Report for the NTCT Working Group on “Toward Carbon Neutrality in East Asia“
Kentaro Tamura and Yosuke Arino

Institute for Global Environmental Strategies (IGES)

1. Japanʼs initiatives toward achieving carbon neutrality
1.2. An Overview
Former Prime Minister Suga declared the achievement of carbon neutrality by 2050 in his
policy speech of October 2020. Furthermore, at the urging of the Biden Administration in theUS, a new 2030 emission reduction target (46% reduction against 2013 levels) was announced

at the Climate Leaders’ Summit in April 2021. The basis for the 46% emissions reduction target

is not known. If a straight line is drawn between zero emissions in 2050 and current emissions,however, there will be around 46% reduction in emissions by 2030 compared to 2013 levels(See Figure 1).

Figure 1 Japan’s GHG Emissions: Historical Trends and Reduction Targets

Source: Calculated by the author based on Greenhouse Gas Inventory Office (2021)

The Japanese government formulated five key policy documents that provide a policy

direction to 46% reduction target, as well as a perspective toward the 2050 carbon neutrality.

The five documents include: 1) the 6th Strategic Energy Plan; 2) the Plan for Global WarmingCountermeasures; 3) the Green Growth Strategy to achieve carbon neutrality by 2050; 4) theNDC; and, 5) the long-term low GHG emission development strategy (long-term strategy).
Relations between these policy documents are summarised as Figure 2.

Figure 2 Relations between Key Climate and Energy-related Policy Documents in Japan
Source: Matsuo, N. and K. Tamura (2021) Understanding the 6th Strategic Energy Plan. IGES Working Paper

Since energy-related CO2 accounts for 88% of the total GHG emissions in Japan, the Strategic

Energy Plan is a key policy document for climate mitigation policy. The 6th Strategic Energy
Plan includes a basic plan for 2030 and energy supply and demand outlook for 2030, both ofwhich are compatible with 46% emissions reduction target. It also provides perspectives for2050 carbon neutrality. The Plan for Global Warming Countermeasures provides specificpolicy measures to achieve the 46% reduction target in both energy and non-energy areas.

The Green Growth Strategy identifies 14 key areas for achieving carbon neutrality providesroadmaps for 2050 in each of the 14 areas.

Based upon these domestic policy documents, NDC and the long-term strategy provide

specific information on the 46% GHG emissions reduction target by 2030 and carbon
neutrality by 2050, respectively, as international pledges.

It should also be noted that the commitment to carbon neutrality by 2050 was enshrined inlaw. In May 2021, the Act on Promotion of Global Warming Countermeasures was amended

to stipulate the goals of the Paris Agreement and the government's declaration of carbon

neutrality by 2050 as basic principles and position them in the law. The Act entered into force

in 1998 as the first climate-dedicated law in Japan, and serves as a framework legislation forclimate change policy. By clearly setting out the direction and continuity of the policy, theamended Act aims to provide predictability to all actors, including citizens, local authorities

and businesses, and to promote initiatives and innovation.
1.2 Perspectives toward Carbon Neutrality

In order to reach carbon neutrality by 2050, the 6th Strategic Energy Plan emphasises theimportance of proceeding with multiple scenarios, rather than using a specific scenario (as inthe 2030 Energy Supply and Demand Outlook, which the following session will discuss in thispaper) as a concrete picture of energy supply and demand for 2050. This approach isreasonable in considering how to approach 30 years from now, when there is still a highdegree of uncertainty.

However, the key questions of how to develop the multiple scenarios, how to compare them,
how to choose between them, and how to change course (at certain milestones) are still not
clear at all. There is no "methodology for the use of scenario analysis in future policy making".
It is feared that if this is not done, multiple scenarios will be developed on an ad hoc basis.

