Recommendationsofthe EU-Japan Business Round Table
to Leaders of Japan and the European Union
Tokyo, 20 April 2018
Working Party 4
Energy, Environment, and Sustainable Growth

Working Party Leaders:Dr. Mark Pleško
President
Cosylab Inc.

Mr. Norihiko Ishiguro
Senior Executive Vice President
NEC Corporation

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Introduction
Japan and the EU would like to support the Paris Agreement which came in force inNovember 2016. An international framework of the Agreement is promised by all major
emitters, including developed, emerging and developing economies, for engaging in
global warming countermeasures. Currently, parties are negotiating to work out
detailed rules by 2018 towards its implementation in 2020.
However, with the announcement made in June 2017 by U.S. President Trump that
the U.S. would withdraw from the Paris Agreement, there is increased uncertainty
regarding the effectiveness and international fairness of the Agreement.
Despite the US decision, moving backwards on climate protection is not an alternative.
The EU and Japan should stay fully committed to implementing the Paris Agreement.
Japan and the EU need to continue to comprehensively analyze how U.S. climatechange and energy policies will affect international competition on an equal footing
and energy security as well as the impact that they will have on international
coordination and cooperation on global warming countermeasures, and to address
such impacts strategically. Not only is there time before the U.S. can officiallywithdraw from the Paris Agreement, the U.S. has declared that it will continuallyparticipate in international negotiations including the COP23 talks. Therefore, Japanand the EU should join forces with other major economies to persistently convince
the U.S. to remain in the Agreement, maintain partnership with the U.S. in areas
within the COP framework where they can be collaborative, and identify areas ofcooperation which can add momentum to the drive against global warming.
KEIDANREN (Japan Business Federation) also released a set of countermeasures
for global warming issues in October, 2017.
Today, developing countries account for approximately 60 percent of global
greenhouse gas emissions, and all emitters are required to contribute to reducing
emissions on a global scale.
However, at the 23rd session of the Conference of the Parties to the United Nations
Framework Convention on Climate Change (COP23), some developing countries
argued that implementation of the Paris Agreement should be differentiated between
developed and developing countries and pushed for broadening the scope of theguidelines. Developed countries opposed to these arguments, but the guidelines
should promote all countries' efforts on climate change and should not be bifurcated.
The issue of climate change is one that must be addressed through the cooperation of
all countries and people. Amidst the recent inability of international conferences tocome to conclusions on other important issues requiring international-level discussions,the fact that the Paris Agreement was agreed upon by countries around the world insuch a short period of time makes it particularly noteworthy. To ensure that all major
emitting countries ratify this agreement, as well as to enhance its fairness andeffectiveness, it will be imperative to establish a system with which the promises madeby each ratifying country and the fulfilment of these promises can be monitoredinternationally and gap closing actions can be considered as necessary.

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On December 12, 2017, One Planet summit convened by France jointly with the United
Nations and the World Bank was held in Paris for discussing three areas (1) tocommemorate the second anniversary of the adoption of the Paris Agreement andmaintain momentum for expanding support for the Agreement, (2) to confirm theimportance of climate finance and pursue the “greening” of public finance and private
finance; and (3) to share good practices and lessons so that countries and various
actors will pursue low-carbon and resilient economies.
Japan and the EU will not only need to steadily implement the domestic measures thatserved as the basis for the formulation of their intended nationally determined
contributions (INDC) but also undertake the tasks of developing low-carbon
technologies and transferring technology to developing countries with significant
potential for making reductions, with support from international institution.
The energy scenarios through multiple future pathway of global energy situation in
Japan and the EU should be basically outlined by an integrated approach to achieve
the energy-related aspects of the UN Sustainable Development Goals: determinedaction on climate change; universal access to modern energy and a dramatic
reduction in air pollution.
Climate migration is already happening. Between 2008 and 2015, an average of 26.4
million people per year were displaced by climate- or weather-related disasters,
according to the United Nations. With increasing temperatures, heat waves andextreme weather events are likely to increase in frequency, intensity, duration andcause more harm and death.
These impact human health, livelihoods, and stability of the broader economy andsociety.
Sea levels of the pacific islands are extremely vulnerable, as are more than 410 cities
around the globe, including Amsterdam, Hamburg, Lisbon, Mumbai, etc.
Climate change is already causing mass human migration. The International
Organization for Migration fears that the scale of such movement will rise, with
unprecedented impact on lives and livelihoods. Parts of western Asia, for example,
are likely to become inhospitable for humans by the end of this century, withtemperatures projected to exceed the human adaptability threshold.
Temperatures exceeding 45 degrees Celsius will become the norm in most low-lying
cities and could go as high as 60 C in Kuwait, Al Ain and Doha during late summer
months.
