The 3rd Workshop of Japan-UK Joint Research Projecton Low-Carbon Societies (LCS)“Roadmap to a Low-Carbon World”

Renewable energy policy and politics in JapanFebruary 13, 2008

Tetsunari IIDA
Institute for Sustainable Energy Policies (Tokyo, Japan)
tetsu@isep.or.jp

ISEP history and activities••

Founded 2000
Policy and its realization– Integrating 4 domains
activities
•
••
•

•

Sustainable energy policy
Sustainable energy service
Energy politic democracy
Energy finance democracy

The result so far

GreenEnergy.com

Non-profit

PolicyDevelopment

Business-model
Innovation

International policy
research &networkingRedefine values
around energy
from end-userperspectives

Integrate
Integrate all
all totomobilize
project
mobilize project– RE policy innovation• Close collaboration withTokyo– Green power scheme– Wind cooperative initiative– Renewable energy
community– SEFI (sustainable energy
finance initiative) Japan

Social entrepreneur

Knowledge
Creation
EnergyDemocracy

In-situ local policy
promotion & humancapacity building

Community
Empowerment

Community andsupporters’ direct
investment forcausesCreativeFinance1Snapshot

Snapshot of energy and climate change policy in Japan

EL market•Market•development
RES policy
history••RPS policy

Concludingremark– Because of the failure of all energy policy areas below, even energy
security seems to be vulnerable

Climate change : national target (-6%)– Although GHG increase by 8% (‘90 =>‘05) and CO2 increase by 14%(‘90 =>‘05), effective policy measures such as carbon tax and cap &trade are far away from political agreement

Renewable energy : national target (1.3% by 2010, 1.63% by 2014)– Political will and initiative is very much poor , even negative, forrenewable energy although win-win consequences could be expected

Grid issue

RPS history

Energy security and the National Energy Strategy (May 2006)

Nuclear energy : more than 30-40% share, reprocessing and Pu use– Nuclear energy is politically too much expected although there arevarious risks both in safety and economical aspect, such as earthquake
proof etc.

•Energy market restructuring– Energy market restructuring in Japan started late 1990s. The conclusion
so far was to keep de-facto regional and functional monopoly forelectricity supply market
2Snapshot

Japan’s electricity market structure and political landscapeEL market•– 10 major electricity suppliers cover 10regions separately– Market monopoly; 97.6%– Grid monopoly and ruling by themselves– Political monopoly;

Marketdevelopment
RES policyhistory• All electricity suppliers are the most “giant”
companies in each region, consequently,
the most influential political actors bothnational and local governments

Grid issue•
RPS policy
RPS history
Concluding
remarkRegional & de-facto functional monopoly

Political structure

Hokkaido

KyushuChugoku
ChubuTokyo
Okinawa

Shikoku Kansai

10 monopolies IPP– Bureaucratic democracy• METI (the Ministry of Economy Trade &Industry) control whole process of energypolicy• Relying its political power on 10 major
electricity suppliers through regulation

TohokuHokuriku

GIPP

New entries(PPS)
G

Grid / ISO / Wheeling– Parliamentary political structure• LDP (ruling party) is closely harmonizedwith by 10 major electricity suppliers
directly and indirectly• Democrats (largest opposition party) is
critically influenced by industry labor union

Customer

Customer

97.6%

2.4%
3

Wind power development in JapanEL market

500
450

Marketdevelopment

Grid issue
RPS policy

Emerging market bypolitical accident('98-'02)

2500

Against wind by
RPS policy('03-present)

2000

400
350
Annual Market (MW)RES policy
history

Electic industriesʼｐaternal market('92-'97)

ISEP estimation
1500

300
250
200

1000

150

RPS history

100

50050

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

0
1991

01990

Concluding
remark4

Cummulative (MW)SnapshotSnapshot

PV market development with comparing German PV market•PV market in Japan had taken off because of “political accident”, and fallingdown because of “policy failure”

