges:
Different
Priority Northbetweenand SouthDifferent Priority
betweenandNorthSouth Global North and Global South are not on the same page in their priority on SDG13

Source: UN My World 2030

Global Challenges:
Supplyof
Security
Critical Minerals
Supply Security
CriticalofMinerals
Share of Top 3 Countries in Resource Extraction and Processing
Extraction

Processing

Source: IEA

Daniel Yeargin’s Views on Energy Transformation
 Technology and economic advantage drove earlier energy transition  Public policy is now the driver.
 Previous energy transitions unfolded over the course of a century or more, and they did not
wholly displace the incumbent technologies   Today’s transition is intended to unfold in
little more than a quarter-century and not be additive Four major hurdles for energy transition
 Owing largely to the disruptions caused by Russia’s war in Ukraine, energy security has
become a top priority again
 Today’s world economy depends on hydrocarbons for over 80% of its energy. Fouressential “pillars of modern civilization”- are cement, steel, plastics, and ammonia (forfertilizer), each of which is heavily dependent on the existing energy system.
 Priority on climate action and definition of “energy transition” is different between Global
North and Global South Supply-demand crunch of critical minerals

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