Recommendationsofthe EU-Japan Business Round Table
to Leaders of Japan and the European Union
Brussels, 15 May 2019
Working Party 4
Environment and Sustainable Development

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

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Mr. Nobuhiro Endo
Chairman of the Board
NEC Corporation

Introduction
According to the Fifth Assessment Report of the Intergovernmental Panel on Climate
Change (IPCC), human influence on the climate system is evident and growing, with
impacts observed across all continents and oceans. Moreover, many of the observedchanges since the 1950s have been unprecedented over a period ranging from several
decades to thousands of years. The report also states that to limit climate change andstabilize temperature increases, it will be necessary to make continuous and significant
efforts to reduce greenhouse gas emissions.
Global CO2 emissions rose by 1.7% in 2018 because of countries like China, theUS and India. The EU and Japan actually decreased their energy-related emissions.
Source: https://www.iea.org/geco/
Despite that, the more conscious countries Japan, the EU and other G20 countries
should aim for climate neutrality (= net-zero greenhouse gas emissions). Reachingclimate neutrality by around mid-century, as the IPCC special report says is necessary
to limit global warming to 1.5 degrees Celsius, requires us to achieve a set of very
ambitious framework conditions and actions. The paper should develop the framework
conditions and actions that the EU and Japan should address, and what they expectfrom other G20 countries.
Climate migration is already happening. More than 31 million people fled disasters
in 125 countries and territories in 2016.
The effects of global warming have led to changes in irregular weather patterns.
Consequently, the environment has suffered a variety of severe and negative impacts
on a global scale. For example, extreme precipitation has occurred in polar and subpolar regions.
Other examples include increases in water evaporation caused by hightemperatures resulting from hurricanes or cyclones and prolonged periods ofabnormally low rainfall leading to water shortages.
Parts of western Asia, for example, are likely to become uninhabitable by the end of
this century, with temperatures projected to exceed the human adaptability threshold.
Temperatures exceeding 45 degrees Celsius will become the norm in most low-lying
cities and could reach as high as 60 degrees Celsius in Kuwait, Al Ain and Doha during
the late summer months.
The sea level has been rising at a rate of approximately 0.6 inches per decade since1900. If this pace continues, there will be an increase in tidal flooding caused by storm
surges and high tides in many coastal areas. Pacific island nations are extremely
vulnerable to rising sea levels, as are more than 410 cities around the globe, including
Amsterdam, Hamburg, Lisbon, and Mumbai. Agricultural productivity is easily affectedby climate change.
Climate change also has an impact on the risk of food insecurity. As climate change
continues, it will likely lead to more frequent and severe natural hazards.
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It is good to expand renewable energy reasonably for the realization of a low-carbon
society. As for energy issues, we have considered and studied the improvement ofenergy conservation and efficiency in light of the Paris Agreement. Unfortunately, atthis point in time, it is technically impossible to rely solely on renewables, therefore weneed - in addition to renewables - a reasonable energy mix comprised of a variety ofsources such as fossil fuels and nuclear power.
Meanwhile, we are experiencing rapid progress in urbanization and innovations
brought about by improvement of accessibility to electricity and quality of life and by adramatic transformation to a new digital era. Since urbanization has a serious andtremendous impact on not only the environment but also energy efficiency and stability,
we believe these issues must be addressed with utmost priority. Likewise, we deem it
imperative to fast-track the development and implementation of high-quality
infrastructure essential for realizing sustainable and inclusive societies, as well as theservices associated with such infrastructure.
In 1990, 43 percent of the world’s population lived in urban areas; by 2018, thatpercentage had risen to 55 percent. This trend is expected to continue, with the numberof urban residents increasing 1.5-fold to 6 billion, an addition of 2 billion people. By the
middle of this century, this figure is projected to rise to 68 percent. If urbanization
occurs in an organized and efficient manner within the appropriate limits, it will bringabout positive effects. In many instances, urbanization has resulted in socioeconomic
advancement. For example, more than 80% of global GDP is generated in cities andAsia is now at the core of global economic growth.
However, we must recognize that extensive, rapid, and unplanned urbanization will
result in adverse effects and challenges. Cities face numerous challenges, including
the expansion of slums, illegal settlements, overcrowding, traffic congestion,
unemployment, crime, water & sanitation, poor health & diseases, exclusion and risinginequality, risks of social instability, and critical deterioration of infrastructure. The
urban environment also faces a variety of threats such as air pollution, climate change,loss of green space, marine plastic litter and microplastic issues, and the degradationand loss of forests and marine areas. Climate change has already impacted our
precious ecosystems and biodiversity, which are vital to sustaining urban
environments, as they can not only improve air and water quality but also reduce theeffects of droughts and floods. It should be noted that these negative effects can befurther exacerbated by continuous increases in the number of immigrants from rural tourban areas.
In many ways, recent urbanization appears to be unsustainable. Many people arebeing forced to face higher risks, the environment is being negatively affected, andunnecessary costs are being incurred. How effectively these risks are addressed will
be determined by how well cities are designed, built, managed, and governed.
In line with this, Working Group 4 would like to study and make recommendations
related to urbanization and the infrastructure supporting it, which not only have a direct
impact on environmental and energy issues but also play an important role insustainable development.
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Recommendations from both
European and Japanese industries
WP-4/#01/EJ to EJ Cooperate closely to promote the stabilisation of energy
supply and prices in order to improve energy security,
conservation and efficiency and address global warming
The BRT calls on the EU and Japanese Authorities to :continue their efforts to strengthen cooperation among members of theinternational community to improve regional peace and energy security.