EL market

3500

Marketdevelopment

3000
Germany(cumulative)

RES policy
history

RPS policy

PV capacity, MW

Grid issue

2500

EL company voluntary net-meterin

2000

EEG enhenced

Japan(cumulative)

Germany EEG
Gov start subsity

1500

Subsidy end

RPS history

1000

Concluding
remark500

Germany(annual)

Japan(annual)092

939495

96

97

98

9900

0102030405506

Snapshot
EL market

History of RES policy and wind power development in Japan•1992 - 98 : Wind power market taking-off under electricity suppliers’
paternalism or green washing–Market
development
RES policy
history–•

1998 - 03 : Un-intended market boosting and emerging “grid issue”–Grid issue

10 monopolies start “voluntary net-metering program” only for solar PV and wind
power in 1992, as their green washing for climate change
Some local gov. start to introduce wind power as “a symbol project”, and rapidly
spreading over Japan–On April 1998, 10 monopolies announced to introduce “15 years fixed price program

for wind” instead fading out “voluntary net-metering program” in order to lower thepurchasing priceThis new program boosted “wind bubble”, not as intended by the monopolies, since
the largest project risk was mitigated rather than price,•RPS policy
RPS history–•“Grid issue” was first raised by Hokkaido Electric Power Co. as their excuse to set
limitation to introduce wind power into their grid such as “stability of electricity
supply”

2003 - present : Cold wind days with grid issue and RPS–

Concluding
remarkMore than 500 MW wind projects in total were inquired in Hokkaido Electric Power Co. alone in 1998, when
there were 22MW wind in Japan and 5MW in Hokkaido.

–Grid issue become “national common issue” from “monopolies’ excuse”, and METI
set barriers for wind rather than solutions, such as battery and seasonal wind cutting
off
Small target and slow progress set by Japanese RPS allow the el-monopolies to set
the ceiling for new renewable and bidding
6Snapshot

History of RES policy and PV development in Japan

EL market•– 10 monopolies start “voluntary net-metering program” only for solar PV
and wind power in 1992, as their green washing for climate change– Grid connecting rules anyhow prepared

Marketdevelopment
RES policyhistory••RPS history

1994 - : Governmental bold subsidy started– The Gov. started PV subsidy for residential “half a cost” ~ 300
mYen/applicant, the most charitable manner ever.
– This charitable subsidy only for PV scheduled to decline every year, andended up in 2005

Grid issue
RPS policy

1992 - : PV market taking-off under electricity suppliers’ paternalism
or green washing2005 - present : RPS, and sunshade on PV market– Market has grown enough 10 monopolies feel it as “burden”– RPS bring contradiction 10 monopolies against their “voluntary netmetering program”– Still no effective policy measure has been introduced nor even discussed,
except for Tokyo Metropolitan Government (TMG)

Concludingremark
7Snapshot

Grid connection in Japan and wind power “restriction”

EL market
Marketdevelopment
RES policy
history

Kyushu EPC (19GW)- 700MW (’06)

Chugoku EPC (12GW)- 400MW (’05)

Hokuriku EPC (8GW)- 80MW (’06)
Hokkaido EPC (6GW)- 150MW (’99)- 250MW (’02)-plus 50MW (‘06)

Grid network in Japan
Inter-region
connection*seasonal cut-off

Grid issueQuickTimeý Ç²TIFFÅià èkÇ»ÇµÅj êLí£ÉvÉçÉOÉâÉÄ
Ç™Ç±ÇÃÉsÉNÉ`ÉÉÇ¾å©ÇÈÇžÇ½Ç…ÇÕïKóvÇ-Ç ÅB

RPS policy

Tohoku EPC (16GW)- 300MW (’01)- 520MW (’06)-plus 100MW (‘06)*with battery

RPS history
Concluding
remarkShikoku EPC (7GW)- 200MW (’05)

