Recommendations
ofthe EU-Japan Business Round Tableto Leaders of Japan and the European Union
4 November 2021
Working Party 4
Environment and Sustainable Development

Working Party Leaders:Dr. Mark PleškoPresident
Cosylab Inc.

Mr. Norihiko Ishiguro
Senior Executive Vice President
NEC Corporation

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Introduction
The environment and safe and secure living are not only the foundation of our daily
lives and business activities but also a significant concern of industries. European andJapanese industries will cooperate in promoting the green growth strategies of both
authorities with the aims of “coexisting with the earth and protecting the future” throughdecarbonization and the realization of a circular economy and “nurturing prosperous
cities where individuals and society are in harmony” through the realization of resilientand comfortable lifestyles. Since these aims are incredibly challenging, innovation
using disruptive technologies as well as massive lifestyle changes will be imperative.
Climate change and all its related subjects has become the largest single area ofconcern by EU citizen, politicians and businesses alike, despite the peak in focus on
the pandemic.
The latest Future of Europe survey of citizens in all EU member states by theEurobarometer (Special Eurobarometer 500, October-November 2020) reports thatclimate change is clearly regarded as the main global challenge affecting the future ofthe EU, with 45% of Europeans selecting this as the main challenge. The second andthird most mentioned issues, got 38% and 37%, respectively. The European
Parliament (EP) Spring 21 survey shows that regarding the topics the EP should focus
on, climate change is in a strong fourth position across all EU member states, but inthe first place in 7 (wealthy) countries.
Concerns with regard to the environment and sustainable development have also beenraised prominently at the 19 June 2021 Inaugural Conference Plenary of theConference on the Future of Europe (CoFE), which comprises the largest publicdebate between policy makers and citizens in the history of the European Union.
In all these debates, the concern is becoming more widespread that environmental
issues, of which climate change and sustainable development are but two major areas,
are not a challenge that can be solved by a group of only a few countries - but thatinstead environmental issues may well become a question of survival for all humankind,or at least civilization as we know it, unless all industrial countries step together anddefine joint and common rules and regulations to fight these challenges.
Japanese industries are basically supporting the goal of realizing a carbon-neutral,
decarbonized society by 2050 declared by Japanese Government in October 2020
while EU industry supports the EU Green Deal to turn the EU into a climate neutral
continent by 2050. Both industries will approach these challenges with unwavering
determination and are committed to playing a proactive role in resolving them.
Japanese industries strongly recognize that aiming for the realization of carbon
neutrality in 2050 while creating a virtuous cycle of economy and environment is an
important issue for building sustainable capitalism. Keidanren updated the "Keidanren
Low Carbon Society Action Plan" to "Keidanren Carbon Neutral Action Plan" andstrongly promotes the plan with the proactive efforts of the business community.
The BRT supports initiatives lead by the EU-Japan Green Alliance that promote
Working Party 4: Environment and Sustainable Development
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Page 2 of 8cooperation on energy transitions, environmental protection, sustainable finance, andfacilitating the energy transitions in third countries.
The BRT is calling upon all to keep a calm and realistic view that keeps the rightbalance between global measures for long-term sustainability of all human activities
on earth and ensuring economic stability of individual industries in individual countries,
also outside the EU and Japan.
In addition, Japan and the EU are expected to take advantage of the advanced
innovation and competitive edge in international markets based on the institutional andtechnical aspects, deepen their cooperation and collaboration, and take the lead ininternational discussions regarding the future direction of environmental actions, aswell as on the creation of institutions and systems.
The COP26 conference to be held is the first time that parties are expected to commit
to enhanced ambition since COP21. Article 6 of the Paris Agreement, which describes
rules for an international carbon market and other forms of international cooperation,
will be discussed as it is the last piece of the rulebook remaining be finalized.

Recommendations from both
European and Japanese industries
Environment: Green growth strategies for coexisting with the earth andprotecting the future
WP-4/#01/EJ to EJ: Measures and policies of both authorities against climatechange
The BRT calls on EU and Japanese Authorities to:•continue to act proactively as global leaders in the midst of efforts of each country
to mitigate climate change.

•use mitigation of climate change as enabler for realizing economic growth and theexpansion of employment opportunities and to ensure that their measures (suchas Japan’s The Long-term Strategy under the Paris Agreement and The EuropeanGreen Deal) will accelerate corporate investments in R&D and capital for the“green deal”.

•

find technologically and economically viable options and take a flexible approachwith a reasonable and realistic transition period towards achieving an ambitious
target for a decarbonized society.

