IEEJ e-NEWSLETTER
No. 209(Based on Japanese No. 212)

Published: May 24, 2021
The Institute of Energy Economics, Japan(As of May 24, 2021)

Sources:(1) DOE-EIA(2) Investing.com

Sources:(1) Ministry of Finance "Japan Trade Statistics"(2) Ministry of Economy, Trade and Industry (arrival month basis)(3) Estimated by World Bank (Netherland Title Transfer Facility)(4) DOE-EIA, NYMEX (Front-month Futures)

Source: x-rates.com

Sources:(1) Finance. Yahoo.com(2) Investing.com

Contents
Summary【Global Monitoring】
1. US: Infrastructure Investment Plans Set Back by Deep Partisan Conflict
2. EU: Decarbonizing through Building Renovation
3. China: Can China Lead the Global Trend toward Decarbonization?
4. ME: Political Unrest in Jordan
5. Russia: Tensions on the Ukrainian Border and Tighter US Sanctions

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Summary【Global Monitoring】
1. US: Infrastructure Investment Plans Set Back by Deep Partisan Conflict
Amid attention on how the US will achieve its 2030 GHG reduction target of 50–52%, theconfrontation between the Democrats and Republicans is deepening, making it difficult to gain
consent on infrastructure investment plans.
2. EU: Decarbonizing through Building Renovation
The European Commission released a tentative analysis of the LTRS of 13 member statesand shared good practices. Attention must be paid to the subsidy schemes to be launched andtechnological development in European countries in the area of buildings and air-conditioning
decarbonization.
3. China: Can China Lead the Global Trend toward Decarbonization?
China is simultaneously stepping up domestic efforts and international cooperation towardachieving net-zero carbon emissions. Whether China can stand at the forefront ofdecarbonization will depend on whether it can live up to its words. The ability of its leaders is
being tested.
4. ME: Political Unrest in Jordan
The political unrest in Jordan seems to have been due to a crackdown by the administration
to contain the frustration of the people, rather than an attempted coup by the former Crown
Prince.
5. Russia: Tensions on the Ukrainian Border and Tighter US Sanctions
A build-up of Russian troops along the Ukraine-Russia border is fueling tensions between
Russia and the West. The United States has imposed sweeping new sanctions, and deliberations
on a new bill that includes tougher sanctions on Nord Stream 2 are also under way.

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1. US: Infrastructure Investment Plans Set Back by Deep Partisan Conflict
Ayako SUGINO, Senior Researcher
Associate Professor
Musashino University
At the Leaders Summit on Climate held on April 22, the United States announced a target to
reduce GHG emissions by 50–52% from 2005 levels by 2030. Both the President and the Vice
President, Special Presidential Envoy for Climate John Kerry, the Secretaries of State, Energy, andthe Interior, the Administrator of the Environmental Protection Agency, the Secretaries of Treasury,
Agriculture, Homeland Security, and Transportation, and the US Trade Representative took the
podium at the Summit, stressing that the US will fully undertake a wide range of efforts to reduce
GHG emissions and mitigate and adapt to climate change.
Attention is focused on how the US will achieve this ambitious target, which far exceeds that of
the Obama administration. The administration has already announced the American Jobs Plan, a
2.2 trillion-dollar investment plan focusing on infrastructure resilience and decarbonization. The
fact sheet released by the White House prior to the Climate Summit states that “There are multiple
paths to reach the emissions reduction goals, and we have many tools available to work with civilsociety and the private sector to mobilize investment,” indicating the government’s confidence inattaining the goal even if Congress does not approve the American Jobs Plan. Specific initiatives
for reaching the goal will apparently be released in the national climate strategy to be issued by the
National Climate Task Force later this year.
Regarding infrastructure investment, the Democrats and Republicans have agreed on the need to
improve the aging infrastructure and make it resilient, but have failed to reach a consensus on thescale and sources of government funding since at least the Obama era. The American Jobs Plan isfacing particularly tough opposition from the Republican Party as it will end the current corporate
tax reduction, one of the greatest achievements of the Trump administration. Republican lawmakers
have complained that the Biden administration is expanding the established definition of
infrastructure to include climate change countermeasures (such as strengthening transmission
networks, installing EV chargers, renovating buildings, and expanding public housing). Instead,they formulated a 568 billion-dollar infrastructure investment bill of their own for water supply andsewerage systems, power grids, and telecommunication networks in addition to transportation
infrastructure. Even though this amount is ambitious given that an infrastructure bill worth around
300 billion dollars was rejected during the 2019–2020 term, Democratic lawmakers immediately
rejected the bill, indicating that partisan conflict is intensifying even under President Biden who
advocates unification and integration.
Meanwhile, ahead of the Summit, progressive (greener) Democrats resubmitted the Green New
Deal Resolution which was first submitted in 2019. The Resolution demands that the Federal
government, at its own responsibility, promote decarbonization by decarbonizing the electricity andtransportation departments and expanding renewables, as well as strengthen the domestic
manufacturing industry and create jobs, achieve environmental justice, raise the minimum wage
and ensure the right to join a union, and increase local resident participation in the decision-making
process for development plans. Democratic lawmakers have also submitted a bill to reform energy
tax credits aiming to reduce and abandon carbon. The bill does not exclude the clean use of fossil
fuels from the scope of tax deduction but newly includes adherence to federal labor and wage
standards as a condition for eligibility.
Even if investment in clean energy infrastructure overcomes partisan conflict and makes progressunder the Biden administration, companies seeking business opportunities in the US must consider
the risk of higher labor costs including wages and welfare benefits in addition to manufacturing,procurement, and employment costs.

