IEEJ © November 2022 All rights reserved

The 442nd Forum on Research Work

19 October 2022

Challenges and Response Strategies forEnergy Security Under the New Reality

Ichiro KUTANIGlobal Energy Group 1
Strategy Research Unit
The Institute of Energy Economics, JapanA new reality
 In recent years, climate change has been at the centre of energy and climate policy debates.
 But over the past year or so, the energy security crisis has never been greater.
Energy prices in Europe have soared since the middle of 2021 due to weather conditions (lowtemperatures in Spring 2021, prolonged wind deterioration) and unforeseen factors, such as a decline innatural gas supply due to breakdowns.



Russia invaded Ukraine in February 2022. Subsequently, Western countries decided to impose a(gradual) embargo on Russian energy. Russia responded by using its own energy exports as a weapon(Reduce export volume, take over assets).



Shortage of physical energy supply, especially natural gas, is a real threat.

International prices for all kinds of fossil fuels are at historic highs, in part because of the escalating
geopolitical risks of conflict with no way out.

In some developing countries, soaring prices of imported energy have strained their finances andhindered fuel procurement.

 Energy security is the foundation of people’s lives and all economic activities, and in the shortterm at least, securing energy supplies has become a top priority.

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 However, there is no time to wait for action on climate change, and the question is how toreconcile energy security and climate action.
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Key points of this report
1. Energy security strategy in view of war in Ukraine and energy transitionJapan needs to prepare for unforeseen circumstances while continuing to seek to maintain its procurement of Russian LNG. To avoid a “scramble
under a zero-sum game”, it is necessary to reacknowledge the role of LNG and the importance of upstream investment, and to take concrete
steps to expand supply.
In Asia, decarbonisation, which follows the process of first shifting from coal to natural gas, is considered a realistic path considering the amountof renewable energy available and the economics considering integration costs. If the promotion of natural gas and LNG investment becomes a
reality, it will help stabilise markets and avoid the negative impact of Asia’s energy transition on regional economies.
Blue hydrogen and ammonia will play a major role in the decarbonisation of fossil fuels, but the high price of natural gas makes them
uncompetitive. Therefore, it is necessary to stabilise the natural gas market to ensure the introduction of blue hydrogen and ammonia.

2. Strengthening stable power supply and importance of nuclear power generation

In advanced countries, lopsided power generation mix and reduced supply capacity have increased vulnerability to risks such as heat waves, cold
waves and earthquakes. The shortage of kWh caused by fuel shortages due to fuel price hikes and fuel supplier risk has also become a problem.
Securing a stable supply has become an issue.
With the growing importance of energy security, the role of nuclear power generation is being reviewed and new plans are being developed.
Construction by China and Russia is currently dominant in the global market. Western companies are urged to apply the lessons learned fromcurrent projects.

3. Critical mineral issues in energy and economic securityThe supply and demand for critical minerals such as lithium may become tight as the introduction of electric vehicles, renewable energy andstorage batteries increases. A multifaceted response is required to develop new mines, strengthen resource diplomacy, promote recycling, anddevelop technologies for non-use and reduced usage to ensure a stable supply. In addition, the supply and processing of critical minerals is highly
dependent on specific countries, and diversification of the supply chain is also a challenge.

4. Economic impact of green investment
IEEJ © 2022In the real world, “green growth” may not be realised depending on the availability of funds and differences in industrial structures.
How to limit negative economic impacts and how to even out the different impacts between economies and industries is important.

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Structure of this report
1. Energy security strategy in view of war in Ukraine and energy transition
2. Strengthening stable power supply and importance of nuclear power
generation
3. Critical mineral issues in energy and economic security

IEEJ © 2022

4. Economic impact of green investment11

1.1 The challenges of response strategies
toward ending dependence on Russian natural gas
 The European Union’s policy of ending
dependence on Russia is different fromJapan’s.


