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How much of Japan’s electricity can be generated by renewable energy (RE)? America’s Berkeley National Laboratory and Japan’s Ministry of Economy, Trade, and Industry (METI) have very different assessments. I think Berkley’s is more realistic.

            According to Berkeley Lab, by 2035, it is both technologically and economically feasible for Japan to get 70% of its electricity to come from RE, mostly solar and wind. Moreover, doing so would lower wholesale electricity costs by 6% from the 2020 level.

            Berkeley’s vision is a mirage, contends the Ministry of Economy, Trade, and Industry (METI ), which contends that geography and the laws of physics create insurmountable barriers. Solar and wind need an enormous amount of suitable land, but Japan lacks enough of such land. 66% of the country is covered by forests. Moreover, due to the earth’s tilt and Japan’s mountainous topography, a square meter of land in Japan gets less energy from sunlight than in many other countries. Wind power needs certain wind conditions and Japan has only a few suitable areas for onshore wind or near-offshore wind, while far-offshore wind will not be economically practical on a mass scale for many years to come. Then, of course, the sun does not always shine, nor the wind always blow. So excessive reliance on RE, METI officials argue, makes brownouts and blackouts more likely. Consequently, METI concludes, Japan is forced to adopt more modest goals for RE, while greatly expanding nuclear power and maintaining its reliance on fossil fuels for decades to come.

            It is telling, then, that Berkeley Lab excluded any unsuitable land and still found enough sites to support its RE goals. Moreover, while the World Bank includes Japan in a list of countries with less solar potential, it noted that, even in such countries, “the potential is not dramatically lower compared to the top-performing group.”

            Before going into the details of why I believe METI is unduly pessimistic, it’s worth recalling that, despite the Ministry’s role in pioneering the commercial use of solar power decades ago, METI has repeatedly underestimated RE’s potential.  For example, in 2018, METI said it would take until 2030 for RE to reach 22-24% of electricity generation. In reality, Japan already reached 22% last year. By contrast, in a 2015 report commissioned by the Ministry of Environment, the Mitsubishi Research Institute projected that renewables could comprise 33-35% by 2030, close to the goal pushed through by former Primer Minister Yoshihide Suga in 2021.

Berkeley’s Vision Versus...

In the Berkeley Lab scenario, by 2035, 90% of Japan’s electricity could come from emissions-free sources, of which 70% would be generated by RE and 20% by nuclear power. The remaining 10% would come from natural gas, down from 37% in 2019. Coal would be completely phased out. Attaining these goals would reduce Japan’s carbon emissions from the power sector by 94% from 2019 levels, an amount equal to 30% of Japan’s total emissions.

            The RE portion would require an investment of ¥38 trillion ($283 billion) over 15 years, amounting to 0.5% of 2022 GDP per year. This investment would cover not only RE generation but also upgrading the electrical grid. The latter includes smart technology and storage capacity to handle the peaks and valleys of RE as well as interconnections among Japan’s nine regions, which are now mostly isolated from each other. With nuclear and gas acting as baseload power, and batteries and grid upgrades outflanking the problems of solar and wind intermittency, Berkeley says Japan need not fear blackouts or brownouts. Yes. ¥38 trillion is a lot of money, but METI has proposed spending ¥150 trillion ($1.1 trillion) of public and private money over the next decade or so on a GX (Green Transformation) program, including ¥60 trillion ($430 billion) on power from sources like RE, nuclear energy, hydrogen, and ammonia.

            To reach the Berkley target, solar power would have to resume rising at the record pace reached in 2015 and wind at twice its record. The scenario assumes that Japan does not raise its minuscule carbon tax (¥289 per ton); if it did, progress would be even faster. So, this is not a forecast of what will happen—since growth in RE has slowed down—but an assessment of what would be attainable if the political will were there.

            If public fear of another accident prevents nuclear energy from getting back to 20% of electricity, then more natural gas would be needed, reducing the decarbonization benefit.

... METI ’s Vision

METI touts a very different vision, one where co-firing coal and gas plants with ammonia and hydrogen, the use of Carbon Capture and Storage (CCS), and exports of natural gas power plants to developing countries, can all combine to preserve coal and LNG electricity, and not only within Japan. Rather than help developing countries with a coal-to-RE transition, Tokyo is pushing a coal-to-gas transition.

            METI’s 2021 Strategic Energy Plan projects that in 2050, when Japan has pledged to reach net zero emissions, renewables will generate just 50-60% of electricity, 30-40% will come from some mix of nuclear and “decarbonized” fossil fuels, and 10% from hydrogen/ammonia. In private, METI officials insist that Suga’s 2030s goals for 2030 and 2050 are “ambitious,” their polite word for unrealistic. It is telling that the 2023 report of the METI-affiliated Institute for Energy Economics Japan (IEEJ) predicted in its base case for 2050—i.e., no heroic assumptions about technological progress in green hydrogen or CCS—that coal would still generate 18% of electricity and natural gas another 36%, while solar, wind, geothermal, and hydro combined would provide just 26%. Even in the Advanced Technologies scenario, fossil fuels would supply 18%, while solar, wind, geothermal, and hydro combined supply just 45% (see table below).