32. EU: Decarbonizing through Building Renovation
Kei SHIMOGORI, Senior Researcher
Global Energy Group 1
Strategy Research Unit
In the EU, 40% of energy consumption and 36% of energy-related GHG emissions comefrom energy use by buildings. It is therefore essential to boost the energy efficiency of buildings
in order to achieve the 2050 climate neutrality target, and so the European Commission
published the Renovation Wave Strategy in October 2020 and indicated plans to make existingbuildings more energy-efficient. To achieve the goal of reducing GHG emissions by 55% by2030, the GHG emissions of buildings must be reduced by 60%, final energy consumption by
14%, and energy consumption for air-conditioning by 18%, all from 2015 levels.
Based on the Energy Performance of Buildings Directive, the member states are required tosubmit Long-Term Renovation Strategies (LTRS) for up to 2050 to the European Commission.
The LTRS must contain numerical targets, and necessary investments and initiatives for
decarbonizing buildings by 2050. In March 2021, the European Commission released atentative analysis of the LTRS of 13 member states and shared good practices, including setting
a mandatory minimum energy performance for buildings, enhancing the energy performancecertificate system, aggregating projects to make loans easier to obtain, tax incentives, andeducational activities. Ending the use of inefficient technologies and fossil fuels in airconditioning was named as one of the three key areas for building renovation, and as goodpractices, initiatives such as prohibiting the use of oil and gas heating in private homes andpublic facilities and switching to electricity and other fuels were indicated.
Recently, the media reported that on April 1, the Danish Energy Agency launched a scheme
to subsidize the introduction of and switching to electric heat pumps by covering up to 15% of
the designated costs, in order to reduce the use of fossil fuels for generating heat for the regional
heating network. Further, the UK announced in August 2020 a grant scheme for the cost of
improving energy efficiency, including air source heat pumps and ground source heat pumps
as low carbon heating measures. In Germany, a demonstration experiment to integrate a large
heat pump into the community heating network has been conducted. Future subsidy schemes
and technological developments in European countries regarding the decarbonization ofbuildings and air-conditioning must be monitored.
There are various other interesting moves in Europe apart from building renovation.
Examples include the signing of a memorandum by transmission network operators heading
toward launching the Eurobar initiative, which links Europe-wide offshore wind farms toEurope’s transmission networks efficiently and reliably; the announcement of the constructionof the EU’s first waste recycling facility for EV batteries and other metals; and the publicationof a vision to build a hydrogen network by 2040 under the European Hydrogen Backbone
initiative. Alongside these decarbonization efforts in the private sector, concrete moves in
Europe including the scheduled submission of relevant laws deserve attention.