LNG and Russian Pipeline Gas Supplies to EU and UK

EU countries were highly dependent on
Russian natural gas, but Japan’s introductionof Russian LNG was more about source
diversification.

 The EU is set to end its dependence on
Russia by 2027, but it must ensure stablesupplies until the time.
In the short term, they are exposed to
Russia’s threat amid uncertainty about
securing alternative supplies.

This has led to a tightening of the global
LNG market.

 For Japan, it is desirable to continue tosecure Sakhalin 2 LNG both in terms ofequity participation and supply.

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

Meanwhile, urgently needed to prepare forunexpected loss of equity participation andsupply.

Source: Compiled from Cedigaz LNG Services, Eurostat, British trade
statistics, and Gazprom

121.1 The challenges of response strategies
toward ending dependence on Russian natural gas[Measures for Japan]

Prospect of existing LNG term contracts by Japanese companies

 Until 2025, Japan is expected tosecure supplies from other projects
and portfolio players.
 From 2026 onward, it is vital tosecure long-term LNG contracts fromother sources including new projects,
and to ensure investment to support
these new projects.
 New development projects in Russia
will recede. The path to restoring
Russia’s future credibility as aninvestment destination and source ofimport is even more distant.

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 As a way of laying the groundwork forthe future, clear message should be
advocated that both investment andprocurement from the project arelegitimate rights under the contract
and there is no reason to bethreatened by unilateral Russian
notification.
Source: Estimates based on various sources13

1.2 The role and challenges of natural gas
in Asia’s energy transition and energy security
 A growing number of Asian countries have also declaredthemselves carbon neutral (CN), but the roadmap to achieve
this is unclear.

Energy mix of major Asian countries
Japan

27%

e.g., China by 2060, India by 2070, Indonesia by 2060, Viet Nam by 2050

 The energy supply and demand structure of Asian countries ishighly carbon intensive, and to realise CN, they need to restructure energy system in the limited time frame of the next
three or four decades.
 In addition, developing countries have unique challenges.
Energy demand will inevitably continue increasing in the future,necessitating a stable supply of large amounts of energy.

MalaysiaCheap energy supplies are essential in light of protecting lowincome people as well as industrial development,.

Indonesia

Renewable energy lacks strength to supply the fast growing energy
demand.

Some countries have limited renewable energy availability.



There is a strong demand for energy affordability, and the cost of
integrating variable renewable energy will become an issue.

24%

52%

Thailand Challenges exist in Asia’s energy transition.

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Viet Nam

38%

13%

25%
41%

24%

26%
34%

29%

India

39%

29%
43%

China

15%
24%

61%
0%

Coal

Oil

8%

6%
19%

20%

40%

60%

Natural gas

Nuclear

Hydro

8%
80%

100%

Other renewables

Source: Compiled from IEA “World Energy Balance
2022”

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1.2 The role and challenges of natural gas
in Asia’s energy transition and energy security
 A two-stage decarbonisation scenario that takes advantage of natural gas (*) could be a realistic solution for Asia, whichfaces the challenge of energy transition (see previous page). But there are challenges.
* Can stably supply large amount of energy (high energy density). Can lower GHG emission by switching from coal.
Asian decarbonisation taking advantage of natural gas
Stage 1: Satisfy energy needs and achieve low carbonisation byswitching from coal to natural gas
Stage 2: Decarbonisation by commercialising various technologies
under development (hydrogen, CCUS) as well as avoiding making
natural gas asset stranded.

Challenges of natural gas••

The economics of natural gas has declined due to soaring prices.
There is concern that the role of natural gas will diminish as
investments in other decarbonised energy increase if the priceremains extremely high for an extended period of time.

 Asia’s energy transition/security will be more costly (right figure) andcould weaken Asia’s relative economic power against other region if
constraints on natural gas investment trigger its high price.

The impact of fossil fuel prices on themarginal cost of electricity in ASEAN

 The promotion of natural gas and LNG investment will not only help tostabilise the markets, but will also contribute to curbing the cost ofenergy transition/security in Asia and averting negative impacts on theregional economy.