What Is “Land”?

In 1858, petroleum oozing from the ground was a nuisance. That all changed a year later with the advent of drilling for oil in Pennsylvania. First, it replaced whale oil in lanterns and then went on to increasingly displace coal. Today, it’s metamorphosing from a resource into a threat.

            Whether something is a resource or a threat is not a fixed matter, but one determined by technology and economics. And this is what METI’s calculations miss. Solar power does not need land per se. What it needs is a surface where sunlight can hit the panels at the proper angle and with sufficient intensity. Technology is increasing the kind of surfaces that are suitable and cost-efficient. Yes, larger surfaces yield more energy per square meter than small ones, and flat surfaces are better than curved. But solar panels on rooftops and mountainsides and even lakes are already being used. There are even solar film panels that can be put on windows. So, while using inferior sources does make solar more expensive and less efficient, it can overcome the obstacles METI cites.

            These technological innovations are gradually being recognized. The Tokyo Metropolitan Government has mandated that, beginning in 2025, big contractors of detached homes less than 2,000 square meters (21,500 square feet) must install rooftop solar. Residences emit almost a third of all carbon in Tokyo prefecture, home to 10% of Japan’s population. Business and apartment buildings with floor space of more than 2,000 square meters were already required to have rooftop solar.

            Moreover, even while talking of the limits to RE, METI is introducing an incentive scheme—called the Feed-in-Tariff—for rooftop solar on industrial and commercial buildings across Japan. When combined with other plans for rooftop solar for government buildings and public lands, the Ministry of Environment projects that, over the coming years, this could add 20 GW of electricity. That compares to the 90 GW of cumulative solar that will be in place by the end of this year. This does not even count rooftop solar for homes. So, METI certainly supports RE. However, it doesn’t want its share to be “too large.”

Solar Farmland: From Agrivoltaics to Abandoned Farmland

One innovation particularly important in Japan is the spread of agrivoltaics: putting solar panels a few meters above crops as in the diagram at the top. Agrivoltaics not only adds to available siting opportunities, but adds some other benefits. Being above the ground keeps the panels a bit cooler, which improves electrical output. Meanwhile, partial shade means that plants lose less moisture through evaporation, and that improves crop yields for some plants and creates small reductions for others. Due to high incentives, which have now been reduced, one farmer in Chiba prefecture was able to earn ¥24 million ($174,000) by having solar panels covering one hectare (2.5 acres) of his farm and selling the excess to the grid. That’s more than he earns from farming itself.

            Unfortunately, only 742 hectares were approved for agrivoltaic use between fiscal 2013 and 2019, just 0.017% of Japan’s total farmland of 4.4 million hectares (17,000 square miles). By contrast, South Korea has targeted 10 gigawatts (GW) of agrivoltaics capacity by 2030. The biggest player is China, which, as of 2020, generated two-thirds of the current global total of 2.8 GW. The technology is just getting off the ground, so to speak. 

            Then there is all the abandoned farmland that could be used for solar farms, except that current regulations prevent it. As of 2015, about 5,400 sq. kilometers of Japanese farmland had been abandoned as farmers died without successors, an amount adding up to about 12% of all farmland. Given a conservative estimate of around 37 gigawatt-hours (GWh) of solar electricity per square kilometer in 2010, this abandoned land alone could produce more than 200 terawatt-hours (TWh) of electricity if used for solar over the coming decade, more than twice as much as Japan’s current solar output. That means solar power could supply 30% of Japan’s 2022 level of electricity consumption, up from the 10% it actually supplied. When Taro Kono was Administration Reform Minister, he tried, and failed, to end these restrictions on using abandoned farmland.

As time passes, even more farmland will be abandoned as elderly farmers pass on At the same time, solar’s potential will increase even more as improving technology is estimated to enable solar to provide at least 63 GWh/sq. km by 2050.

How Much Is Possible?

A group of scholars compared land use for solar in Europe, India, and Japan/Korea (taking the latter two countries as one unit due to their land use similarities). What they found was that, by 2050, solar could supply 46% of Japan/Korea’s needed electricity using just 3% of the total land in the two countries, together with rooftop solar that would supply 14% of solar energy in 2050.

            Here’s the bottom line: the main obstacles to faster adoption of RE in Japan are not geographical/physical limits or cost. It’s primarily regulations, business practices, and government policy. Abandoned farmland is just one example. During times of peak usage, utilities are still able to curtail renewable access to the grid in favor of fossil fuels and nuclear. And lengthy approval processes and other obstacles make building efficient megasolar projects harder and more expensive than they need be.