For Japan and the EU, it will be crucial to carry on with efforts to secure safe, stable,
economical, and sustainable energy. The governments, enterprises, industries, andcitizens of Japan and the EU must not only prepare for natural disasters that could
potentially occur in each region as a result of global warming and implement crisis
management measures but also address energy system reform, the reduction ofenergy demand and greenhouse gases, and the resolution of environmental
conservation and other problems.

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Recommendations from both
European and Japanese industries
WP-4/#01/EJ to EJ Change and harmony in the areas of energy and theenvironment
Diversification and destabilization of resource- and energy-supplying regions:
Today, the global energy market remains vulnerable to a wide range of risk factors,
including natural disasters, major technical accidents, and geo-political tensions.
The shale revolution in the United States and new demand and investment trends in
the Middle East and Asia are recasting traditional patterns of global oil trade, with
global implications for energy security. The Middle East is set to remain, by far, thelargest global crude-exporting region, but the availability of additional crude from thisregion for international trade is being squeezed by rising domestic consumption andnew local refinery capacity. The largest increase in crude export comes from North
America, propelling the region above Russia, Africa and South America in the global
rankings. On the importers side, Asia’s crude oil import requirement grows by amassive 9 mb/d, drawing in available supply from around the world. Taken together,
these trends imply the need for a fresh look at oil security and how best to achieve it.
Asia accounts for the lion’s share of oil demand growth over the coming 25 years
and, unsurprisingly, the same is true for crude oil imports. According to WEO-2017
report, Asia’s combined crude oil import needs rise by 9 mb/d to around 30 mb/d by
2040, with strong growth in China, India and Southeast Asia more than offsetting
declines in Japan and Korea. Asia’s share of global crude oil imports therefore will rises
from 50% today to more than two-thirds by 2040.
We still have seen signs of sectarian violence and terrorism even in Middle Easternregions that have been comparatively stable up until now. The governments of Japanand EU countries will continue their efforts to strengthen cooperation among membersof the international community to improve regional peace and energy security.
The significant impact of the destabilization of energy prices on Japan and EU
countries that import energy:
Growing dependence on oil from the Middle East, the world’s low-cost resource
superpower, means that the risk of a sharp rebound in price in the event of shrinking
oil investment would offset the economic benefits. And if the price drops to such a levelthat it does not bring investment to the supply sector, there will also be growing concern
over the stable supply of natural gas. Furthermore, the effective use of bio fuelsremains a question mark, and there has been a major impact on investment in energy
efficient technologies and energy conservation measures. Also, in the unlikely eventthat a resource-rich country was to fall into a national financial crisis, it could lead to
growing geopolitical risks and the potential reinforcement of terrorist organizations.
Although declining resource prices have contributed to the short-term improvementof trade deficits in Japan and EU countries, it is important for these countries to fully
understand the impact that the stabilization of resource prices can have on energy
security, energy conservation, and energy efficiency, and to act accordingly.
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The impact of rising energy demand in newly developing countries on national energy
policy changes and resource prices:
At COP21, expectations were high for efforts toward the introduction of energy
systems that are not only less carbon intensive but also more efficient.
According to WEO-2017, global energy needs rise more slowly than in the past but
still will expand by 30% between today and 2040, the equivalent of adding another
China and India to today’s global demand. The largest contribution to demand growth– almost 30% – comes from India, whose share of global energy use rises to 11% by
2040 (still well below its 18% share in the anticipated global population). Southeast
Asia is another rising heavyweight in global energy, with demand growing at twice
the pace of China. Overall, developing countries in Asia account for two-thirds ofglobal energy growth, with the rest coming mainly from the Middle East, Africa andLatin America.
Japan and the EU are committed to working together to stabilize resource prices andimplement energy mix policies suitable for regional needs that will enable companies
to continue their business activities in a stable manner while contributing to worldwide
efforts against global warming.

WP-4/#02*/EJ to EJ Basic energy policies
Harmonization of supply stability, economic efficiency, the environment, and safety
standards:
Energy forms the foundation of economic activities. Efforts to reduce energy demand
while at the same time ensuring the stable supply of energy and proper electricity rates
are not only critical to business operations but also have a profound impact on thecreation of new business opportunities. It is also important to give due consideration
to environmental load. Based on this perspective, the governments of Japan and EU
countries should carefully consider the future role of nuclear power generation toachieve CO2 reduction of Paris Agreement.
Cooperation with other countries from a global point of view:
In regard to the energy demand and supply structure of the world, changes indemand are occurring primarily in Asia, and the diversification of energy sources suchas natural gas, renewable energy, and nuclear power is becoming more pronounced.
Meanwhile, the impact on the global environment is being exacerbated, and energy
issues are becoming even more complex.