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 Therefore, it is necessary to develop an environment for appropriate useof natural gas.
Clarify its role as a transition energy

Promotion of natural gas-related investment

Supporting technology to decarbonise natural gas (CCS, CCUS, hydrogen)15

1.3 Importance of stabilising markets
to decarbonise fossil fuels (natural gas) Blue hydrogen and ammonia play a central role in the decarbonisation of fossil fuels.
Blue hydrogen/ammonia is also expected to play a role in shaping the market in the early stages ofhydrogen/ammonia introduction (Green hydrogen/ammonia is more difficult to implement early interms of both quantity and price).

The natural gas market needs to be stabilised in order to ensure the introduction of bluehydrogen/ammonia because blue hydrogen/ammonia cannot be competitive to materialise thescenario when natural gas price is high.
Green hydrogen

Blue hydrogen

O2
Renewable power
Fossil fuelH2
production

H2

Water

H2
production

H2

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CO2
CO2 is captured and utilised or stored.
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Structure of this report
1. Energy security strategy in view of war in Ukraine and energy transition
2. Strengthening stable power supply and importance of nuclear power
generation
3. Critical mineral issues in energy and economic security

IEEJ © 2022

4. Economic impact of green investment17

2.1 The challenges of stable electricity supply under market deregulation,
mass introduction of REs and soaring fuel prices
 In advanced economies, the power generation mix has changed significantly throughout the 2010s due to delegulation ofelectricity market, the promotion of decarbonisation policies, the expansion of renewable power generation, and low
primary energy prices through 2020, resulting in a downward trend in conventional power generation capacities. Overall,there is less reserve capacity and greater vulnerability to shocks.
 Electricity supply and demand becomes more vulnerable against external shocks such like heat waves, cold waves,earthquakes, and prolonged bad wind conditions. Examples include tight supply due to summer heat wave at the California
ISO from 2020 to 2022, rolling blackout due to cold wave at ERCOT, Texas in February 2021, and tight supply in Tokyo
area due to outage of power station due to earthquake combined with cold/heat wave in March/June 2022.
 In advanced economies, increasing number of country/region
are introducing capacity markets, which are a mechanism to
pay for the availability of supply capacity, to secure investment
for new capacities as well as to ensure operation of existing
capacities. But even in these countries, there have been cases
in which they are fail to secure sufficient supply capacity at atime when demand actually increases.

Electricity generated by source in EU 28

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 Withdrawal of power station for economic reasons is difficult topredict, making long-term reliability assessment difficult
thereby investment in new power generation difficult. The
United Kingdom is attempting to introduce technologies thatcan both decarbonise and provide a stable supply through a
support mechanism that takes into account the characteristics
of each next-generation technology. It is likely that similar
policies will prevail among countries and regions.
Source: Compiled from IEA “World Energy Balance 2022”18

2.1 The challenges of stable electricity supply under market deregulation,
mass introduction of REs and soaring fuel prices
 In Europe, where many countries are abolishing coal-fired power generation as a policy in their efforts todecarbonise, wind power generation has become low in output since around the autumn of 2021, andwholesale electricity spot prices have soared due to rising natural gas prices. This, combined with war in
Ukraine, has led to a protracted crisis. In addition, during the summer of 2022, a combination of heatwaves caused power station to shut down and output to fall, further tightening the reserve capacity. A
shortage of natural gas supplies from Russia heading into winter could lead to electricity shortages.
 In China and India, where the share of coal-fired power generation is high, planned power outage due tocoal shortages also occurred in 2021 and 2022. In January 2021, wholesale electricity spot prices soared
in Japan due to LNG shortages. These are all issues of “kWh shortage” associated with fuel constraints.
The conventional kW shortage still needs to be addressed, but in addition, the kWh shortage also needs tobe addressed.