Source: https://nyc3.digitaloceanspaces.com/owid-public/data/co2/owid-co2-data.xlsx Note: Kilograms per kilowatt-hour of primary energy consumption

In 2010, the year before the Fukushima nuclear disaster, Japan’s energy and climate future looked encouraging. The country had some of the cleanest energy among advanced countries. Decades before people heard about global warming, Japan was pioneering solar power and electric vehicles—albeit for other reasons. Without Japan’s efforts, the world today would have far less potent technological weapons to defeat climate change. Understanding the pre-Fukushima situation is necessary for us to understand today’s policy battle.

The Revolutionary 2010 Strategic Energy Plan

Until Fukushima, Japan’s energy was as clean, and for a while even cleaner, than in other rich countries, as measured by carbon emissions per unit of all energy (see chart at the top). Regarding electricity generation alone, in 2010, Japan was second to the EU in terms of low-carbon electricity (see chart below).

Source: https://nyc3.digitaloceanspaces.com/owid-public/data/energy/owid-energy-data.xlsx Note: Share of electricity generation from renewables and nuclear

            Moreover, the 2010 Strategic Energy Plan (SEP) developed by the Ministry of Economy, Trade, and Industry (METI) projected further growth in low-carbon electricity via a substantial increase in nuclear and renewable electricity and a substantial drop in fossil fuels. Reducing energy imports, rather than cutting emissions, was METI’s primary motivation. That focus was a product of the two oil price shocks of the 1970s.

            The 2010 SEP proposed to double Japan’s “energy self-sufficiency,” i.e., energy not imported, from its 18% level in 2007 to 40% by 2030. The share of electricity with zero emissions was to double from 34% in 2007 to 70% by 2030. Nuclear’s share would double from 26% to 50%, while renewables would double from 8% to 19%. Since hydroelectricity was already at its maximum, increased renewables would have to come from solar and wind. While reaching 19% in 2030 seemed very ambitious at the time, renewables have already surpassed that goal at 23%.

            METI also wanted to halve Japan’s imports of oil, 90% of which came from the volatile Middle East. That required switching from gas-powered cars to hybrids and electric vehicles. So, the SEP set a goal to hike the share of low-emission vehicles in new car sales—hybrids, battery-powered EVs, and hydrogen fuel cell vehicles—from 10% in 2007 to 50% by 2020 and 70% by 2030. That would reduce transport sector emissions per mile driven by 38% as of 2030.

            At the same time, METI wanted the steel industry, which now produces about 15% of Japan’s carbon emissions, to switch from thermal coal to natural gas. It proposed reducing residential and commercial emissions by half by creating rules for new buildings. However, in these areas, because METI stuck to voluntary measures, little progress was made.

            The plan projected a 30% reduction in energy-related carbon emissions by 2030 compared to 1990, the base year for the 1997 Kyoto Protocol. Since Japan’s emissions had increased during 1990-2007, this would represent a cut of 40% from 2007 levels and would bring Japan halfway to its 2010 goal of an 80% reduction in emissions from the 1990 level by 2050.

DPJ vs. the LDP-METI-Keidanren Axis

Many of the proposals in the 2010 SEP emerged from a 2006 METI strategy document called New National Energy Strategy (NNES), but the NNES was focused more on energy independence than emissions reduction. The heightened attention to emissions by 2010 resulted in part from the victory of the opposition Democratic Party of Japan (DPJ) in the 2009 Lower House election. The first DPJ Prime Minister, Yukio Hatoyama, announced that Japan would reduce carbon emissions from 1990 levels by 25% as early as 2020, a goal set out in the DPJ’s election manifesto. METI, the powerful Keidanren business federation, and the Liberal Democratic Party (LDP) all claimed that this goal was impossible to meet. The pledge of the previous LDP government was an 8% cut. As a compromise, the 2010 SEP announced a goal of a 30% reduction ten years later, by 2030, but METI did not really buy it.

When Hatoyama was replaced by Naoto Kan, the DPJ government stopped talking about the 2020 goal. Moreover, in a stunning move, the Kan administration renounced the Kyoto Protocol’s call for mandatory cuts in emissions during 2008-12. Another measure in the DPJ manifesto was a cap-and-trade system for carbon emissions, something that has proved effective elsewhere. The Hatoyama administration tried and failed to include it in proposed legislation, and Kan dropped the idea. To this day, Japan still lacks any effective system for carbon pricing.

For details on assorted policy differences between the DPJ and the traditional policy-making elite, as well as within the DPJ, see this and this.

            Despite the disagreements, a couple of lasting achievements emerged from the short period of DPJ rule. The most impactful was a “feed-in tariff” (FIT) for solar power plants. The FIT would guarantee purchases of solar power by the utilities at a high price, thereby incentivizing producers. The LDP had intended the FIT to apply only to surplus electricity, but the DPJ wanted it to apply to all solar-generated electricity. When the LDP returned to power, it adopted the DPJ’s formulation, perhaps because the Fukushima disaster made the need for solar power more urgent. The FIT is one of the biggest reasons that solar electricity has become a major power source in Japan over the last decade.