Amid these circumstances, Japan and the EU must promote a framework for a morecomprehensive collaborative alliance from the viewpoints of energy and theenvironment.
As such, it will be imperative to not only deepen our relationship with the IEA and
IAEA but also strengthen cooperation by exchanging information with our European
counterparts in various international committees.
Medium-, and long-term energy strategies:
The sustainable development scenario should be an integrated way to achieve arange of energy-related goals crucial for sustainable economic development: climate
stabilisation, cleaner air and universal access to modern energy, while also reducing
energy security risks. Core scenario should be the achievement of an early peak in
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CO2 emissions and a subsequent rapid decline, consistent with the Paris Agreement.
In a faster transition scenario, how policies could push an even more rapid andsteeper decline in CO2 emissions and limit climate risks further.
The key to this will be to balance economic growth with the reduction of CO2 emissions.
And while the decision to engage in global efforts to cut CO 2 emissions was made at
COP21, it will be essential to ensure that these efforts are paired with economic growth
to make it possible to move forward with them in an attractive and sustainable manner.
Achieving a stable supply of energy through a multi-layered energy supply structure:
An overarching theme is that in the real world there is no single energy transition
policy package that fits all countries – national policy objectives and constraints will
shape each jurisdiction’s policy mix.
There are invariably advantages and disadvantages to the adoption of every energy
source, and there is no form of energy that provides complete satisfaction from theview point of stability, environment and economic efficiency. In view of this, a multilayered energy supply structure capable of functioning not only during times of peace
but also in emergencies should be established.
WP-4/#03/EJ to EJ Fossil fuels
Advantages and disadvantages of oil, natural gas, and coal:
Although fossil fuels are known to emit greenhouse gases, they do excel today interms of economic efficiency and supporting grid stability against a backdrop ofincreasing portion of renewable energy sources. Progress is currently being madetoward the development and commercialization of highly efficient lower-carbon
alternatives, and governments should be providing support for these development andcommercialization efforts, as well promoting the use of these alternatives in developing
countries.
Natural gas supplies 22% of the energy used worldwide, and makes up nearly aquarter of electricity generation, as well as playing a crucial role as a feedstock forindustry. Natural gas is a versatile fuel and its growth is linked in part to its
environmental benefits relative to other fossil fuels, particularly for air quality as well as
greenhouse gas emissions.
In the United States, plentiful supplies maintain a strong share of gas-fired power inelectricity generation through to 2040, even without national policies limiting the useof coal. But 80% of the projected growth in gas demand takes place in developing
economies, led by China, India and other countries in Asia, where much of the gas
needs to be imported and infrastructure is often not yet in place. Efficiency policies
also play a part in constraining gas use: while the electricity generated from gas
grows by more than half to 2040, related gas use rises by only one-third, due to morereliance on highly efficient plants.
A new gas order is emerging, with US LNG helping to accelerate a shift towards amore flexible, liquid, global market. Ensuring that gas remains affordable and secure,beyond the current period of ample supply and lower prices, is critical for its longterm prospects.
Coal supplies a third of all energy used worldwide and makes up 40% of electricity
generation, as well as playing a crucial role in industries such as iron and steel.
Coal use will continue to be significant in the future.
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Coal is under pressure in many regions of the world for concerns about air pollution
and significant greenhouse gas emissions. It is being squeezed out in power
generation by cheap (except LNG) and abundant natural gas and fast-growing
renewables, whose costs are also plummeting on a world scale.
In light of the Paris Agreement, we can anticipate greater diversification in powersources that will gradually lower dependence on coal in power generation, a longterm transition that must be anticipated. However, the scale and speed of change
across the globe must reflect national circumstances, notably in terms of affordability
and securing access to energy. Where new investments in coal-fired power are stillplanned, it is essential that they use the best available and most efficienttechnologies.
Japan and the EU should collectively contribute to countermeasures against global
warming by supporting when necessary the introduction of thermal power technology
characterized by high efficiency and lower CO2 emissions, such as ultra-supercriticalcoal-fired thermal power, gas-fired combined cycle thermal power, etc.
It should also be noted that fossil fuels remain low in price as a form of thermalenergy in developing countries. Among other technologies, gas-fired power plants canprovide for security of supply and bring strong benefits on flexibility to the energy
landscape, in particular with a growing share of intermittent renewable energy sources.
Carbon capture and storage (CCS) technologies are expected to play a significant partin the global climate response. Following the ratification of the Paris Agreement, theability of CCS to reduce emissions from fossil fuel use in power generation andindustrial processes – including from existing facilities – will be crucial to limiting futuretemperature increases to "well below 2°C," as laid out in the Agreement. CCS
technology will also be needed to deliver "negative emissions" in the second half of the
century if these ambitious goals are to be achieved. Japan and the EU should
contribute to the development of CCS technologies and support their advancement.