fully understand the impact that the stabilization of resource prices can have onenergy security, energy conservation, and energy efficiency, and to act
accordingly.

commit themselves to work together to stabilize resource prices and implement
energy mix policies suitable for regional needs aiming at a reduced carbon
intensity, while enabling companies to continue their business activities in a stablemanner and contributing to worldwide efforts against global warming.

The BRT believes that :

uncertainties in the global energy market arising from a wide range of risks,changes by major transformations and geo-political tensions seriously affectenergy security.

the destabilization of energy prices has a significant impact on Japan and EU
countries that import energy.

growing energy demand continues to give tremendous impact on energy mix
policies and the global warming.

WP-4/#02/EJ to EJ Achieving a stable supply of energy and cooperation withother countries
The BRT calls on the EU and Japanese Authorities to :continue their efforts to establish a multi-layered energy supply structure capableof functioning not only during times of peace but also in emergencies.



deepen relationship with various international committees to promote a framework
for a more comprehensive collaborative alliance from the viewpoints of energy andthe environment.

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The BRT believes that :a multi-layered energy supply structure which is based on “3E+S”- stable supply(“Energy Security”), and realize low cost energy supply by enhancing its
efficiency (“Economic Efficiency”) on the premise of “Safety” and making
maximum efforts to pursue environment suitability (“Environment”) - isfundamental to ensure long-term sustainability of human activities.

the diversification of energy sources, the impact on the global environment and thecomplexity of energy issues are becoming more pronounced.

WP-4/#03/EJ to EJ Challenge to build low carbon society
The BRT calls on the EU and Japanese Authorities to :

carefully consider all possible options of usage on fossil fuels including natural
gas which has its environmental benefits relative to others, since it is necessary
to pursue the usage of fossil fuels on which latest reducing CO2 emissions
technology are given when we study stability and economic efficiency of futureenergy supply.



contribute to the development of CCS technologies and support their advancement.

strengthen the cooperation to establish a new ecosystem in the field of CCU(Carbon Capture and Utilization) as well since it is vital to pursue all possible
options of low carbon technologies such as Carbon Recycling (artificial
photosynthesis, methanation, catalyst, mineralization and next generation
biotechnology, etc) in order to reduce CO2 emissions.

The BRT believes that :ensuring natural gas remains affordable and secure is critical for its long-term
prospects.



CCS technologies are expected to play a significant part to limit future temperature
increases to "well below 2°C," as laid out in the Paris Agreement.

carbon recycling which regards CO2 as "carbon resource" and reutilize them as avariety of carbon compounds should be focused.

WP-4/#04/EJ to EJ Future direction of usage on nuclear power
The BRT calls on the EU and Japanese Authorities to :cooperate in facilitating the effective implementation of international nuclear safety
standards and security measures at bilateral meetings and multilateral meetings
on nuclear power. These standards should capitalize on lessons learned throughthe operational experience of the parties.