Japan Creates the Global Solar Power Industry

If not for Japan, solar power across the globe would cost much more and be far less widespread than it is. The road to commercial viability began a half-century ago with Japan’s Sunshine Project. The government supplied money, and worked with private firms, to make solar panels technically and economically feasible. Previously, solar cells were mostly known for their use in satellites and manned spaceships.

            The Sunshine Project began in 1974, shortly after the 1973 oil embargo and quadrupling of prices, as part of Japan’s search for energy independence. The focus ranged from fundamental R&D to pilot projects, and various subsidies existed. As a result of decades of effort, Japan became the world’s biggest producer of solar energy panels, a status it held until 2008. Leadership passed to Germany and then China. One can only wonder whether Japan might have retained its leadership longer had Prime Minister Junichiro Koizumi not ended solar subsidies prematurely in 2005. As the industry grew, learning curve effects and economies of scale sent costs plunging at a rate far beyond expectations. In a virtuous cycle, lower costs led to greater adoption by electric utilities all over the world, leading to even further cuts in cost. Within Japan, the subsidies resumed after Fukushima under the FIT scheme. That sent solar mushrooming from just 0.3% of electricity in 2010 to 10% in 2022 (see chart below).

Source: https://www.irena.org/Publications/2023/Mar/Renewable-capacity-statistics-2023;  https://en.wikipedia.org/wiki/Solar_power_in_Japan

            To be sure, less successful attempts in other energy areas were also part of the Sunshine Project, but only governments have the wherewithal to fund a variety of such risky experiments, of which only some will succeed. Private finance could never have taken the risk of funding a technology that took four decades to pay off. This is not a case of the government fighting the market, but of leading it until costs become so low that government aid is no longer needed.

EVs Pioneered in Japan

Just as the 1973-74 oil shock spurred Japan’s efforts in solar power, it also spurred METI to develop battery-powered electric vehicles (BEVs), seeing them as the best alternative to gasoline autos. METI (then known as MITI) began financing R&D for BEVs as early as 1976. Progress was slower than expected, and a series of plans evolved. In 1997, MITI added efforts in hybrids and vehicles powered by compressed natural gas, methanol, and hydrogen fuel cells. Hybrids were added partly in response to the 1997 Kyoto Protocol on climate change, possibly because emissions reduction could be achieved more quickly. Previously, “the main ambition [was] replacing petroleum with electricity, hydrogen or natural gas in order to ensure energy independence.”

            Unbeknownst to METI in 1997, Toyota was already working on the Prius and would put it on the market two years later. Perhaps Toyota stayed away from the METI efforts because it did not want to share its knowledge with competitors.

            As early as the late 1990s, consumers were eligible for hefty subsidies for purchases of various low-carbon autos, including EVs. When Nissan (then under the leadership of Carlos Ghosn) came out in 2010 with the world’s first mass-produced BEV, the Nissan Leaf, Japanese consumers were given sizeable incentives, up to a maximum of ¥780,000 ($5,400) at today’s exchange rate). These days, the maximum is set at ¥650,000 $(4,500) for a BEV, ¥450,000 ($3,100) for a plug-in hybrid (PHEV), and a whopping ¥2,300,000 ($17,000) for a hydrogen fuel cell vehicle (FCEV). The size of the incentive depends on the range of the car: and its ability to pump excess electricity back into the home or office. Until 2019, the Nissan Leaf was the world’s top-selling EV; then, it was overtaken by Tesla.

            In 2021, electrified cars accounted for more than 40% of Japan’s 3.67 million car sales, not that far from METI ’s 2010 goal of 50% by 2020. 97% of them are traditional hybrids, and most of the rest of either BEVs or PHEVs. Despite the gigantic incentive, consumers bought only 2,464 FCEVs. Continuing to throw money at FCEVs is not a case of catalyzing the market, but of trying to defy it, as are fossil fuel subsidies all over the world.

            Because of the shift to hybrids, as well as increasingly stringent fuel mileage standards on gasoline cars, a new Japanese car has among the lowest emissions per mile of driving among rich countries. Progress in Japan and Europe have moved more or less in tandem (see chart below), while US emissions per mile are far higher.

Source: https://tinyurl.com/2p92stm5

            The problem is that, as the cost of driving goes down—because people buy less gasoline per mile—many people drive more miles per year, sometimes because they’ll choose driving over using public transportation. Consequently, overall emissions may not go down. That happened in both Japan and Europe. In Japan’s case, total emissions from cars rose rapidly from 1990 through 2000 and then fell back afterward, leaving emissions in 2019 a bit higher than they were in 1990.