Chubu EPC (33GW)- no restriction so far

Okinawa EPC (2GW)- 25MW (’06)

Kansai EPC (37GW)- no restriction so far

Tokyo EPC (60GW)- no restriction so far

8Snapshot

Japanese RPS (RES quota) regulation - too small target
180

Marketdevelopment

160

RES policy
history
Grid issue
RPS policy
RPS history

Progressive target (* 0.1 TWh)

EL market

16TWh（1.63%)

12.2TWh（1.35%)

1401201008060
40

3.3TWh（0.3%)

ActualTarget（original）
Target(revised）

20Concluding
remark02003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 20149Snapshot

Highly political renewable target

EL market•RPS policy
RPS history
Concluding
remark45% (2030)
Renewable electricity target (share of electricity)

Grid issue

Renewable Electricity Target

RES policy
history

50.0

Share of RE(at start point)

Marketdevelopment

43 countries and 21 states (US, Canada) has political renewable target

40.0

30.0
30% (2020)(drafted)

20.0

20% (2020)
12.5%()

10.0 1.63% (2014)
1.35% (2010)

21%(2010)

15% (2020)*US
congress
21% (2020)

20% (2010)
25% (2013)

10% (2010)22% (2010)
0.0JPEUGEUKCH

US

7% (2005)
17% (2006)

-10.0

-20.0

FR

Share of renewable(at starting point)

Cal

N.Y.

10% (2002)

1019% (2003)

Snapshot
EL market

Japanese RPS (Quota system) introduced after political conflict•–Marketdevelopment
RES policy
history–•

Grid issue
RPS policy

NGOs/Parliament collaboration has once opened the policy window

Electricity industries (10 regional monopolies) : strong opposition against both
FIT and RPS (quota obligation) in order to avoid any regulations and enjoy
monopoly–•RPS history•Owing to their voluntary net-metering program since 1992 and their voluntary longterm contract program for wind power since 1998, wind power has started rapid
growth, then, they reverse their attitude

Government (METI bureaucrats) : keeping their political power on energy
policy–Concluding
remarkIn Nov 1999, supra-partisan coalition for renewable energy has launched in theParliament under the strong collaboration with NPO alliance, that had proposed adraft legislation based on FIT.
In May 2000, the Parliament Coalition proposed the draft law based on FIT,
however finally METI has taken back their political power, and succeeded legislationof new RPS in 2002

Historically they have relied on the political power of electricity industry throughtheir command & control regulation, RPS (quota obligation) fit their political culture
and attitude

Energy Politics in the Parliament: still controlled by “energy conservatism”,stick to nuclear “myth”and pork-barreling culture–

LDP (ruling party) is controlled by the electricity monopolies, while Democrats(opposition party) is controlled by the trade union of the monopolies
11Snapshot
EL market

Concluding remark - “cold wind & sunshade days in Japan”•–

Marketdevelopment
RES policy
history

Political risk of negative feedback from the electricity monopolies–•

Policy risk from political RPS (renewable quota regulation)––

Grid issue•––

Concludingremark•

RPS does not effectively address the issue of external costs of conventional energy,
nor does it provide cradle markets bringing new technologies to competitiveness
Moreover, RPS works not as “a promoter” but as “a cap” because of its nature ofpolitical risk

Cold wind & sunshade days in Japan

RPS policy
RPS history

Early success, such as German case, have created negative feed-back to large,
hostile energy industries in Japan, who have market power as well as political power
for energy policies in Japan,
Then RE policies easily turn to be “policy risk” rather than “support” since it’s often
developed by those hostile actors,

Wind power market has been falling into “political risk trap” in Japan, and might
keep some years so far.
PV market has been falling into “absence of support policy” except for “voluntarynet-metering program” by 10 monopolies

Japanese lessons tell us the need for combination of strong politicalcommitment and innovative integration for RE promotion––

Renewable heat “absence of policy framework”
Renewable fuel falling into similar “political risk trap” with wind12