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 Until now, the adequacy of supply capacity (the possibility of a kW shortage) has been an indicator toassess supply stability. However, on the other hand, quantitative assessment of risk of a kWh shortage,
including the risks in the fuel supply countries, is difficult. Quantitative assessment of the kWh shortage
risk would be a major issue for future policy response.

192.2 Trends to promote nuclear power under the new reality
and future challenges
 Nuclear power generation is promising as a zero-emission baseload power source. In addition, nuclear could play a roleby taking advantage of its characteristics as the demand for energy security intensifies.
 In the case of the United Kingdom and France, to reach ambitious policy goal, bold measures are taken that diverge inpart from the market deregulation policy. These policy examples may have important implications for Japan.
Examples in United Kingdom

Examples in France

Adhering to the necessity of nuclear•
The Government announced the Energy Security Strategy inearly April 2022. The strategy includes an ambitious target for
nuclear to cover 25% of electricity supply by installing up to
24 GW by 2050.

Strategies based on a long-term perspective•
In February 2022 (before the Russian invasion of Ukraine),
President Emmanuel Macron said at least six of the next
generation of the European pressurised water reactors (EPR 2)
would be built and eight more would be considered.



Nuclear, which is capable of stable power generation, is
considered to have attracted renewed attention because thecountry is necessary to prepare for the situation in which theoutput of wind power, which is increasing every year, is not as
expected, and it is also necessary to break away fromdependence on fossil fuels, including natural gas, in the future.

Supporting measures•
A review of the support mechanism (so called RAB model) isunder consideration to promote the investment for new reactors.

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The current mechanism (Contract for Difference, CfD) isdesigned to support only when power station start operation,and it does not sufficiently contain the uncertainty of nuclear
project, which requires large investments and long
construction period before generate a profit.

•This strategy is sought to be based on the results of ananalysis published in October 2021 by transmission system
operator RTE.
Scenario analysis of the long-term power mix. The study
resulted to identify that achieving carbon neutrality without
new nuclear power capacity is unrealistic, and that the total
cost of the electricity system, including integration costs, ischeaper in a scenario where assumes the addition of nuclear
capacity.

Planning and implementation based on the long-term
perspective is ideal since decision-making and construction of
nuclear power takes a long time.

Strengthening the state-led implementation system•
In July 2022, Prime Minister Élisabeth Borne announced a plan
to fully nationalise power giant Électricité de France (EDF) in
order to make a strong push for decarbonisation.

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2.2 Trends to promote nuclear power under the new reality
and future challenges
 China and Russia dominate the world nuclear market (figure), although there is a trend away fromdependence on Russia.
••••

Finland cancelled its contract to build the Hanhikivi 1
Ukraine plans to install nine Westinghouse-built light water reactors.
Poland has established partnerships with U.S. and French companies.
On the other hand, construction of Russian nuclear reactors is underway in China, India, Turkey, Bangladesh, Hungary,
Egypt and other countries.

 Delays and cost overruns have been seen in new development of Western countries in recent decades due
to a sharp decline in the number of new projects and the loss of construction know-how.
•

Growing emphasis on energy security alone cannot ensure Western companies to seize business. The key is whether
they can take advantage of the lessons learned from current projects.

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World’s under construction and planned nuclear reactors(As of 1 January 2022)
Source: Compiled from “World Nuclear Power Plants” (2022 edition)of Nuclear Power in the World, published by the Japan Atomic
Industrial Forum.