•prioritize material recovery over energy recovery (incineration).
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Page 3 of 8•formulate cross-country policies with all sovereign states that are major
contributors to climate change to ensure that the EU and Japan domestic industries
are not penalized compared to industries in third countries.

•encourage sustainable consumption patterns changes.

•promote carbon-neutral, sustainable energies and conduct research anddevelopment of biofuels production and usage, and other new immature energies
towards the commercialization to spread of carbon neutral energy technologies
and the like.

•introduce WTO compatible subsidies or incentive schemes including imposition offees on end-users that reflect the indirect benefits to society brought by theinvestment in decarbonization by industry.

•take effective measures to promote both governments to introduce the sustainableenergy contributing to decarbonization into public sector, including government
procurement rules.

•recognize that energy data management without equipment, as exemplified byvirtual power plants (VPP) and resource aggregation services, also plays a majorrole in contributing to the realization of carbon neutrality, and develop policies toaccelerate the expansion of such forms of management accordingly.

•facilitate further hand-in-hand cooperation between the EU and Japan in the areaof sustainable finance as a catalyst towards a decarbonized society with the aim
to coordinate and promote a consensus in international fora and to maketaxonomy operational and usable for business while keeping economic feasibility.

The BRT believes that:•it must respect EU’s and Japan’s continuous efforts to reach their nationallydetermined contributions (NDC) to mitigate climate change.

•the EU and Japan must remain forerunners in this area by representing the global
conscience of all humanity and actively promoting this view to all other industrial
countries worldwide in order to make them share the same measures and adopt
the same rules and regulations to achieve a carbon-neutral economy andimplement appropriate measures to achieve this goal.

•it is difficult to overcome climate change problems through a mere extension of
conventional efforts, and that the creation of industry-led disruptive innovation isessential.

•

the only way to achieve ambitious climate targets for 2030 and to promote a
circular economy is close joint collaboration aiming at reducing the complexity ofmarket entrance (especially for strategic sectors as waste and energy), promotinginternational standardization as well as simplifying and accelerating theadministrative processes to get permission for new investments and technologies.

•in particular, we recognize that it is essential to expand Virtual Power Plant (VPP)
that manages multiple distributed energy resources together and makes them
function like a single power plant and resource aggregation service that improve
efficiency and realize optimization through matching surplus power generated
from renewable energy to the market.

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Page 4 of 8•EU and Japan need to cooperate to move towards electrification of the grid andachieve decarbonisation of carbon-intensive sectors, such as building sectors
e.g. by rapid promotion of heat pumps towards achieving a carbon neutralsociety.

•in sustainable finance, enabling activities and transitional technologies willcontinue to play an important role in order to mobilise all necessary means toachieve the objective of sustainable finance including the zero-emission ambition.

WP-4/#2/EJ to EJ Promotion of resource efficiency and the circular economy
The BRT calls on EU and Japanese Authorities to:•avoid the pursuit of resource efficiency through exceedingly regulatory
approaches, which could inhibit innovation and economic growth, but rather use
promotion through voluntary efforts by stakeholders with associated incentives.

•pursue resource efficiency from the viewpoint of international circulation system
based on the fact that movement of secondary raw materials across borders is
now the norm.

•promote alignment and simplification of related standards and regulations ofproducts made of renewable resources contributing to the circular economy, withincentives for R&D and commercialization.

•Japan and the EU should not only move forward with efforts aimed at improving
resource efficiency but also work together to formulate consistent national andinternational rules and treaties to this effect.

•take measures to visualize the entire utilization cycle from the manufacturing ofproducts to their shared use, reuse, recycling and disposal as well as to realize
and accelerate supply and demand control in resource circulation through means
such as matching products and assets with users by utilizing the traceability of
raw materials, parts and products, and AI.

•specifically target SMEs as they account for a large number of entities and jobs
and thus contribute significantly to the issues at hand.

The BRT believes that:•

resource constraints are likely to inhibit economic growth over the medium to longterm. This is why it is imperative to improve the efficiency of resource use.

•the circular economy holds the potential to create business opportunities that willlead to additional economic growth and the job creation in the future.

•discussions on resource efficiency and the circular economy must go beyond
recycling and other aspects of pure reuse to cover a wider range of concepts ofproduct longevity, frugality and efficient use, thus impacting manufacturers, service
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providers, and other companies, to consider the extension of product life, thesharing of services, and the goods and services through operational billing.
•beyond the necessary energy efficiency, in order to fully harness the potential ofrenewables, energy use optimization is key, leveraging digitization, energy
management & analytics, demand flexibility, batteries, hydrogen, etc. Regulatory
frameworks should foster those pursuits through leveling the playing field (pricingexternalities) to enable fair competition and the pursuit of the sustainably mostcompetitive solutions.