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study continuously, from the viewpoints that nuclear power is one of the carbonfree electricity alternatives and promoting measures against global warming andstably securing energy that is less susceptible to fluctuations in fossil fuel prices,the direction of usage for nuclear power generation as important base-load powersource with the careful consideration of safety.

WP-4/#05/EJ to EJ Future direction of usage on renewable Energy
The BRT calls on the EU and Japanese Authorities to :
take all possible measures to promote the followings in order to accelerate possible
conversion to renewables: 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 inefficient fossil fuels subsidies.
 At one point, a discussion will be necessary about carbon taxes and a carbon
emission market that reflect the true cost of CO2 emissions to society at least
at G20 level. As a first step, EU and Japanese Authorities should work together
and carefully study the outcome of the EU-ETS reform.
 Promote research on immature renewable energy technologies towards theircommercialization.
 Promote research on energy storage (eg via hydrogen, batteries) in order toalleviate the issue of variability in renewables generation.

The BRT believes that :renewable energy is expected to play a major role in the transition to a less carbonintensive and more sustainable energy system.



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.

WP-4/#06/EJ to EJ Smart Grid and convergence of Electric distribution networks
with ICTThe BRT calls on the EU and Japanese Authorities to :
take necessary actions to promote the following measures: 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 and to minimize system losses.

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 Balance all diverse capacities such as Wind, PV and others in a smart way.
 Promote smart functionality of PV inverters through regulatory requirements.
 Improve power quality and stability through smart grids and micro grids withbattery storages .
 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).
 prepare a concrete action plan for financial stimulation and promotion of highdistributed on-site smart grid green power generation in connection with emobility penetration.


promote the implementation of a sustainable, effective, and transparent frameworkfor strengthening of government support for collaborative R&D and technical trials
between private-sector companies and academic institutions and providing
subsidies and tax incentives for biomass-derived fuels and chemicals to increase
the uptake of products manufactured using the technologies converting non-edible
plant resources into fuel or useful chemicals.

The BRT believes that :the growing role of prosumers, smart grids, micro grids, energy storage and emobility requires a different distribution of roles and responsibilities in the value
chain of electricity production, transmission, distribution and retail.



along with the spread and expansion of renewable energy, grid stability, peak shiftof power consumption, stable power supply need to be dealt with.



harmonization of safety standards for storage batteries, standardization andunification of test protocols, and/or introduction of mutual certification systemshould be promoted between Japan and EU.

Japan and the EU must continue to work together toward lowering costs andincreasing efficiency through technological development and standardization,
while also monitoring the “cradle to grave” environmental impact of batteries aswell as research to minimize the environmental impact of manufacturing anddisposal of batteries.



it is imperative to proactively make use of the micro-grid and ICT that enablehandling efficient power sources, such as solar power generation.



technologies and processes to competitively convert biomass into fuel, such as
cellulosic ethanol, bio-gasoline and biogas which can be further converted intohydrogen, or useful chemicals must be developed and become more widelyadopted in order to make the shift from fossil to biomass resources as raw
materials for a wide range of uses and therefore achieve significant reduction ingreenhouse gas emissions.

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WP-4/#07/EJ to EJ Energy conservation & energy efficiency
The BRT calls on the EU and Japanese Authorities to :collaborate on standards to take the lead in promoting market introduction ofenergy conservation and energy efficiency technologies, and their supporting
infrastructures.

promote alignment and simplification of related standards and regulations ofenergy conservation and energy efficiency.

promote development of advanced technologies that boost energy efficiency
through best practices, and implement stimulus measures such as investment inmethodologies. At the same time, these actions should be complemented byaggressive measures that will also have an impact on technologies forsoundproofing of buildings and stabilization of room temperature.



implement harmonization of standards and mutual accreditation of testing
protocols to verify the energy saving effect of components and materials.

The BRT believes that :energy conservation is an initiative aimed at fulfilling the need for economic
efficiency, environmental compatibility, and energy security, and industries inJapan and the EU should make every possible effort to develop and promote theuse of energy conservation technologies.



it is also important to ensure that excessive investment burden is not placed oncompanies nor that production suppression is imposed on them for the sake ofachieving unequal energy conservation effects or slowing down development ofinnovative low carbon production processes with higher energy needs.

the promotion of energy conservation will require the strengthening of researchand development and improvement of public awareness of energy conservation.