            The answer is to move to BEVs and renewable electricity. Look at Norway, where, in 2022, BEVs comprised 30% of all cars on the road and 80% of new car sales. Emissions per mile are less than half of the rest of Europe. Whereas Norway’s total road transport emissions rose 7% from 1990 to 2012, after that, the spread of BEVs sent total auto emissions downward by 9%.

Fukushima Topples the Chess Table

The Fukushima nuclear disaster was a completely avoidable, self-inflicted calamity. Not only was Japan not following the world’s best safety practices, but also the electric utility at fault, TEPCO, had been falsifying safety records for years, while METI regulators turned a blind eye. The alliance of utilities, METI, and the LDP, nicknamed “the nuclear village,” destroyed nuclear’s credibility.

            That changed everything. All nuclear plants shut down for a while, few have been restarted due to public opposition, and it remains unclear how many will ever restart. In response, Japan turned to coal. Emissions rose (see first two charts again).

It also changed the policy battleground. In some ways, METI, the LDP, and Keidanren moved backward. For example, the government now favors a “go slow” policy on fossil fuel, refusing even to phase out coal. Instead, it dreams of “clean coal” via carbon capture. In other areas, like the FIT, the government has shifted in the right direction. Equally important, hundreds of climate-friendly corporations outside of heavy industry formed new organizations to spur decarbonization, e.g., the Japan Climate Leaders Partnership. For the first time, they have gained seats, and some real influence, on governmental advisory panels.

            This post-Fukushima political shift will be detailed in the next installment.

Source: https://carbontracker.org/reports/put-a-price-on-it/ Note: Estimate for Japan

It’s easy to feel frustrated about Japan regarding climate change. It often feels as if the country only makes progress kicking and screaming, that the fossil fuel lobby has a stranglehold on policy, that its automakers are behind the curve regarding electric vehicles (EV), and that Prime Minister Fumio Kishida is reversing the progress made under his predecessor, Yoshihide Suga.

            This perception is strengthened by Japan’s moves at the 2023 Group of Seven (G7) meeting of cabinet ministers in charge of energy and climate. Tokyo (with the support of the US and the EU ) blocked a British proposal to accelerate to 2030 the 2035 deadline for the complete phaseout of “unabated” coal. The latter is coal without carbon capture technology (CCS). While CCS may be necessary for certain industrial sectors, it is not cost-competitive for electricity generation and will likely never be, given the fall in renewable energy (RE) costs. The International Energy Agency has said that achieving net zero by 2050 requires rich countries to phase out unabated coal by 2030. Rather than offer a later deadline, Tokyo successfully eliminated any deadline, using the Ukraine war as the pretext. Tokyo also extracted a formulation accepting new gas-burning power plants if they could be claimed to lower emissions, e.g., by replacing coal. Japan’s machinery makers want to keep exporting such plants to developing economies.

            All this, however, is just one side of the picture. Japan is a battleground. Yes, the fossil lobby in and out of government tries, not to stop, but to slow down, the shift from fossil fuels to RE. On the other side, hundreds of leading companies, and parts of the LDP, want to reduce emissions more quickly and some finally accept the use of carbon taxes.

            Recall that Suga, defying the fossil lobby, upgraded Japan’s 2030 emissions reduction and RE goals. He also adopted the goal of reaching net zero by 2050; up from sometime between 2050 and 2100 (see table below). While the 2030 goals may not be met, more will be done than if Suga had not acted.

Source: https://www.enecho.meti.go.jp/en/category/others/basic_plan/pdf/6th_outline.pdf

The Economic Game-Changer

What’s most important is that behind the “move more quickly” faction stand the forces of economics. Within a few years, Japan will find building and running new solar and onshore wind facilities cheaper than operating existing coal and gas-fired power plants. By 2020, that was already the case in countries with half the world’s population. In 2030 in Japan, it will cost an estimated $108 per Megawatt-hour (MWH) to run existing coal plants and $112 for gas (see chart at the top). But to build a new wind or solar farm including battery storage for electricity—because the sun doesn’t always shine and the wind doesn’t always blow—the cost will be just $83 for solar and, by 2032, just $100 for onshore wind. Should Japan impose a carbon tax of even $30 or $60 per ton, the price crossover point will come earlier.

            When doing the right thing for the environment becomes the more profitable thing for producers and the cheaper thing for customers, that’s a powerful game-changer. That is why, in 2023, for every dollar of new investment in coal, oil, and gas around the globe, 1.7 dollars are being invested in clean energy. The latter includes renewables, electric vehicles, nuclear power, grids, storage, low-emissions fuels, efficiency improvements, and heat pumps.