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Structure of this report
1. Energy security strategy in view of war in Ukraine and energy transition
2. Strengthening stable power supply and importance of nuclear power
generation
3. Critical mineral issues in energy and economic security

IEEJ © 2022

4. Economic impact of green investment

22

Analysis framework Analysed supply and demand balance of critical minerals.
 Comparing supply and demand, and comparing cumulative demand and resource reserves + recycled
supply as time series (up to 2050)
Subjected technologies and minerals
 Carbon neutral (CN) technologies: renewable energy, stationary storage batteries, electric vehicles, fuelcell vehicles, water electrolysis, etc. (decreases in mineral demand due to abolish of conventional
technologies are also considered. Demand for non-carbon neutral technologies also considered) Critical minerals: Copper, lithium, nickel, cobalt, graphite, silicon, dysprosium, neodymium, platinum,
palladium, rhodium, and vanadium
Methodology
 Demand = Amount of CN technology installed × Mineral resource intensity of technology− Conventional technology to be replaced × Mineral resource intensity of technology.

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 Supply = Mine production + Recycling supply.
Production from mine = f(mine development stage, production capacity),
Recycled amount = Waste amount × Product recovery rate × Recycling rate.

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Analysis: example of Nickel and Lithium
Supply-demand
outlookComparison of cumulative demand andreserves (+ recycled supply)

Nickel (Ni) (used in lithium-ion batteries) In the Advanced Technologies Scenario(ATS) in which the electrification of theautomobile advances greatly, the demand
will increase more than 3 times fromcurrent levels by 2050.
 In ATS, demand will exceed supply (mineproduction + recycling) around 2035.
 Cumulative demand in ATS through 2050
will exceed reserves (+ recycled supply).

Lithium (Li) Demand will grow significantly mainly with
the increase in electric vehicles. In ATS, it
will increase by more than 10 times fromcurrent levels by 2050.
 In ATS, demand will exceed supply (mineproduction + recycling) around 2030.
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 Cumulative demand in ATS through 2050
will be slightly below reserves (+ recycled
supply).
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Uneven distribution of critical minerals
 Reserves of many critical minerals are unevenly distributed around the globe.
 However, geographical distribution of reserves and downstream processes is often different. For example,
Indonesia has the largest share of nickel production, while China has the largest share of primary nickel
production after refining.

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Country-wise share of reserves

United States
CanadaMexicoBrazilPeru
Chile
Argentina
Cuba
Australia
Indonesia
Philippines
Viet Nam
China
Kazakhstan
RussiaZimbabwe
DR Congo
South Africa
OthersCu(copper)
5%
1%
6%
0%
9%
23%
0%
0%
11%
3%
0%
0%
3%
2%
1%
0%
4%
0%
33%

Co
(cobalt)
1%
3%
0%
0%
0%
0%
0%
7%
18%
8%
3%
0%
1%
0%
3%
0%
46%
0%
9%

Ni
(nickel)
0%
2%
0%
17%
0%
0%
0%
0%
22%
22%
5%
0%
3%
0%
8%
0%
0%
0%
21%

Li
V
(lithium)(vanadium)
3%
0%
0%
0%
0%
0%
0%
1%
0%
0%
42%
0%
10%
0%
0%
0%
26%
25%
0%
0%
0%
0%
0%
0%
7%
40%
0%
0%
0%
21%
1%
0%
0%
0%
0%
15%
11%
0%

Note: Compiled from USGS Mineral Commodity Summaries 2022

Country-wise production shareof ore and primary nickel (2019)
PGM(platinum
REO
group)(rare earth)
1%
2%
0%
1%
0%
0%
0%
18%
0%
0%
0%
0%
0%
0%
0%
0%
0%
3%
0%
0%
0%
0%
0%
18%
0%
37%
0%
0%
6%
18%
2%
0%
0%
0%
90%
1%
0%
4%

Ore production
Americas
EuropeJapan
China
Indonesia
Philippines
Other Asia
Oceania
RussiaAfricaOthers

11%
2%
0%
4%
35%
13%
8%
6%
9%
2%
10%

Primary
nickelproduction
12%
17%
8%
34%
16%
0%
3%
8%
0%
3%
0%
25

Supply and demand balance (Advanced Technologies Scenario)
 Reserves + recycling < Cumulative demand (until 2050): Nickel and cobalt
 Early supply shortage concerns: lithium, cobalt, neodymium and dysprosium Uneven distribution and geopolitical risks: nickel, cobalt, graphite, platinum-group metals, neodymium,dysprosium and vanadium
Cumulative demand through 2050 − (reserves + recycled supply)Co
Democratic Republic of theCongo, Australia, Indonesia