WP-4/#04/EJ to EJ Nuclear power
Nuclear power has been one of the largest contributors of carbon-free electricity
globally. There is keen interest in nuclear power generation from the viewpoints ofpromoting measures against global warming and stably securing energy that is lesssusceptible to fluctuations in fossil fuel prices.
However, if we attempt to achieve this without nuclear power, the cost of doing so will
increase dramatically. At the same time, it would lower the feasibility of achieving thisaim, and we therefore believe it will be impossible to reach the COP21 objective
without the inclusion of nuclear power generation. WEO-2017 report expects about$1.1 trillion of investment in nuclear power by 2040 leading to an increase of nuclear
power production of around 46%. While significant, nuclear’s share of power
generation declines to 10 percent, and the increased output is currently less than halfof what is assumed in the sustainable development scenario. Furthermore, growth isquite concentrated, with about 93% of the net production increase accounted for by
two countries: China and India.

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A critical and competitive base-loaded power supply in regions without energy
resources:
Safe nuclear power generation plays an important role in the energy mix for Japanand the EU. Moreover, it contributes to giving Japan and the EU a competitive edge,
securing a low-cost base-load power source, ensuring grid stability, achieving
economic growth, and creating jobs.
Rising expectations for nuclear energy and the importance of education and training
on ensuring safety and future R&Ds:
Japan and the EU must cooperate to universalize lessons learned from the
Fukushima nuclear accident in an efficient and transparent way, as well as provide
technology development, education and training in order to ensure the complete safetyof nuclear power generation.
Replacement of current nuclear reactors with safer ones:
The latest nuclear reactors provide a technologically high level of safety, are being
explored as a possibility for inclusion in the energy mix of the future, and should beconsidered for use in replacing aging nuclear reactors in Japan and the EU. The
construction of nuclear reactors in Japan and the EU utilizing the latest models should
be used as a reference for the export of nuclear power technology by Japan andEuropean countries to third countries.
Developing decommissioning technologies and methodologies:
Japan and the EU hold a large part of the worldwide inventory of the aged nuclear
reactors which will be subject to decommissioning. Establishing decommissioning
technologies and methodologies for safety and minimum environmental impact is an
obligation of Japan and EU and precondition to enhance credibility of nuclear schemesin the general public, and promote nuclear power technology to third countries. Japanand EU should therefore promote an R&D program for collaboration on thedevelopment of methods for nuclear power plant decommissioning.
Finance & Support:
To achieve the highest possible safety standards, we would like to request thatJapan and the EU not only promote investment in nuclear energy but also request that
the World Bank, European Bank for Reconstruction and Development (EBRD),
European Investment Bank (EIB), Asian Development Bank (ADB) and JBIC provide
financing to support programs dedicated to ensuring the full safety of nuclear power.
Security measures:Japan and the EU should cooperate in facilitating the effective implementation ofinternational nuclear safety standards and security measures at bilateral meetings andmultilateral meetings on nuclear power. These standards should capitalize on lessons
learned through the operational experience of the parties.
WP-4/#05*/EJ to EJ Renewable Energy
Renewable energy is expected to play major role in the transition to a less carbonintensive and more sustainable energy system. Renewables have grown rapidly inrecent years, accompanied by sharp cost reductions for solar photovoltaics and wind
power in particular on a world scale. The IEA expects renewable electricity generation
to increase by a more than one-third by 2022. However, renewable heat and transport
are lagging behind, despite good potential.
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As the rapid deployment and falling cost of clean energy technologies are
mentioned in WEO-2017 report, growth in solar PV capacity was larger than for any
other form of generation in 2016 and costs of new solar PV have come down by 70%,wind by 25% and battery costs by 40% since 2010.
Renewable sources of energy meet 40% of the increase in primary demandthrough their explosive growth.
Renewables capture two-thirds of global investment in power plants as they
become, for many countries, the least-cost source of new generation. In theEuropean Union, renewables account for 80% of new capacity and wind power will
becomes the leading source of electricity soon after 2030, due to strong growth both
onshore and offshore.
Policies continue to support renewable electricity worldwide, increasingly throughcompetitive auctions rather than feed-in tariffs, and the transformation of the power
sector is amplified by millions of households, communities and businesses investing
directly in distributed solar PV. Growth in renewables is not confined to the power
sector; the direct use of renewables to provide heat and mobility worldwide also
doubles, albeit from a low base.
Advantage and disadvantage of renewable energy:
Although the role of renewable energy in the reduction of CO 2 emissions andachievement of energy security cannot be denied, integration into the grid and stabilityof supply remain major issues to address. Despite its potential to complement
traditional energy, it will require a smart and integrated power distribution network andthe development of energy storage solutions.