            These market forces are finally compelling Japan’s automakers to shift to battery-powered electric vehicles (BEVs) faster than they intended. The shift was sparked by a loss of sales overseas that is putting China on track to overtake Japan as the world’s biggest auto exporter. In the last couple months, Toyota announced its goal of producing 3.5 million battery EVs (BEVs) by 2030, up from 2 million just a little while ago. The new goal equals 35% of current global sales. Honda now targets 2 million BEVs by 2030, equal to half of current sales. In the past, Honda’s BEVs goals were fuzzier due to an emphasis on “electrified” cars, which includes both traditional hybrids and plug-in hybrids (PHEVs). Nissan’s goals are still fuzzy: 55% electrified cars by 2030, up from 50%.

            On the downside, these automakers are still hedging their bets by investing billions of dollars on cars that are either losing popularity, such as traditional hybrids, or failing to ever gain it, like PHEVs and the truly futile fuel cell vehicle. In 2022, global sales of BEVs and PHEVs combined overtook sales of traditional hybrids: 10.5 million to 8.4 million. BEVs outsold PHEVs three to one. Moreover, Bloomberg reported that 2017 “will end up being the all-time high” for global sales of gasoline-powered cars.

            Meanwhile, dozens of planned coal plants were never built, not due to political pressure, but because they no longer make financial sense. Global Energy Monitor reported in 2023, just one small plant “stands between Japan and a claim of ‘no new coal’ in the country. This is in contrast to the nearly 10 GW [Gigawatts] that was in the works just two years prior.”

            Solar power has expanded at a much faster-than-expected pace due in large part to government subsidies. The share of RE electricity generation nearly doubled from 12% in 2015 to 22% in 2022. As a result, annual power sector emissions in 2022 were 16% below 2015 levels. The role of subsidies belies any notion that Tokyo opposes RE. Rather, for reasons we’ll explore in Part II, it wants a combination of RE and fossil fuels.

            At the same time, a growing number of leading corporations in sectors like electronics are urging the government to move faster on RE because, otherwise, they won’t be able to sell to big overseas customers committed to 100% clean energy during the 2030s or sooner. A couple hundred of them now accept the need for a serious carbon pricing system (details in a later installment).

            All of this is encouraging. Due to the economic shift, the forces for progress on climate change are gaining strength, even in Japan. Momentum is on their side. The bad news is that progress is still far too slow to avoid a climate catastrophe. No Group of Seven country is on track to reach net zero by 2050, but Japan is the furthest from the goal.

            More policy action is required. But policy action comes more easily when it is backed by economic incentives for producers and consumers alike.

Growth, Energy, and Emissions

The history of energy has been progress toward fuels that are more efficient, that can do things that earlier forms of energy could not (e.g., electricity), and that are less smoky and sooty. All of this adds up to downward pressure on carbon emissions, even though only recently has that become a conscious goal.

            The firewood and dung still used by three billion people emit many times more carbon than a gas stove to boil a quart of water. All the cement and steel used to build infrastructure and buildings as countries industrialize are immensely carbon-intensive. By contrast, the services that predominate in rich economies need less energy. At the same time, a modern electric arc steel plant emits far less carbon than previous steel mills.

            The consequence is that, over the last seven decades, as world per capita GDP quadrupled, the energy needed to produce a dollar’s worth of GDP fell by almost half (see chart below).

Source: https://nyc3.digitaloceanspaces.com/owid-public/data/co2/owid-co2-data.xlsx

Note: The horizontal axis is on a logarithmic scale so that an equal length along the axis shows equal proportionate growth, e.g., a doubling.

            Initially, as relatively poor countries grew a bit richer and farming became more mechanized, they substituted fossil fuels for animal power. Consequently, carbon emissions per unit of energy rose, then peaked in 1965. Then, as these countries grew still richer, they shifted to cleaner forms of energy. Average carbon emissions per unit of energy are lower today than they were back in 1950 (see chart below).

            Finally, consider the impact due to the combination of less energy per dollar of GDP and lower emissions per unit of energy. As per capita GDP doubled from 1950 through 1971, emissions per dollar of GDP fell just 6%. But when per capita GDP doubled again from 1971 to 2021, emissions per dollar of GDP halved! (see chart below). Growth is not the enemy of the effort to reduce emissions, but its partner.

Of course, since per capita GDP quadrupled and the population kept rising, total global emissions soared for a long time. Finally, however, in 2012, emissions peaked (see chart below). Now, we come to why they peaked and have begun to decline, even if they do so far too slowly.

The Great Decoupling In Rich Countries

Once some countries got rich enough, there emerged an unprecedented world-historical change, a decoupling. GDP kept growing even as total energy consumption and total emissions fell. As of 2019, 28 countries had already passed their peak emissions, Japan is one of them. After 1975, energy and emissions grew more slowly than GDP, and, beginning in 2005, they started shrinking even as the economy kept growing (see chart). Since 2005, Japan’s GDP grew a measly 5%, while energy use fell 21% and emissions fell 17%. Had the Fukushima nuclear disaster not revived the use of coal, emissions would have fallen more.