43. China: Can China Lead the Global Trend toward Decarbonization?
Li ZHIDONG, Visiting Researcher
Professor at Graduate School
Nagaoka University of Technology
Decarbonizing is a global trend. China is seeking to stand at the forefront of this trend by
simultaneously stepping up domestic efforts and international cooperation.
In September 2020, at the UN General Assembly, President Xi Jinping declared that China aims
to reach peak CO2 emissions before 2030 and achieve net-zero carbon emissions before 2060. At a
UN meeting in December, he announced that China will raise its 2030 Nationally-Determined
Contribution (NDC), specifically, its CO2 emissions per unit GDP (emission intensity), from 60–
65% to at least 65% compared with 2005 levels, and the ratio of non-fossil energy in primaryconsumption from 20% to 25%.
Inside the country, the Five-Year Plan for National Economic and Social Development and theLong-Range Objectives through the Year 2035, the first milestone toward “net-zero emissions,”
was adopted at the National People’s Congress that ended on March 11. The following targets wereset for 2025: (1) reduce energy consumption per unit GDP by 13.5% from 2020 levels, (2) reduce
the emissions intensity by 18%, and (3) increase the non-fossil energy ratio to 20%. Even if thesetargets are met, to achieve the NDC, it will be necessary to raise the non-fossil energy ratio by 1
point per annum and lower the emission intensity by at least 3.7% per annum for five years from2026. This will not be easy. However, on March 15, at the Central Financial and Economic Affairs
Commission hosted by President Xi himself, he declared that “net-zero emissions” is a criticalstrategic decision by the Communist Party of China (CPC) Central Committee that affects thesustainable development of the Chinese people and the common destiny of humankind. Further, heemphasized that the economic and social systems must be transformed fundamentally and that thetargets must be achieved as declared. Attention must be paid to whether area-specific plans forenergy conservation, renewable energy development, etc. to ensure that the targets are achieved
will be formulated by the end of the year.
Efforts toward international cooperation are also gathering steam. On April 16, President Xi
Jinping had online talks with French President Emanuel Macron and German Chancellor Angela
Merkel. While pledging that China will make sure to achieve “net-zero emissions” and strengthenties with France and Germany, President Xi requested that developed countries set ambitious targets
and provide financial support, technological transfer, and capacity building assistance to developing
countries. On the 20th, in a video speech at the Boao Forum for Asia held in China, he expressed
his ambition to promote international cooperation on climate action and resolve the problems ofdeveloping countries in financing, technology, and capacity building. Further, on the 22nd, heparticipated in the Leaders Summit for Climate hosted by President Biden held online. He
welcomed the US’ return to the Paris Agreement, and called on the country to work together toprotect and improve the Earth’s environment. At the same time, without citing names, he stressedthat “one should not change their mind so quickly” and “one should refrain from making promises
one will not keep.” Thus, amid the intensifying conflict between the US and China, the Chinese
government indirectly criticized the US, which seeks to demonstrate leadership in decarbonization
despite not ratifying the Kyoto Protocol and temporarily leaving the Paris Agreement. At theSummit, China pledged to reduce its coal consumption, which is essential for achieving “net-zeroemissions” in 2026 or beyond. Despite the deepening US-China rift, there are high hopes for theircollaboration on climate change.
Whether China can stand at the forefront of decarbonization will depend on whether it can live
up to its words. Its leadership skills are being tested.

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4. ME: Political Unrest in Jordan

Akiko YOSHIOKA
Senior Analyst
JIME CenterIn early April, what was thought to be an attempted coup d’état occurred in Jordan in the
Middle East, capturing the world’s attention. This was the first report of political unrest in the
country since King Abdullah ascended to the throne in 1999. The incident came to light when
it was reported that more than 10 former senior government officials had been arrested on April
3, and that former Crown Prince Hamzah (the King’s younger stepbrother), who had been
criticizing the administration, was under house arrest. Apparently, however, nobody from the
Jordanian military or intelligence agencies had been arrested and Prince Hamzah had made nocoup attempt or grab for power. The incident ended two days later, at least on the surface, with
Prince Hamzah pledging allegiance anew to the King. Frustration with the administration has
been mounting among the Jordanian public in recent years due to rising unemployment anddeteriorating living standards. It appears that the administration was alarmed by Prince Hamzah,
who spoke for the public, and took heavy-handed measures to contain the criticism. Thoughsmall, Jordan is a cornerstone of the region surrounded by unstable Syria and Iraq, and Palestine,and so instability in the country could have a significant impact on regional stability. Publicfrustration stemming from economic conditions and restrictions on free speech has not been
resolved, and the stability of the country must continue to be watched.
At the end of March, Chinese Foreign Minister Wang Yi visited Saudi Arabia, Turkey, Iran,the UAE, Bahrain, and Oman to discuss cooperation in a wide range of economic areas, inaddition to energy, with each country. The repression of the Uyghurs by the Chinese
government is a delicate issue for Middle Eastern Muslim countries, but all their governments
wish to maintain mutual noninterference on the issue of human rights and are keen to deepen
economic ties with China. As the US-China rift intensifies, China seeks to cement relations
with anti-US countries and build new ties with countries facing difficult relations with the US.
Based on statements after the talks, China’s intentions have mostly been met. Furthermore, thecountry is ramping up its cooperation and assistance in science and technology, which was oncea strength of Japan, mainly in response to the new Coronavirus.
The discussions to “rebuild” the Iran nuclear deal (JCPOA) began in Vienna, and an indirect
dialog between Iran and the US took place. With the return to the JCPOA, the US is aiming toreach a longer and stronger nuclear deal that includes missiles and Iran’s regional activities, forwhich returning to the deal is essential. Iran is demanding the reopening of oil exports,
normalization of financial transactions, and unfreezing of its overseas assets, and the Biden
administration is apparently considering lifting some of the sanctions in these areas. An
explosion occurred at the Natanz nuclear facility in Central Iran during the talks in Vienna,
reportedly with the involvement of Israel according to reports by Israeli media. The nuclear
talks continued despite the attack, and an official of the Iranian government has alreadyannounced that the rebuilding of the JCPOA, including the (partial) lifting of US sanctions, isonly a step away.