Today

Ni

Australia, Indonesia, Brazil,
Russia, Philippines

Timing of tightsupply-demandbalance2030

Chile, Australia, Argentina, China

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China

Chile, Australia, Peru,
Mexico

Cu

Li

Dy
Nd

2050

2040

South Africa, Russia, Zimbabwe South Africa, Russia,

Turkey, China, Brazil
China

High uneven distribution
and geopolitical risks
Low and medium uneven
distribution and geopolitical
risks
Country name: Major production
areas

C
V

China, Australia,
Russia, South Africa

Pt

United States

Rh

Pd

South Africa, Russia, Zimbabwe

Si

Note: Cu (copper), Li (lithium), Si (silicon), Ni (nickel), Co (cobalt), C (graphite), Pt (platinum), Pd (palladium), Rh (rhodium), Nd (neodymium), Dy (dysprosium) and V (vanadium)26Reference: Major uses of critical minerals

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Ore

Major uses

Cu (copper)

Wind power generation, solar photovoltaics power generation, electric vehicles, batteries. However,
it is often used outside of CN technology.

Li (lithium)

Lithium-ion battery

Si (silicon)

Solar PV. However, it is often used outside of CN technology.

Ni (nickel)

Lithium-ion batteries. However, stainless steel and heat-resistant steel are the main applications.

Co (cobalt)

Lithium-ion batteries, special steel

C (graphite)

Lithium-ion batteries, metal crucibles, molds, electric furnace electrodes, etc.

Pt (platinum)

Exhaust gas catalysts for automobiles, electrocatalysts for fuel cells and water electrolysers

Pd (palladium)

Exhaust gas catalysts for automobiles, electrocatalysts for fuel cells and water electrolysers

Rh (rhodium)

Exhaust gas catalysts for automobiles

Nd (neodymium)

Electric vehicle motors, magnets in wind power generators

Dy (dysprosium)

Electric vehicle motors, magnets in wind power generators

V (vanadium)

Electrolyte for redox flow batteries. Other than CN technology, additives to steel are main.

27

Response required Under the Advanced Technologies Scenario, the cumulative demand for nickel and cobalt by 2050 will
exceed the reserves (+ recycled supply). Also, demand for lithium, cobalt, neodymium and dysprosium
will exceed supply by around 2030.
 With respect to these critical minerals, it is necessary to develop technologies that contribute toincreasing the recycling rate, in conjunction with increasing production at existing mines and developing
new mines.
 In order to secure critical minerals, it is necessary to develop recycling, non-use and reduced usage
technologies, as well as acquisition or rights and long-term purchase contracts. Diversification of criticalminerals is also important.
 Currently, the supply of critical minerals is an oligopoly of several countries. The introduction of new
regulations and tax regime on resource development and exports in producing countries may cause
supply constraints for demand countries. Therefore, it is necessary to pay close attention to the policy
trends of producing countries. Diversification of the supply chain is also an issue to be addressed, since
processing such as refining is concentrated in specific countries such as China.

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 There are uncertainties in policies of resource producing country, prospects for developing technologies
for recycling, non-use and reduced usage. Therefore, it is important to balance technology choices fromthe perspective of energy and economic security and the sustainability of critical minerals.

28

Structure of this report
1. Energy security strategy in view of war in Ukraine and energy transition
2. Strengthening stable power supply and importance of nuclear power
generation
3. Critical mineral issues in energy and economic security

IEEJ © 2022

4. Economic impact of green investment

29

Background of the analysis
Last year, IEEJ Outlook 2022 raised issues that should be considered during the course
towards carbon neutrality.
- “Green growth” is expected, in which investments in climate action will form a virtuous cycle of emissions
reductions and economic growth, but the effects may vary by economy and actor.
- That can create new gaps: (1) disparities among advanced economies and among developing economies,(2) disparities between advanced and developing economies, (3) disparities between economies that
depend on fossil fuel exports and those that do not, and (4) disparities among citizens.