            There are big differences in the pace of this progress, and that shows the role of politics. In North America after 2007, even though GDP rose 24%, energy use dropped 4% and emissions dropped 17% (see chart below).

            In the EU, emissions started falling as early as 1980, and energy a few years later, Even though GDP doubled from 1975 to 2021, energy use fell 10% while emissions fell 30%.

Even China is showing the initial signs of decoupling (see chart below).

Economics and Politics

The upshot is that the natural processes of economic development are already pushing Japan and others in the right direction. While economic forces are not sufficient, the policies needed for net zero by 2050 can count on market forces as an ally, not an obstacle. By contrast, the fossil fuel lobby in Japan, and elsewhere, is increasingly forced to fight a rearguard battle against the market.

Coming Up in Part II: The conflicting motivations shaping Japan’s energy and climate change policy

Source: https://ourworldindata.org/grapher/share-electricity-coal

Necessary but not sufficient. That’s the key phrase describing the relationship between economic fundamentals and achieving net zero greenhouse gas emissions by 2050. Without economic growth and tumbling prices for renewable energy, green policies would face extremely severe headwinds. Fortunately, these economic forces are already promoting some decarbonization. Nonetheless, “business usual” is nowhere near strong enough to reach net zero. Government measures are needed. Unfortunately, the current 2030 goals of many governments, including Japan—even if fully implemented—are not ambitious enough to meet the 2050 deadline.

            Consider the case of coal. The low prices of solar and wind power should induce utilities to phase out the existing coal-fired plants at a rapid pace. That is happening in the European Union, which is halfway toward a government-mandated shutdown of all its coal plants by 2030. In the US, where there is no federal mandate, companies are shutting down many plants on their own. However, under current trends, there will still be a substantial number in the 2040s. In Japan, it’s even worse. The government and the Keidanren business federation are trying to maintain coal indefinitely under the rubric of energy stability and dreams of carbon capture. Consequently, while the terawatt-hours of electricity generated yearly from coal are far below their 1985 level in the US and Europe, they have tripled in Japan (see chart above).

            While Japan is phasing out some of the most polluting coal plants, it is currently building and/or planning to build new coal-fired plants equal to 8% of existing capacity. As detailed below, there’s a good chance that Japan will not even be able to fulfill its extremely modest plan to reduce coal’s share in electricity generation from 30% to 26% by 2030.

            Meanwhile, at the May 2022 Group of Seven meeting, Washington and Tokyo together blocked a proposal to set a 2030 date to phase out all “unabated” coal plants. Consequently, the G7 pledged a phase-out but with no deadline. The term “unabated” allows Japan to keep running plants it calls ultra-critical in terms of emissions and would also allow plants with carbon capture technology. The latter is not economically feasible and may never be. To make matters worse, US Supreme Court has severely restricted the ability of the Environmental Protection Agency (EPA) to regulate carbon emissions.

Economics And Politics In Reaching Climate Goals

To reach net zero emissions, two big trends are required. The first is reducing the amount of energy it takes to produce a dollar of GDP. This comes automatically with economic development. The second requirement—reducing and then virtually eliminating the carbon content of energy—is far from automatic. Let’s look at the data.

            Once poor countries reach a certain level of development, as real per capita GDP goes up, the amount of energy per dollar of GDP goes down (see chart below).

Source: https://ourworldindata.org/co2-and-other-greenhouse-gas-emissions

However, as poor countries become richer, per capita GDP rises faster than energy-intensity declines. Consequently, per capita energy consumption—electric lighting, heating and cooling, modern appliances, cars, modern industry—rises rapidly and that’s part of the rise in living standards.  Once a country becomes rich enough and services rise as a share of GDP, per capita consumption of energy decelerates, then flattens out, and eventually declines (see chart below). America’s energy use per capita topped out in 2003 and fell 15% by 2019. Japan, too, is down 15% from its 2005 peak.

            By contrast, decarbonizing energy is more problematic. As poor countries develop, CO2 per unit of energy rises, then tops out and declines as they reach middle-income status. Finally, as they approach affluence, further declines come harder (see chart below).

            Some progress is being made in the richest countries, but the pace depends less on economics than on interest group politics. From 2012 to 2019, Japan reduced emissions per unit of energy by 10% while in the US it’s down 14% from 1981. By contrast, in the European Union, which is more committed to decarbonization, it’s down 40% from 1965.

            Once a country has hit a certain level of per capita GDP, additional progress on emissions has very little linkage to per capita GDP. Japan in 2018 ranked 14th among 30 countries in per capita GDP in 2018, but 4th in CO2 per unit of energy (see chart below).

Note: The trend line does not include two outliers Poland (very coal-dependent) and Sweden (very dependent on hydro and nuclear)

Japan Passes Up Low-Hanging Fruit

Japan is not likely to meet its goal of reducing greenhouse gas emissions in 2030 by 46% from the 2013 level. Even if it could, experts say a 62% reduction by 2030 is necessary to be on track for net zero by 2050. Japan could meet its goal if it stopped passing up opportunities to grab the low-hanging fruit.