Currently there are various options for renewable energy, including wind, solar,hydro, geothermal, tidal, and biomass. However, other than hydroelectric power, which
can provide a certain level of base power, these power sources are affected by regional
appropriations. Thus, there are remaining economic, efficiency, environmental, safety
and stability issues that need to be addressed, pointing to the need for further
discussions while their uptake is being realized.
Despite slower capacity growth, hydropower will remain the largest source of
renewable electricity generation in our forecast, followed by wind, solar PV andbioenergy.
To overcome these challenges, it is imperative to: Comprehensively develop the adoption of highly distributed renewable energy
sources.
 Drive down the total costs for renewable energy in comparison with othertraditional energy sources, including all indirect costs of CO2 emission.
 Keep the appropriate level of subsidies or incentive schemes for renewableenergy technologies while phasing out subsidies for fossil fuels.
 Promote research on immature renewable energy technologies towards theircommercialization.
Feed-in tariff system in Japan
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There have been many cases wherein permits have been secured under the
renewable energy feed-in tariff system (FIT) in Japan but the project did not actually
become operational for some application programs, leading to concerns regarding thehigh burden on citizens and the prevention of entry of latecomer energy producers thatoffer lower costs and higher performance. In particular, in regard to the FIT for solar
power systems, which are being introduced at a rapidly increasing rate, there is a need
to formulate schemes to encourage producers to find ways to lower costs from theperspective of lowering the burden on citizens.
FIT cost in 2017 for renewable energy in Japan reached around $25Bil./year and theFIT cost in 2030 will expect around $34.6Bil./year - $37.4Bil./year, according togovernment’s preliminary calculation
Also, hydro, geothermal, and wind power, which are cheaper to generate but have
longer lead times for commercialization should be more encouraged to be adopted.
Furthermore, governments should evaluate a balance between feed-in tariff systems
and mitigation of national burden in Japan and EU states to stimulate renewableenergy.

WP-4/#06*/EJ to EJ Smart Grid and convergence of Electric distribution
networks with ICT
The growth of Renewable Energy Systems on the grids in the future will to a
substantial degree occur in dispersed energy production. This will in turn favour local
balancing of energy flows on the grid as opposed to centralized transmission system
operators (TSOs) controlled balancing. The trends to achieve this are throughautomatic trading of energy flexibility by prosumers, dynamic pricing of energy basedon local conditions, and maximisation of adaptability potential by harnessing virtual
energy reservoirs in processes. Local sustainability and uninterrupted energy supply
to remote areas in case of natural disasters drives grid planning towards possibilities
for island operation of electric micro grids. The growing role of prosumers, smart grids,
micro grids, energy storage and e-mobility requires a different distribution of roles andresponsibilities in the value chain of electricity production, transmission, distribution
and retail. All these trends will have to ultimately result in a multitude of load balanced
smart micro grids, which are in turn connected to the main grid, supported by state-ofthe-art ICT such as internet of things, big data, etc.
Energy storage batteries:
Along with the spread and expansion of renewable energy, grid stability, peak shiftof power consumption, stable power supply need to be dealt with.
Since it is expected that the demand for storage batteries will be greatly expanded in
the future, harmonization of safety standards for storage batteries, standardization andunification of test protocols, and/or introduction of mutual certification system should
be promoted between Japan and EU.
Storage batteries contribute to the stabilization of the energy supply-and-demand
structure through the storage of convenient power and the ability to use it anytime,
anywhere. As a technology for long-term and large-scale storage of power, thehydrogen energy storage system should be more widely utilized for the efficientutilization of power.
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Due to the development of the smart grid, storage battery applications are expected
to expand further to include vehicles, residences, buildings, and commercial
establishments. Japan and the EU must continue to work together toward loweringcosts and increasing efficiency through technological development andstandardization, while also monitoring the “cradle to grave” environmental impact ofbatteries.
On the other hand, the uptake of renewable energy has led to instability of the power
grid due to the increase in distributed power sources. Systems for maintaining stability,
however, are prohibitively expensive. Recently, the use of cloud and ICT has made it
possible to intensively gather data and carry out control at lower costs. Also, in regard
to storage batteries, technologies to prevent imbalances that prevent further charging
due to having one battery depleted and another fully charged are being developed. It
is imperative to proactively make use of the micro-grid and ICT that enable handlingefficient power sources, such as solar power generation.
Measures to be taken are:1) Strengthening the positive role of highly distributed residential and small
commercial photovoltaic (PV) installations for self-consumption to reduce costly
investments in power distribution network and new big power generators. This
will also reduce the need in harmful environmental interventions.
2) Promote smart functionality of PV inverters through regulatory requirements
3) Improvement of power quality and stability through smart grids and micro gridswith battery storages.