IEEJ © 2022

In this background, “IEEJ Outlook 2023” provides a quantitative assessment of how climate change
investment (green investment) impacts countries or regions, and what disparities may arise.

30

Analytical method
 Quantitative assessment of the impact of green
investment* on national economies* Regard difference of investment in the Advanced
Technologies Scenario to the Reference Scenario.

«Case settings»
1/ No Financial Constrained Case
Additional green investment will have a positive
spillover effect as well as multiplier effect through1) an increased demand  2) Increased income 3) increased consumption(This case represent common concept of green
growth)2/ Financial Constrained CaseIEEJ © 2022

Since funds have a constrain, the amount spenton green investments reduces other investments.
Furthermore, since green investment itself is not
an investment to expand production capacity, it isalso considered that production and income will
decrease through a decrease in production
capacity due to a decrease in other investments.

31

Green growth is unlikely when there are constraints in funds

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Changes in production in 2050
(By region. Compared to Reference Scenario)

 Without financial constraints, global production
would increase by 9.8%, while with constraints it
would decrease by 3.7%.
 Regardless of financial constraints, the production
value will decline in economies such as the Middle
East, which is highly dependent on mining (fossil
fuels).
 Advanced economies are more likely to enjoy
green growth, while developing countries are not.

Changes in production in 2050
(By industry. Compared to Reference Scenario)

 Regardless of financial constraints, theproduction value of mining and energy supply
related to fossil fuel will decrease.
 GDP accelerates by an average of 0.4% a year
without financial constraints and decelerates
by 0.1% with constraints(IEA analysed acceleration of 0.4% in the 2020s intheir Net Zero Emissions by 2050 Scenario *).

* IEA (2021), Net Zero by 2050 - A Roadmap for the Global Energy Sector

32

Conclusion
 Although “green growth” is expected in green investment, many economies are unable to enjoy it if
there are financial constraints.
 Regardless of financial constraints, advanced economies are more likely to enjoy green growth, whereas
emerging and developing economies are not. In the real world, there are advanced economies withmoney to spare and developing economies without money to spare, and the economic gap between thetwo can become wider.
 In order to raise funds smoothly, it is necessary to utilise green finance, which mainly consists of private
funds, as well as government budgets. It is important to clarify the direction of environmental policy inorder to limit risks and encourage investment.
 Regardless of financial constraint, economies highly dependent on fossil fuel exports are negatively
affected. It is necessary to break away from dependence on the fossil fuel industry, and re-education(reskilling) of workers will be important for smooth labour movement from declining industries to otherindustries.

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 In a world striving for a low-carbon society, new disparities between economies or industries may arise.
It is important to limit negative economic impacts and to even out the different impacts among
economies and industries. If the availability of funds lead to greater inequality, it is also necessary foradvanced economies to provide financial support to emerging and developing economies that cannot
afford it.

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Thank you for your attention.

IEEJ © 2022

Co-authors
Hiroshi HASHIMOTO

Gas Group, Fossil Energies & International Cooperation Unit (1.1)

Yoshikazu KOBAYASHI

CCUS Group, Fossil Energies & International Cooperation Unit (1.3)

Junichi OGASAWARAElectric Power Industry & New and Renewable Energy Unit (2.1)

Kenji KIMURA

Nuclear Energy Group, Strategy Research Unit (2.2)

Yoshiaki SHIBATA

New Energy System Group, Electric Power Industry & New and Renewable Energy Unit (3.1)

Shigeru SUEHIRO

Econometric & Statistical Analysis Group, Energy Data and Modelling Center (3.1, 3.2)

Contact : report@tky.ieej.or.jp34