Investments in energy efficiency by industry, even at equal capacity levels,
should be encouraged by governments, with incentives that reflect the indirect
benefits to society.

WP-4/#08/EJ to EJ Energy research and international cooperation
The BRT calls on the EU and Japanese Authorities to :
promote cooperation among industry, government and academia to reinforce thedevelopment framework of technologies which is capable of reducing greenhousegas emissions.



promote to establish a system for continuously training technical experts in energyrelated fields through personnel exchanges.



continue to support ITER (International Thermonuclear Experimental Reactor andLatin for "the way") project, which is one of the most ambitious energy projects inthe world today.

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The BRT believes that :greenhouse gas emissions are impacting climate change and the environment,
thereby making this an issue facing all of mankind that requires international
insight.

both Japan and the EU as leaders in the fields of energy and environmental
technology must forge ahead with ground-breaking innovation.

WP-4/#9/EJ to EJ Efforts toward the prevention of global warming following theParis Agreement reached at COP21
The BRT calls on the EU and Japanese Authorities to :undertake the tasks of developing low-carbon technologies and transferring
technology to developing countries with significant potential for making reductions,while at the same time driving energy efficiency and improving their energy mix at
home.



promote “the avoided emission of CO2 approach” as well as other environmental
impacts through public-private collaboration for evaluating low-carbon
technologies and products by LCA.



contribute to global warming countermeasures by outstanding technologies,
products and know-how possessed by both countries.



Help to finalize Article 6 of the Paris Rulebook addressing such market
mechanisms to clarify support measures of a bilateral offset mechanism which will
be an effective means for achieving greenhouse gas reductions in newly emerging
countries where a sharp rise in energy demand is becoming apparent.

open their doors to industry, provide easy-to-understand explanations of adaptiveplanning, technology needs, and financial assistance, and create an environment
in which industry can easily participate.

take measures, to promote commercial technology transfer, ensuring the creationof appropriate regulatory frameworks in countries to which technology transfers
are to be made and the protection of intellectual property rights.

The BRT believes that :the prevention of global warming is an issue facing all of mankind and both Japanand the EU as leaders must play roles to take and promote all possible measures.

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WP-4/#10/EJ to EJ Promotion of resource efficiency and the circular economy
The BRT calls on the EU and Japanese Authorities to :move forward with efforts aimed at improving resource efficiency considering theentire life-cycle of products and work together to formulate consistent rules
fostering actions to combat climate change and promote circular economy.

take advantage of the advanced innovation and competitive edge in international
market, which they possess in regard to the institutional and technical aspects ofresource efficiency and the circular economy, deepen their cooperation andcollaboration, and take the lead in international discussions on the future directionof the circular economy and resource recycling, as well as on the creation of
institutions and systems.

The BRT believes that :the discussion on resource efficiency and the circular economy holds the potential
to create business opportunities that will lead to additional economic growth andjob creation in the future.

the pursuit of resource efficiency through exceedingly regulatory approaches could
inhibit classical economic growth. Therefore, it is desirable to choose an approachthat will lead to economic growth, such as promotion through voluntary efforts bystakeholders with associated incentives and reasonable regulation.

a last recent project funded by the German government, which demonstrates theuse of waste gases of the steel production in combination with green hydrogen asa resource for valuable chemicals like methanol or ammonia, is a great example.

WP-4/#11/EJ to EJ Promotion of global investments and nurturing of long-term
relationships
The BRT calls on the EU and Japanese Authorities to :encourage direct investment from a transparent, open, and long-term perspective
living up to the commitments all parties made in the Energy Charter Treaty.



promote high-efficiency, low-cost renewable energies and conduct research anddevelopment of hydrogen production and usage, energy storage, geothermal, andother new energies to spread of energy conservation technologies and the like.

consider research that will contribute to the highly efficient utilization of fossil fuelswith minimized carbon impact and both the safety and security of nuclear power.

The BRT believes that :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 sustainable resources in response to global risks.

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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.