The 6th Strategic Energy Plan provides comprehensive perspectives for carbon neutrality in

2050. First, it emphasis thorough energy conservation and efficiency improvement. Second,it stresses the importance of decarbonising the power sector by exploring all technologicaloptions. That means, maximum use of renewable energy is seen as “top priority of a main

power source.” Simultaneously, it suggest decarbonising thermal power plants by carbon
capture, utilization and storage (CCUS) and hydrogen/ammonia co-firing and 100% firing. In

addition, somehow contradictorily, it states continuous use nuclear power at the necessary

scale and develop new generation of reactors, while reducing dependence on nuclear as
much as possible. Third, electrification in all the sectors is also identified as the essentialapproach. Fourthly, promotion of hydrogen-related technologies is emphasised. Hydrogenis expected to be applied for the “hard-to-abate” (i.e., “hard-to-electrify”) sectors such as hightemperature heat in the industrial sector, steelmaking, aviation and shipping, etc. Finally,
direct air carbon capture and storage (DACCS), bioenergy with carbon capture and storage(BECCS) and reforestation are mentioned for offsetting residual emissions.

The 6th Strategic Energy Plan also highlights the importance of fostering Japanese companies’
international competitiveness in a decarbonised world. It refers to the Green Growth Strategy

that identified 14 areas where future growth would be expected through technologicalinnovation and provided roadmaps for 2050 in each of the 14 areas. The 14 areas are:

(1)Offshore wind power, next-generation solar power and geothermal power:

Offshore wind power can be introduced in large quantities and at low cost, and isexpected to have an economic spill-over effect. In the photovoltaic industry, thePlan highlights the practical application and creation of new markets for nextgeneration solar cells, including perovskite solar cells that can be installed on walls
and other surfaces where existing solar cells have technical limitations. With regard

to geothermal power generation, the Government will conduct surveys of theamount of resources in suitable areas for development, provide risk money tobusiness operators, review the operation of regulations under the Natural Parks

Law, the Hot Springs Law and other relevant laws and regulations, and promotelocal understanding.
(2)

Hydrogen and fuel ammonia industries: the Government will make efforts to(3)

Automobile and storage battery industry: In the automobile sector, aiming to

reduce supply costs and increase demand.

make the entire supply chain carbon-neutral, comprehensive measures will betaken to promote electrification, including promotion of the introduction ofelectric vehicles and fuel cell vehicles, development of quick recharging facilities
and hydrogen stations, development of next-generation battery technology andpromotion of manufacturing sites, and support for automobile dealers,maintenance companies, service stations, etc., which support parts suppliers andlocal economies, along with energy decarbonisation.
(4)

Carbon recycling and material industry: Carbon recycling is a technology thatmakes effective use of CO2 as a resource, and is an important cross-sectional field

for the realization of a carbon-neutral society. CO2 absorbing concrete, carbon

recycling fuel (synthetic methane), carbon recycling chemicals (artificialphotosynthesis).
(5)

Housing and building industry and next-generation electricity managementbusiness: Strengthening of regulatory measures such as the obligation to comply
with energy-saving standards, including for housing; expansion of the spread of

net zero energy houses (ZEH) and net zero energy buildings (ZEB); enhancement

and reinforcement of measures for existing stock, including promotion of energysaving renovation; review of certification standards for excellent long-term

housing and the housing performance indication system; and extension of theservice life of housing and buildings. In addition, the government is working toimprove the quality of life of homes and buildings. At the same time, theGovernment will promote energy management initiatives that contribute to theadjustment of electricity supply and demand in line with the amount of electricity
generated by solar power generation systems, etc., using energy management
systems for homes and buildings (HEMS and BEMS).
(6)

Next generation heat energy industry: It is important to decarbonise gas as asource of heat energy. In order to decarbonise gas, it is important to use the next
generation heat energy such as synthetic methane synthesised from hydrogen and
CO2 (methanation) and direct use of hydrogen.

