Institute for Sustainable Energy Policies
Toda Bldg. 4F, 1-21, Yotsuya, Shinjuku, Tokyo, JAPAN, Phone: +81-3 5366-1018, FAX: +81-3 3358-5359, www.isep.or.jp

5 December 2002

Japan’s energy policies: the need for stable promotion policy for renewables
The In-Depth Review of Japan’s Third National Communication
Under the United Nations Framework Convention on Climate Change

Mika Ohbayashi
Director
Institute for Sustainable Energy Policies

Overview: Japan’s Energy Situation
Japan’s primary energy supply heavily relies on fossil fuel, more than 50% is from oil(87.1% of oil is from Middle East, 2000). Dependency on oil has been reduced in these 10 years, but
the dependency on coal and nuclear has increased, as well as natural gas. In the electricity sector,
Japan has been aggressively promoting nuclear power, in the 90’s, Japan added 15 nuclear power
plants in their operations.
See attached profiles;
1. Japan’s primary energy supply in 1990 – 2000
2. Transition of Japan’s primary energy supply from 1990 to 2000
3. Japan’s energy R & D budget in 1999
Japan’s Renewable Energy Policies
Energy supply and demand structures in Japan are very centralized. The “pillar” of thenational energy strategy is oil, and the national government has been seeking alternative sources ofenergy, such as nuclear power. In those Japanese contexts, renewable energies are regarded as analternative energy source, included in the category of “new energy.” In this category, municipal
waste generation, natural gas fired CHP, clean energy vehicles, etc., are also included, but without
geothermal and hydro. Renewables, such as solar, wind and modern biomass are not evaluated theirenvironmental and socialistic benefits, but regarded as an “appendage” to the national energy supply,and has mainly been focused on research and development, but not on practical promotion.
A Small Daybreak of Renewables in Japan
Backed by heavy industries and the central government, the promotion of PVs was started,in 1994, the government started financial support for the installation of PVs on indivisual roof tops.
Combined with the utilities’ voluntary program; purchasing of surplus of electricity from individual
PV generation, this subsidies scheme significantly succeeded, and now Japan’s installation andshipment of PV system marked No.1 in the world.
On the other hands, despite the recent breaking records of expansion of wind power in othercountries and high potential of resources, however, Japan’s policy for wind power still remains
ambiguous.
There we can consider several explanations for the context; 1. the governmental support
scheme for renewables are based on subsidies scheme for installation, not based on the efficiency of

the power plants, the innovative competition in the industry or energy provider including local
authorities has not occurred. This also made very bad examples of inefficient wind power plants(discouraging wind power providers to get into market once they installed power plants), 2. eachwind power manufacturer is basically small, the Japanese big industries are not interested in themarket (luck of pressure from industries), 3. structure of Japan’s transmission systems are very
centralized, and need additional investment to change into discentralized energy system (possessionby the utilities which own transmission systems), etc. Those backgrounds bring uncertainties ofwind power market and disinterests of investors for the market, but some wind power providers haveentered to the market, wind power capacity in Japan has been doubling for these several years.
1997: Long Term Purchase and Contract for Commercial Wind Power
1999: Tendering for Commercial Wind Power ( in Hokkaido)
2000: Tendering for Commercial Wind Power more than 20MW (all ten utlitites)
2003: Governmental Quota + trading electric credit system to be introduced in April
See attached profiles;
4. Production of PVs and Wind Turbine by Countries
5. Expansion of Wind Power Capacity in Japan
New New Energy Policy in JapanThe Japanese government decided to introduce Quota system for electricity fromrenewables in 2003. This obliges power suppliers, mainly utilities, to supply electricity fromrenewables at certain percentage. The target is set for 1.35% in electricity supply in 2010.
Definition of renewables under the governmental scheme is as followings; PV, wind, small
scale hydro less than 1MW excluding dam and pumped storage, modern biomass, the portion ofbiomass from municipal waste generation and geothermal (but no new additional capacity).
Last year, the government decided the target of each renewable resource in 2010, but under
the new scheme, renewable energies have to compete each other under the same condition at themarket. Renewables have very different peculiarities, the combined quota is not appropriate to be
introduced in the market at the initial stage such as we have in Japan. Also, the government will
dominate the trading system and not disclose the status of trading. Some fears that it brings
disinterests of investors and domination by utilities have much potential in their own supply area.
And also, some afraid that even this low target will not be reached, or it will be reached but with waste
incineration.
Japan is still at very initial stage in renewable energy promotion, so we believe that we needmore stable scheme encourages investments flow into the renewable energy market. It also needs toharmonize with other environmental policies and to encourage public participation in the energy
policies.
See attached profile:
6. New Energy and Geothermal