Publisher’s Note

Post-Paris Accord Prospects — the Role ofInternational Governance & of the Market
By Kazumasa Kusaka
Some 90% of CO2 emissions have their origin in the production
and use of energy. So when we contemplate ways to achieve ourclimate goals, we naturally have to discuss the future of energy.
Even the energy sector itself knows that fossil fuels are depletable
resources, though it does not know when this depletion will occur.
Markets are good at finding efficient solutions in resource
allocation for a short period, but the question is how good are theywhen it comes to intertemporal resource allocation. So both theenergy and environment communities need to work together fromlong-term perspectives.
When we look back at the transformation of Japanese energy
policy, it reflects the policy needs of the time which markets alone
cannot meet. In the 1960s, coal-to-oil fuel substitution was thetheme; then the two oil crises hit in the 1970s and the key theme
became “alternatives to oil”. In the 1990s, regulatory reform for
more competitive energy prices and the goals of the United Nations
Framework Convention on Climate Change were the priorities.
Then the Great East Japan Earthquake and Fukushima nuclear
accidents put safety and supply security at the top of the agenda.
And now, the shift to low-carbon energy systems is the challenge
towards 2030 and 2050, though the features differ. For 2030, a setof concrete policy measures will aim to achieve the targets, whilefor 2050 the plans are an “ambitious vision” in the United States, a“possible path” in France and a “direction” in Germany. Why are
they so ambiguous?
Actually, 2030 is too short a period for power stations to bereplaced, or for buildings and automotive fleets to be fully replacedby revolutionary technology. We have to rely on the best known
available technologies. For Japan, zero-emission power sources,
i.e. renewable and nuclear, have to be increased, while electricity
should be competitively priced. The good news is that, in spite ofpessimism among the energy community, newcomers from outside
and IT technology have a big role to play in demand side priceresponsiveness which is now exploitable through regulatory reform
and technology.
In regard to 2050, long-term thinking is required. The gap
between ambition and reality can only be filled by revolutionary
unknown technologies.
To enhance awareness in society and spur political action forstop-gap measures, it is eye-catching to emphasize extreme
weather events, even though a 2012 Intergovernmental Panel on
Climate Change report points out that long-term trends ineconomic disaster losses, adjusted for wealth and population
increase, have not been attributed to climate change. However, forlong-term sustainable commitments, we rather need solid andhttps://www.jef.or.jp/journal/

scientifically supported analysis, as well as correspondingly
effective measures.
Also, as Professor Wilfred Beckerman writes in Through GreenColored Glasses: Environmentalism Reconsidered (1995), there is
no choice between environment and development. Development isnecessary to acquire the capacity and resources to address theclimate challenge, especially in developing countries. “Sustainabledevelopment” is not just the environment, but about development
consistent with the environment, as Sustainable Development
Goals (SDGs) adopt a holistic approach. Achieving the 17 SDGs
requires significant investment reoriented to address them.
Where are we now with regard to international governance?
Regarding the Paris Accord, a “bottom-up pledge and review
mechanism”, the so-called Nationally Determined Contribution(NDC) process, has been agreed. However, implementation
guidelines, the so-called Rule Book, have still to be negotiated andagreed under the adverse circumstance of the declining presence of
the US. There are two main elements to consider. How commonand how differentiated should the guidelines be between OECD
countries and most developing countries? And how much financial
assistance should be given? Whether detailed rules with much
substance can be agreed upon at the upcoming COP24 inKatowice, Poland, in December is not certain.
And even as we accelerate our efforts towards a low-carbon
society, there seems to be a gap between ambition and reality.
Regardless of President Donald Trump’s policies, we are making
some progress in ambitions because of the positive development in
Chinese commitment, the declining costs of renewables, and theattitude of the private financial sector, such as the Task Force on
Climate-related Financial Disclosures. But in reality, although thedirection is right, whether the targets of 1.5-2.0 C and net zeroemissions in the latter half of this century can be achieved is notcertain. Especially in developing countries climate change is not a
top priority, but only one of the SDGs.
This is the challenge in how to obtain optimal long-term
solutions in the market economy. There is a need to mobilize
various players, both domestic and global, in an inclusive manner,and not just in economics but also politically and socially. In otherwords, no government alone can achieve the climate goals; butneither can any single president stop the progress.
Kazumasa Kusaka is chairman and CEO of the Japan Economic Foundation(JEF), as well as being a professor of public policy at the University of Tokyo. He
previously served as special advisor to the prime minister on global warming
after having been vice minister for international affairs at the Ministry ofEconomy, Trade and Industry.
Japan SPOTLIGHT • July / August 20181