4) Unify EU/JAPAN technical standards for highly distributed residential and small
commercial PV installations and make them comparable to the high standards
set by the newest USA rule 21/2017 regarding power quality and fire safety(such as rapid-shutdown regulation).
5) Prepare concrete action plan for financial stimulation and promotion of highdistributed on-site smart grid green power generation in connection with emobility penetration.
WP-4/#07/EJ to EJ Effective use of biomass resources
In order to make the shift from fossil to biomass resources as raw materials for awide range of uses and therefore achieve significant reduction in greenhouse gas
emissions, technologies and processes to competitively convert biomass into fuel,such as cellulosic ethanol, bio-gasoline and biogas, or useful chemicals must be
developed and become more widely adopted. It is a positive example of a circular
economy.
Fast-tracking the practical and economical utilization of technologies that convert
waste products, wood-based biomass, and other non-edible plant resources into fuelor useful chemicals requires strengthening of government support for collaborative
R&D and technical trials between private-sector companies and academic institutionsin Japan and the EU. Further, promoting the uptake of products manufactured using
the above technologies requires the implementation of a sustainable, effective, andtransparent framework for providing subsidies and tax incentives for biomass-derived
fuels and chemicals until they can become self-justified.

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International standardization of evaluation methods, classification schemes, andlabelling procedures are also necessary to enable a stable and profitable uptake ofbiomass-derived products at the global level. In labelling for example, although there
are internationally defined environmental labels (Type I, II, and III), compliancestandards vary among different countries.
Standardization of the certification criteria for labels will make it possible to have
universal labels that can be used worldwide. This will lead to the establishment ofmarket reliability of biomass-derived products and pave the way for their stable andprofitable uptake. Also, linking environmental labels with requirements/conditions fortax incentives and public procurement can serve as an impetus for the further spreadof the use of biomass-derived products. To enable Japan and the EU to agree on andlead the way in establishing international standards for evaluation and labellingsystems, both governments must pursue the harmonization and mutual recognition of
their respective regulations.
WP-4/#08*/EJ to EJ Energy conservation & energy efficiency
Energy conservation is an initiative aimed at fulfilling the need for economic
efficiency, environmental compatibility, and energy security, and industries in Japanand the EU should make every possible effort to develop and promote the use ofenergy conservation technologies.
At the same time, it is also important to ensure that excessive investment burden is
not placed on companies nor that production suppression is imposed on them for thesake of achieving unequal energy conservation effects.
The promotion of energy conservation will require the strengthening of research anddevelopment and improvement of public awareness of energy conservation.
Strengthening of energy conservation in each field:
One area in which energy conservation effects are foreseen in the residential andbusiness fields is the use of insulation materials and high-performance windows asenergy conservation measures in houses and buildings.
Energy conservation technology for electric appliances and equipment, such as
refrigerators, air conditioners, servers, and LED lighting, is also evolving. In thetransportation field, advancements are being made in the energy efficiency andreduced environment footprint of automobiles through the development of EV, PHEV,
clean diesel, and hydrogen fuel cell vehicles (FCV). Japan and the EU shouldcollaborate on standards to take the lead in promoting market introduction of thesetechnologies, and their supporting infrastructures. Alignment and simplification ofrelated standards and regulations must also be promoted, as for instance the cost of ahydrogen refilling station for FCVs is today significantly higher in Japan than in Europe
or the US.
Industrial energy efficiency has improved, with use of energy management systems
increasing Energy use per unit of economic output in the industrial sector fell bynearly 20% between 2000 and 2016. The magnitude of the declines is similar both in
IEA member countries and major emerging economies. In some energy-intensive
industries, such as aluminum smelting and cement manufacturing, average efficiency
has improved sharply as a result of rapid expansion in production capacity, especiallyin emerging economies, since new facilities tend to be much more efficient than old
ones. In these industries, efficiency gains help reduce the impact of volatile energy
prices on competitiveness.
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Buildings’ energy efficiency has improved, but far more is possible as energy
efficiency in buildings continues to improve. Efficiency improvements of 10% to 20%
are possible in most countries from appliances, equipment and lighting products thatare already commercially available. There is strong global momentum towards more
efficient lighting; by 2022, 90% of indoor lighting worldwide is expected to beprovided by light-emitting diodes (LEDs).
One commonality among all fields is that the introduction of energy management isalso an effective means to increase energy efficiency.
To increase the efficiency of energy, Japan and the EU must develop advanced
technologies that boost energy efficiency through best practices, and implement
stimulus measures such as investment in methodologies. At the same time, theseactions should be complemented by aggressive measures that will also have an impact
on technologies for soundproofing of buildings and stabilization of room temperature.