•collaborations by companies, administrations and industries that go beyond
existing frameworks are integral to realizing the circular economy. Until now, there
have been individual supply chains for each company or industry, and data onproduction, logistics, and sales have remained separate. To realize the circular
economy, we believe that it is important to link and control data such as supply anddemand and the usage of a variety of raw materials and products beyond existing
frameworks.

•product design and the procurement of raw materials based on the premise ofreuse of products and resources are important. To this end, it is imperative to havea mechanism that can be used to trace data on the original components of products
and the place of origin of raw materials.

Secure & safe cities and their management :“Nurturing prosperous cities where individuals and society are inharmony”
WP-4/#3/EJ to EJ : Realization of a resilient and comfortable life

The BRT calls on EU and Japanese Authorities to:•address with utmost priority the development and implementation of secure, safe,resilient, and high-quality city infrastructures that consider life-cycle cost, which isessential for realizing sustainable and inclusive societies as well as the services
associated with such infrastructures. This is because city design and management
have a serious and tremendous impact on creating attractive and ideal residential
circumstances compatible with both societies and people.

•continuously promote the functional improvement of local cities/rural areas and thedistribution of functions along with the development of urban cities. In particular,
as stated above, increasing the use of renewable energy is essential for realizing
decarbonization; however, appropriate energy distribution to local cities/rural areas
including the introduction of Microgrid technologies should also be promoted fromthe perspective of decreasing the cost of power transmission and the dispersion ofrisks in times of disaster. Likewise, there is also a need to implement policies toWorking Party 4: Environment and Sustainable Development
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Page 6 of 8accelerate initiatives towards “local production for local consumption” from thepoint of view of promoting the circular economy and reducing CO2 emissions.
Promote greening cities to improve air quality, lower GHGs and ultrafine dust
particles in the cities, and create a better livelihood and temperature regulation.
The BRT believes that:•resilient and comfortable cities require a wide range of basic, high-quality
infrastructures and associated services to be viable and sustainable, andinfrastructure development is vital for economic growth because it can create jobs,
alleviate poverty, and improve quality of life for urban residents.

•issues of congestion and depopulation of cities can result in lowering the level ofservices and sustainability of cities. On the other hand, it is possible that thedistribution of functions and people to local cities/rural areas from a state ofextreme concentration in urban cities will accelerate along with advances in digitaltechnologies under the new normal in the post COVID-19 era. We believe that thiswill lead to a certain level of progress in the mitigation of urban issues caused byovercrowding and in the reassessment of social values and changes in people’s
behavior leading to improvements in quality of life, including work-style reforms, inaddition to reducing the risk of infectious diseases.

WP-4/#4/EJ to EJ: Promoting optimization of city management
The BRT calls on EU and Japanese Authorities to:•take the following steps and measures from the point of view of accelerating
optimization of city management through trusted City as a Service, and data-driven
solutions that provide the most suitable services to residents, healthy buildings andhealthy precincts.
✓ promote policies to introduce and utilize innovative digital technologies forrealizing a sustainable society. Specifically, we request both authorities toreview and introduce taxation systems and laws/regulations that encouragecompanies to make investments in R&D and capital. In addition, we request
both authorities to introduce the policy to encourage the business to recognize
and reduce the total cost of ownership as opposed to the capital expenditure
only.
✓ take leadership and strive to strengthen further cooperation with businesses
to promote free and reliable flow of data across borders.
✓ promote the utilization of AI by placing the highest priority on compliance withrelevant laws and regulations in each country/area and on respect for humanrights. We also request both authorities to cooperate with the private sector inestablishing and implementing policies and guidelines aimed at preventing andaddressing human rights issues. We request both authorities to refrain fromintroducing regulations that strongly and negatively impact or even suppress
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development and utilization of AI technologies.
•promote optimization of city management at various scales (building,neighborhood, infrastructure, etc.)

The BRT believes that:•city management will become primarily focused on high-level operations ofhabitation and mobility through City as a Service, which provides services suited
to the diverse values of residents by combining various types of big data tovisualize the city’s circumstances and predicting possible changes in cities throughAI analysis. We also believe that “data-driven city management” utilizing digital
twins, which enable low-cost and speedy execution of large-scale analysis andsimulation that are difficult to conduct in real cities, will be particularly effective indisaster prevention planning and the measurement of policy effectiveness.

•the free and reliable flow of data across borders and the utilization of data acrossdomains to address social issues while enhancing data security and privacy arenecessary from the point of view of accelerating the above.

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