WP-4/#12/EJ to EJ Initiatives and measures as a response to accelerated
urbanization in the world
The BRT calls on the EU and Japanese Authorities to :recognize the increasing impact of disasters caused by climate change and theircomplexity in many parts of the world and to cooperate closely to strengthen
disaster risk reduction to infrastructure with the aim of minimizing the loss of lives
and assets in disasters.

address with utmost priority to develop and implement resilient and high-quality
infrastructure considering life-cycle cost which is essential for realizing sustainable
and inclusive societies as well as the services associated with such infrastructure,since urbanization has a serious and tremendous impact on not only theenvironmental but also energy efficiency and stability.



facilitate and promote high-level dialogues with authorities of emerging countries,
recognizing magnitude of urbanization in emerging countries onto global
environment, to share their good practices, national experiences, accumulated
knowledge, and effective solutions for solving urbanization issues. EU andJapanese Authorities should strive to spread mindset and policy regarding qualityof infrastructure and support changes to the behavioural aspects of urban planning,
design, and procurement in emerging countries.

The BRT believes that :cities require a wide range of basic infrastructure and associated services to be
viable and sustainable and infrastructure development is vital for economic growth
because it can create jobs, alleviate poverty, and improve quality of life for urban
residents.



it will be crucial for the international community to carry on efforts to ensure aresilient and stable society to secure global sustainable development.

strengthen the support provided to emerging countries to solve the problems they
face in order to achieve sustainable development on a global scale.

WP-4/#13/EJ to EJ Challenge to solve social issues in new era
The BRT calls on the EU and Japanese Authorities to :continue cooperating closely while recognizing the importance and effects of thelatest digital technologies to ensure environmental conservation and safety in cities
against disaster, crime, terrorism, and various accidents as well as to support theWorking Party 4: Environment and Sustainable Development
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advancement of digitalized infrastructure to accelerate the realization ofsustainable urban development.
strengthen cooperation to promote cross-domain data utilization since the digitalsociety of the future will primarily address social issues from the viewpoint ofcomprehensive optimization as opposed to the early digital society, which was
focused on laying out systems for each field and on data utilization within those
fields.

The BRT believes that :

it is crucial to further advance ICT and its utilization to solve social issues throughefficient operation and optimization of diversified urban functions and complicatedstyles of living since problems such as exhaust emissions from traffic congestion
and large amounts of garbage and waste resulting from the overpopulation ofurban areas negatively impact the environment.

urban problems such as unemployment, poverty, and educational issues result ina rising incidence of crime, thereby requiring comprehensive and persistent efforts
since the safety of cities is often overwhelmed by the cascading effects of various
urban problems.



efforts to utilize digital technology in an aim to solve social issues have entered a
new era and these technologies have the potential to dramatically improve the levelof urban security. It is also beneficial from an economic perspective to achievesignificant improvement through investment in infrastructure using digitaltechnology as cities with low levels of security and those unsuitable for a healthy
life will have a negative impact on economic development.

WP-4/#14/EJ to EJ Support of sustainable finance
The BRT calls on the EU and Japanese Authorities to :
take a global perspective in developing standards for sustainable economic
activities and investments.

Not simply consider economic activities in isolation but also their role within theeconomy, society or other ecosystems they are rooted in, the size of theircontribution to the national or regional GDP, the stage of transitions anddevelopment towards electrification and digitalization, financial resources andskills needed to implement measures that meet the criteria, etc.

focus more on the ‘continuous improvement’ from the current situation rather thangetting caught up in the different nature of economic activities. Encouraging thecontinuous improvement will ultimately create clarity in order to foster innovation,
reward concrete transitional activities, mitigate inequality and enhancecompetitiveness.

maintain a positive and inclusive mindset to encourage companies to transition tothese goals in order to mobilise investments in alignment with economic,
environmental, societal and governance objectives.

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The BRT believes that :the overall objective of sustainable finance which can channel private capital
towards sustainable projects and can become a key enabler to achieve the UN
SDG agenda and the Paris Agreement is welcomed. The BRT further
acknowledges that financing and appropriate support to investments are indeed
the missing links to the achievement of Paris Agreement on climate change andthe UN 2030 Agenda for Sustainable Development.

sustainable finance should be comprehensive initiatives that can encourage
necessary investment not only to activities with regard to realizing a low-emission
society but also to solving issues caused by urbanization and to enhance of
resilient infrastructure with its associated services which is fundamental for lives
and social and economic activities and to realizing an efficient, stable and inclusive
society through an appropriate energy mix. The BRT expects EU and Japanese
Authorities to facilitate international collaboration among governments, financial
market participants and companies to best scale up sustainable finance globallyand to implement effective mechanism of this field.

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