Prompt implementation of regulations for building standards and insulation of houses
will make it possible for the resulting highly energy efficient buildings and homes tocontribute to the lowering of energy consumption and expenditures, the reduction of
CO2 emissions, and the maintenance of good health at both a household and national
level.
Harmonization of standards and mutual accreditation of testing protocols to verify
the energy saving effect of components and materials should be implemented.
Energy efficiency is key to ensuring a safe, reliable, affordable and sustainableenergy system for the future. It is the one energy resource that every country
possesses in abundance and is the quickest and least costly way of addressing
energy security, environmental and economic challenges.
WP-4/#09/EJ to EJ Energy research and international cooperation
The reduction of greenhouse gas emissions and energy technology development
focused on the mid and long-term
Greenhouse gas emissions are impacting climate change and the environment,
thereby making this an issue facing all of mankind that requires international insight.
As such, the development of technologies capable of reducing greenhouse gas
emissions with the use of electricity produced using fossil fuels, non-fossil-fuelrenewable energy, and nuclear power deemed safe is becoming necessary on a global
scale, and it is imperative that the development framework be reinforced throughcooperation among industry, government, and academia.
Energy and the Sustainable Development Goals
Energy access is the “golden thread” that weaves together economic growth, humandevelopment and environmental sustainability. The adoption of the Sustainable
Development Goals in 2015, and the adoption of SDG 7.1 specifically – the goal toensure access to affordable, reliable, and modern energy for all by 2030 –established a new level of political recognition for energy’s central role indevelopment.
Improvements in technologies are offering new opportunities for making significant
progress on the SDG goal on electricity access. The combination of declining costs
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for solar and decentralised solutions, cheaper and more efficient lighting andappliances, and new business models making use of digital, mobile-enabled
platforms has increased the number of available solutions to cater to those currently
without electricity access. But many challenges remain, particularly for clean cooking.
Of the 1.2 billion people who have gained access since 2000, nearly all have gained
access via connection to the main grid, with 70% of people getting access with power
generated from fossil fuels (45% coal, 19% natural gas and 7% oil). However, thedeclining costs of renewables and efficient end-user appliances, along with
innovative business models financing electricity access, are all having an impact, andhave been transforming the energy access landscape, especially in rural areas. Overthe last five years, renewables have started to gain ground, as have off-grid and minigrid systems, and this shift is expected to accelerate. Over the past five years,
renewables (mainly hydro and geothermal) have been the source of over one-third of
new connections, and decentralised renewables are the source of 6% of newelectricity access.
Human resource development
To promote sustainable efforts aimed at achieving the goal set by all ratifying nationsof the Paris Agreement to reduce CO2, both Japan and the EU—as leaders in the fields
of energy and environmental technology—must forge ahead with ground-breaking
innovation.
In addition to contributing to the international society, sustainable innovation
activities like these are also conducive to economic growth. This is why a system forcontinuously training technical experts in energy-related fields through personnel
exchanges should be considered.
Innovative energy technology development cooperation
Japan and the EU should continue to support ITER (International Thermonuclear
Experimental Reactor and Latin for "the way") project, which is one of the mostambitious energy projects in the world today and 35 nations are collaborating to build
the world's largest tokamak in southern France, a magnetic fusion device that has been
designed to prove the feasibility of fusion as a large-scale and carbon-free source ofenergy based on the same principle that powers our Sun and stars.
WP-4/#10/EJ to EJ Efforts toward the prevention of global warming following theParis Agreement reached at COP21
The prevention of global warming is an issue facing all of mankind.
Since much of the world’s greenhouse gas emissions have already shifted fromdeveloped countries to newly developing countries, it will be impossible to prevent
global warming if only developed countries set targets for reduction.
We welcome the Paris Agreement as a framework through which all major emitting
countries, including the U.S. and China, are able to participate, and view it as anextremely important and historical first step that enabled all countries participating in
COP21 to set their own targets.
Going forward, it will be necessary to not only ensure that all major emitting countries
ratify this agreement and demonstrate their commitment to the full implementation of
the Paris agreement, as was established during COP 22 in Marrakech, but also
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establish a system with which the fulfilment of the promises made by each country canbe reviewed internationally from the perspective of enhancing fairness andeffectiveness. As was said in the introduction, we regret the US announcement to want
to withdraw from the Paris Agreement. It is important that the EU, Japan and all othersignatories (especially other major economies) stay committed, discuss theimplications of the US decision with their business communities as soon as possible,and devise ways of bringing back alignment among all parties.
Japan and the EU will need to undertake the tasks of developing low-carbon
technologies and transferring technology to developing countries with significant
potential for making reductions.
Visualization of emission reduction effects
A life cycle assessment (LCA) is a technology that can be used to evaluate theenvironmental impact made by a product at every stage of the product life cycle fromthe cradle to the grave. For evaluating low-carbon technologies and products by LCA,
the avoided emission of CO2 approach should be promoted through public-private
collaboration.