(7)

Nuclear industry: The development of technologies that contribute to further

improving the safety, reliability and efficiency of light water reactors will bepromoted. Steady promotion of fast reactor development using international
collaboration, and demonstration of small modular reactor technology throughinternational collaboration. Steady promotion of fusion research and development
through international collaboration such as the ITER project.
(8)Semiconductor and information and communications industries: Carbon
neutrality will be realized by a society that is electrified and digitalized in all fields,

including manufacturing, services, transportation, and infrastructure. Therefore,
the semiconductor and information and communication industries, which are thefoundation of digitalisation and electrification, are key to promoting green anddigital at the same time. Promotion of energy demand efficiency and CO2

reduction through digitalisation (Green by Digital) and energy saving andgreening of the digital equipment and information and communication industry
itself (Green of Digital)(9)

Shipbuilding industry: The Government will promote technological developmentof zero-emission ships using alternative fuels such as hydrogen and ammonia, andstart demonstration projects by 2025, aiming to achieve commercial operationahead of the previous target of 2028, and to further promote the use of such ships
by 2030.
(10)

Logistics, human flow and civil infrastructure industry: The government aims

to achieve carbon neutrality in 2050 in the logistics, human flow, and civilengineering infrastructure industries through the formation of carbon-neutral

ports for hydrogen imports, the introduction of smart transportation, thepromotion of bicycle mobility, the promotion of green logistics, the promotion ofmore efficient and lower-carbon transportation networks, bases, and transport,

zero emissions in infrastructure and urban spaces, and comprehensive efforts toachieve carbon neutrality in construction.
(11)

Food, agriculture, forestry and fisheries: Based on the Green Food System
Strategy (May 2021), the Government aim to achieve zero CO2 emissions inagriculture, forestry and fisheries by 2050 by promoting the development ofinnovative technologies and production systems and their social implementationthroughout the supply chain, from production, processing and distribution toconsumption.

Specifically,

theGovernment

will

strongly

promotetheelectrification and hydrogenation of agricultural and forestry machinery andfishing vessels, the reduction of greenhouse gas emissions from agriculture andlivestock, sinks such as long-term, large-scale storage of carbon on agriculturalland and in the oceans, and the reduction of food losses. In addition, in order tostrengthen the CO2 absorption and storage functions of forests and timber, theGovernment will promote the conversion of buildings to wooden structures,including the establishment of high-rise wooden technology, and will work to

rejuvenate forests through thinning and reforestation using seedlings withexcellent growth potential.
(12)

Aircraft industry: Aim to establish the technological superiority of Japan's aircraft

manufacturing industry for low-carbon development in the aircraft sector,

including electrification technology, hydrogen technology, sustainable aviationfuel (SAF) such as biojet fuel, and carbon fibre composite materials for airframes.

(13)

Resource recycling related industries: With regard to the “reduce, reuse, recycle
and renewable” of wastes, technological development and social implementation
are encouraged by legislation and planning. Technologies such as waste power

generation, heat utilization and biogas utilization have already entered thecommercial phase and are becoming more widespread and sophisticated.
(14)

Lifestyle-related industry: A combination of ZEH (Net Zero Energy House) andZEB (Net Zero Energy Building), home appliances, hot water supply and otherequipment, and electric vehicles as moving storage batteries will be implemented

to promote total management of housing and transportation. To promote

behavioural change through nudging and sharing, and to develop anddemonstrate technologies to verify the effects of CO2 reduction.

As pointed out earlier, the 6th Strategic Energy Plan does not provides a specific energy orpower generation mix for 2050. However, the Green Growth Strategy provides a power

generation mix for 2050 as a reference. In that mix, renewable energy accounts for 50 to 60%,

nuclear power, thermal power with CCUS, for 30 to 40%, and hydrogen and ammonia for 10%.

Figure 3 Proposed Process of Transition to Carbon Neutrality
Source: Government of Japan. 2021. Green Growth Strategy.

