## (1) Market Size of the Environmental Sector in Japan

According to estimates by a private company in the United States, the global market for the environmental industry grew by 4% every year from 2000 to 2008, despite differences in the scope and types of environmental industry. In 2009, growth was expected to be negative in response to the global recession, but that it would turn positive (slightly above 3%) after 2011, with the trend continuing for some time. In looking at this phenomenon by region, Asian countries will show the largest growth from 2008 to 2012, with expected market growth of about 20.0 billion dollars (Figure 1-3-26).

The Ministry of the Environment carries out a survey of market size and employment in Japan's environmental industry, based on environmental classifications proposed by OECD. According to this survey, market size and employment in the industry has continued to grow since 2000 (Figure 1-3-27). The 2010 market was estimated at about 69 trillion yen, and the estimated number employed was about 1.85 million people, even though the market size decreased from the previous year due to the global economic crisis.

## (2) Patents in the Environmental Sector

Looking at Japan's environmental technology from the perspective of the number of patent registrations shows a trend of growth, with the number exceeding 2,000 in 2009. This trend shows an increase in science and technology research expenditures in the environmental sector, including those of businesses, public institutions, and universities. The number of registrations for environmental-related patents in the United States and European countries remains flat, while China is showing an upward trend (Figure 1-3-28).

Japan is ranked high in terms of the number of patents granted in sectors including the atmosphere, water quality management, waste management, and anti-climate change strategies. Looking at the details of the number of patent

Note: 2011 and 2012 are estimated values

Source: Ministry of the Environment based on Environmental Business International, Inc., San Diego, California

Figure 1-3-27 Market Size of the Environmental Sector and Employment in Japan

Source: Ministry of the Environment

Figure 1-3-28 Number of Patents in the Environmental Sector (Japan and major countries) and Science and Technology Research Expenditures (Japan)

Figure 1-3-29 Number of Registered Patents Related to Technologies for Measures to Cope with Global Warming (2010)

registrations in the anti-climate change sector in particular, Japan has more patent registrations for electric vehicles, hybrid electric vehicles, energy-saving architecture, and energy-saving equipment. In the renewable energy sector, the United States and Germany are ranked high in the number of patent registrations (Figure 1-3-29).

## (3) Environmental Financing to Promote Innovation

A proactive approach is expected for active organizations to develop new technologies for dealing with environmental issues. With the goal of leading Japan's economy into a long-term growth spiral to overcome deflation, the Bank of Japan launched an initiative for funding to strengthen the basis of growth in June 2010. This initiative supplies low-interest funding to financial institutions according to their past loan records. The recipient financial institutions submit policy papers to address eighteen sectors defined as new growth strategies or similar fields by the government. Looking at the cumulative amount invested and lent during the period between April and December of that year, the amount of money supplied to the environmental and energy sectors reached a record high of 671.9 billion yen, accounting for nearly 30% of the total funding. This has created expectations for growth in these sectors in recent years (Figure 1-3-30). In the future, it is hoped that financial institutions will be supported in their efforts to find new growth businesses, exercise good judgment in selecting the ones to cultivate, and promote businesses that can lead the next generation by providing funds for new technology development, which is encouraging yet risky, and promoting businesses particularly in sectors that involve the environment and energy.

In recent years, technology research and development-related budgets have particularly grown in relation to other budgets for environmental conservation (i.e., government expenses for global environment conservation, pollution prevention, and protection or maintenance of the natural environment). Budget in 2012 secured for technology

Figure 1-3-31 Technology Research and Development Budget in Expenses for Environmental Conservation

research and development is about 35.5 billion yen of overall environmental conservation expenses (Figure 1-3-31).

## (4) Understanding Business Confidence in the Environmental Sector

Keeping a careful watch on trends affecting future environment-related markets is a critical part of implementing environmental policy as we consider market trends affecting environmental technology. In response to market needs, the Ministry of the Environment launched a new statistical survey called the Short-Term Environmental Survey (also known as the Environment "Tankan"), starting in FY2010. This ongoing survey is conducted twice a year and provides information such as business confidence in environment-related corporations. The survey is designed to contribute to increased recognition of environmental business activities through the publication of survey results, and it will also be used as basic data for planning or formulating specific environmental business promotion policies and evaluating their effects.

According to the results of the December 2011 survey, business conditions for environmental businesses are relatively good compared to businesses as a whole. As part of the survey, a questionnaire on current environmental businesses was conducted to identify business conditions, while a Diffusion Index (DI) $ ^{*} $ targeted corporations currently implementing environmental business activities. When the results were compared between the target group