Contributions to global warming measures in Japan and the EU
The creation of a framework through which both developed and developing countries
can work together to achieve low-carbon growth will play a critical role in addressing
climate change issues. The outstanding technologies, products, and know-how
possessed by Japan and the EU will not only lead to the strengthening of innovationand sustainable development in both countries but also contribute to global warming
countermeasures on a global scale.
In particular, contributions utilizing ICT should also be considered. These include
continuous observation of the global environment using artificial satellites, radars,
sensors, and other equipment to monitor climate change, the use of supercomputersand other means for climate change prediction and research on the mechanisms
behind climate change, and the construction of a global earth observation system.
It will also be imperative to conduct research and development of technologies forcalculation and verification of greenhouse gas emissions and carbon dioxide captureand storage (CCS) in order to alleviate climate change.
Moreover, a bilateral offset mechanism will be an effective means for achieving
greenhouse gas reductions in newly emerging and developing countries where a sharp
rise in energy demand is becoming apparent. Japan and the EU must not only work
together with industry to design such a system but also clarify support measures.
In conjunction with measures like these to alleviate climate change, the governmentsof Japan and EU countries must open their doors to industry, provide easy-tounderstand explanations of adaptive planning, technology needs, and financial
assistance, and create an environment in which industry can easily participate.
Establishment of IPR protection
To promote commercial technology transfer, Japan and the EU must take measures
to ensure the creation of appropriate regulatory frameworks in countries to which
technology transfers are to be made and the protection of intellectual property rights.
It will be necessary to create appropriate regulatory frameworks to establish IPR
protection in newly emerging and developing countries, and governments in Japan andthe EU should introduce monitoring systems for the protection of IPR, provide
patenting assistance, and establish technology partnerships.
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WP-4/#11*/EJ to EJ
economyPromotion of resource efficiency and the circular

Although resource prices are declining in the short term, resource constraints arelikely to inhibit economic growth over the medium to long term. This is why it isimperative to improve the efficiency of resource use. In this light, Japan and the EU
welcome the progress being made through international-level discussions on resource
efficiency and the circular economy, including the establishment of the G7 Alliance on
Resource Efficiency at the G7 Summit at Schloss Elmau held in 2015. The
announcement of the EU’s adoption of a Circular Economy Package and the promotionof efforts to improve resource efficiency are also welcomed.
Discussions on resource efficiency and the circular economy go beyond recycling
and other aspects of the venous industry to cover a wide range of concepts impacting
manufacturers, service providers, and other companies to be recognized as arterial
industry, including the extension of product life, the sharing of services, and the goods
and services through operational billing. The discussion holds the potential to createbusiness opportunities that will lead to additional economic growth and job creation in
the future. The truth of the matter is that business is already doing a lot in both Europe
and Japan.
On the other hand, the pursuit of resource efficiency through exceedingly regulatory
approaches could inhibit economic growth. Therefore, it is desirable to choose anapproach that will lead to economic growth, such as promotion through voluntary
efforts by stakeholders with associated incentives and reasonable regulation. It will
also be imperative to pursue resource efficiency from the viewpoint of international
circulation system based on the fact that movement of secondary raw materials acrossborders is now the norm.
In view of the above, Japan and the EU should not only move forward with efforts
aimed at improving resource efficiency but also work together to formulate consistent
rules. In addition, Japan and the EU are expected to take advantage of the advanced
innovation and competitive edge in international market, which they possess in regard
to the institutional and technical aspects of resource efficiency and the circular
economy, deepen their cooperation and collaboration, and take the lead ininternational discussions on the future direction of the circular economy and resource
recycling, as well as on the creation of institutions and systems. In this regard, we arelooking forward to active discussions on resource efficiency and the circular economy
during coming G7 Summits.

WP-4/#12/EJ to EJ Promotion of global investments and nurturing of long-term
relationships
Amidst sharp fluctuations in the price of oil and other resources, continued
investment and strong economic collaboration in a wide range of fields will benecessary to secure stable and inexpensive resources in response to global risks.
When it comes to long-term sustainable energy policy, it is important to make thenecessary investments and ensure strong cross-border collaboration in order toachieve ambitious targets. Japan and Europe should therefore encourage direct
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investment from a transparent, open, and long-term perspective living up to thecommitments all parties made in the Energy Charter Treaty.
To promote the spread of energy conservation technologies and the like, it will be
important to promote high-efficiency, low-cost renewable energies and conduct
research and development of hydrogen, energy storage, geothermal, and other newenergies. In addition, research that will contribute to the highly efficient utilization offossil fuels and both the safety and security of nuclear power should also be considered.

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