2. Cooperation among China, Japan and ROK for achieving carbon neutrality
2.1 How can stimulus recovery packages for COVID-19 disaster contribute to socio-economicand energy structural changes toward decarbonisation? If not, what are the challenges and how
can they be overcome?
Governments of China, Japan and ROK should deliver green stimulus packages to recoverfrom the COVID-19 pandemic with an aim to both facilitating transformation of economic,

energy and social systems toward decarbonisation and ensuring just transition which allows
such transformation to be made in a smooth and “no-one-left-behind” manner, including

reskilling of workers, green job creation, and financial support for them. As Figure 4 shows,
however, China, Japan and ROK are currently categorised as “missing opportunities,” since

they have allocated more than 1% of GDP to recovery spending but less than 30% of the total

recovery spending was for a green recovery (i.e., potential impact on GHG emissions, air
pollution, natural capital, quality of life and inequity).

Figure 4G20 Green Recovery Spending (January 2020-Augst 2021)
Source: Climate Transparency 2021.

Note: Bubble sizes represent total value of recovery spending.

This figure shows the three countries will be able to expand “green portion” further in thenext recovery spending. In doing so, it is recommended to introduce “green strings” forrecovery spending and reinforce policy regulations and incentives that align with near-termclimate targets.

2.2 How can APT countries collaborate together at the regional level to commit and achievecarbon neutrality?
2.2.1 Mutual learning for developing strategies and roadmaps for achieving carbon neutrality
Having experience and expertise, China, Japan and ROK are in a good position to supportother Asian countries to develop their long-term strategies toward net-zero emissions. TheGlasgow Climate Pact, which was adopted at COP26, urges those Parties that have not yet
done so to submit long-term strategies towards “just transition to net zero emissions by oraround mid-century.” The Glasgow Climate Pact also notes the importance of aligning NDCs
with long-term strategies. In addition, rules for a 5-year cycle of NDC submission under theParis Agreement were agreed at COP26. So, a series of subsequent NDCs need to be set asstepping stones toward net-zero emissions. National long-term emissions pathways toward

net zero andIn addition to China, Japan and ROK, as of writing, India, Indonesia, Lao PDR, Malaysia,Singapore, Thailand, and Viet Nam have committed to net zero emissions. Not all of them
have not develop long-term strategies. In addition, most of them have not revisited andenhanced their 2030 emissions reduction targets.

2.2.2 Mobilising finance for transition management (or a “just transition”) involving the privateand public sectors
The three countries can and should more aggressively provide finance to support justtransition from coal to renewable energy in developing countries in Asia. There are notable

examples. At COP26, a financial package to accelerate South Africa’s transition away fromcoal was announced by France, Germany, the UK, the US and the EU. This $8.5 billion packageof grants and concessional finance over 3-5 years aims at speeding the retirement of coalplants and the deployment of renewable energy, while it also revitalises coal mining regionsin South Africa by providing potential alternative job opportunities such as electric vehicle
manufacturing and green hydrogen production 1.

Similarly, at COP26 Asian Development Bank (ADB), Indonesia, and the Philippine announced
a new partnership to establish an Energy Transition Mechanism (ETM) with an aim toaccelerating Southeast Asia’s clean energy transition. 2 Japan committed a grant of $25

million to ETS. A full scale-up of ETM in Indonesia, the Philippines, and possibly Viet Nam—aiming to retire 50% of the coal fleet, which is approximately 30 GW, over the next 10 to 15years—could cut 200 million tons of CO2 emissions per year.

Following these example, the three countries should mobilise the finance through publichttps://ec.europa.eu/commission/presscorner/detail/en/IP_21_5768
https://www.adb.org/news/adb-indonesia-philippines-launch-partnership-set-energytransition-mechanism
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private partnership to help decommissioning coal-fired power plants, providing alternative

energy as well as jobs in Asian developing countries. The three countries have governmentled financial arms and contributions to multilateral/regional development banks. Together

with private sectors, such resources should be mobilised for rolling out renewables and also
facilitate just transition.