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5. Russia: Tensions on the Ukrainian Border and Tighter US Sanctions
Sanae KURITA, Senior Researcher
Global Energy Group 2Strategy Research Unit
In early April, Russian troops were deployed in large numbers along the country’s border witheastern Ukraine, fueling tensions between Russia and Ukraine and the Western countries backing
it. Clashes between the Ukrainian government forces and the pro-Russian forces have increased in
the region in the past few weeks, and the Russian government has stated that it is responding
legitimately to the risk of a larger military clash, and has no intention to withdraw. As tensions roseamong the countries, the United States notified its NATO allies that it would mobilize twobattleships to the Black Sea by May 4. The G7 foreign ministers and the High Representative of the
EU expressed deep concern over the build-up of Russian military forces on Ukraine’s borders in ajoint statement issued on April 12, and called on Russia to immediately de-escalate tensions andcalm the situation.
On April 15, US President Biden signed an executive order to mobilize sweeping new sanctions
in retribution for Russia’s cyberattacks and more. With the order, the Department of Treasury
designated 16 organizations and 16 individuals as sanction targets for intervening in the 2020 US
presidential election, and 3 organizations and 5 individuals for their involvement in Russia’s
annexation of Ukraine’s Crimea in 2014 and subsequent repression. Further, the US Treasury
prohibited US financial institutions from participating in the primary market for bonds issued afterJune 14 by the Central Bank, the National Wealth Fund, or the Ministry of Finance of the RussianFederation, and from lending funds to these three entities. Furthermore, six technology companies
and organizations were newly sanctioned for their involvement in extensive cyberattacks on US
government agencies and companies via software of US SolarWinds. The White House has
determined that the Russian Foreign Intelligence Service was involved in the cyberattacks, andannounced the expulsion of 10 diplomats, including representatives of Russian intelligence services,from the country. Meanwhile, on April 16, Russian foreign minister Sergei Lavrov announced theexpulsion of 10 US diplomats from the country in retaliation to the sanctions. He further released alist of eight top US officials to be newly sanctioned, prohibiting eight incumbent and former top US
officials including the Directors of the Federal Bureau of Investigation and the National Intelligence,
the US attorney general, and the Secretary of Homeland Security from entering Russia. However,the country will not shut down the channels for dialog with the US and did not rule out thepossibility of summit talks between the two countries.
On April 19, the Russian authorities decided to transfer currently imprisoned Kremlin critic
Alexei Navalny to a prison hospital. He had been on a hunger strike since March 31 demanding
appropriate medical treatment by external physicians. With speculation that his health was rapidly
failing, with even the risk of death, his supporters had been asking the public to join nationwide
protests on the 21st, when the president would deliver a state-of-the-nation address. Westerncountries had also issued strong demands to President Putin that Mr. Navalny be given appropriate
medical treatment, and the US in particular had warned that there would be consequences were Mr.
Navalny to die. On the 23rd, Mr. Navalny announced that he would end the hunger strike.
On April 21, the US Senate Foreign Relations Committee passed the Ukraine Security
Partnership Act, a new bill submitted by six bipartisan Senators. The bill includes 300 million
dollars in foreign military financing to help Ukraine strengthen its defenses, and calls for aninvestigation of 20 companies involved in the construction of the Russia-Germany gas pipeline
Nord Stream 2, which may threaten Ukraine’s gas transit income, including the pipeline operator
owned by Gazprom. The bill must be approved in both the Lower and Upper House plenary sessions
and be signed by President Biden to be legislated. On April 22, the Russian defense minister
indicated that troops would be withdrawn from the Ukrainian borders by May 1. It is not clear
whether this will ease the tension.

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