            Japan’s 2021 Strategic Energy Plan hinges upon reviving nuclear power to 20-22% of all electricity generation by 2030, up from just 6% in 2019. Prime Minister Fumio Kishida has vowed to have 9 nuclear plants operating this winter and 17 by next summer, up from just six now. However, for years, Japanese local governments have been able to block reopening most of the plants shut down in the wake of the 2011 Fukushima catastrophe—even the 17 approved by the Nuclear Regulation Authority. Kishida’s call will test whether the Ukraine war has changed their minds. While some more plants are likely to be reopened, hitting 20-22% of electricity is not realistic. What then will fill the gap? Coal and natural gas. That jeopardizes the goal of reducing coal’s share to 26%.

            Tokyo plans to raise renewables (including hydropower) to 36-38% of electricity. That is realizable since the country is already on track to bring it to around 34%. To achieve the 2030 emissions goal, renewables would have to hit 40-50% of electricity generation, a feasible goal according to a 2021 statement signed by nearly 100 leading Japanese corporations affiliated with the Renewable Energy Institute.

            Steel production alone accounts for a stunning 17% of all carbon emissions in Japan when the emissions involved in electricity production are included. The reason is simple. Japan’s old-fashioned blast furnaces emit four times as much CO2 per ton of steel as more modern electric arc furnaces (EAFs). Yet, only 25% of Japanese steel is made with EAFs, compared to 43% in the EU and 77% in the US. As a result, out of 17 countries, Japan comes in fifth in CO2 per ton of steel. Since EAFs need scrap steel, not all the world’s steel could be made with EAFs, but there is enough scrap to substantially increase the portion in Japan and elsewhere.

            Autos account for 20% of Japan’s carbon emissions (not counting emissions created in manufacturing the vehicles). Unfortunately, powerhouses like Toyota have not only dawdled on producing electric vehicles, but have actively lobbied against them in both Japan and foreign markets. On Sept. 29, Akio Toyoda stated that, “Realistically speaking, it seems rather difficult to really achieve” California’s new requirement that bans sales of gasoline vehicles and regular hybrids after 2035 (plug-in hybrids are permitted). If Toyota sticks to this stance, it would be giving up a huge market since as many as 15 American states automatically follow California’s regulations on emissions. Ford, by contrast, applauded the new regulations.  

            While EVs are expected to increase from a measly 1% market share in 2021, Japanese automakers talk of reaching just 20-40% by 2030, compared to 50‑70% in the US and 75-85% in Europe.

            Japan and the US could achieve much more progress using existing, financially feasible technologies. So far, domestic politics in both countries limits this.

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Source: Our World in Data at https://nyc3.digitaloceanspaces.com/owid-public/data/co2/owid-co2-data.xlsx

The price revolution in renewable energy provides the world with an unprecedented opportunity, one that would be missed if success came to the “degrowth” movement. It contends that countries have to stop growing to save the environment.

            What makes solar and wind power different is that they are cheaper than the fuels they are replacing. In countries with half the world’s population, it already costs less to build and operate new large-scale wind or solar plants than to operate an existing coal or gas-fired power plant, let alone build a new one. With each passing year, renewables’ cost advantage will grow.

            That was not the case in the past. Coal, for example, cost more than firewood at the start of the industrial revolution, but wood was becoming scarce, coal was more easily transported, and it could run at the higher temperatures needed by steam engines. Oil and gas cost more than coal. Nuclear plants were not only costly to construct but safety concerns (some real; some imagined) limited nuclear’s maximum share of global electric power to just 7% (in 2001) and now it’s down to 5%.

            This price revolution means the poorest countries can shift from dung and firewood directly to renewables. They can leapfrog over the carbon-intensive phases of coal, oil, and gas that past generations required. Middle-income countries—who, as we’ll see below, drive the most growth in emissions—can shift from coal to renewables and eventually electric vehicles, limiting the need for oil and gas. This is already beginning to happen. In 2020, renewables supplied more than 80% of the global growth in electric capacity. China increased solar and wind from 5% of its electricity output in 2011 to 24% in 2020. During the same period, the solar and wind share in India rose from 7% to 18%. In poorer sub-Saharan Africa, it increased much less: from 1% to 7%. Moreover, in 2022, about 25% of all cars being sold in China are electric vehicles (either battery-powered or plug-in hybrid), many of them priced as little as $5,000 to $20,000. There are now 4 million charging stations in the country.

            This burgeoning potential would be aborted if growth were to halt because billions of people are still too poor to afford clean energy. An estimated 3 billion still cook their food and heat their homes with animal dung and firewood. Firewood emits 100 times as much CO2 as a gas-fueled stove. The accompanying deforestation compounds the damage.

            Another 3 billion people still get the majority of their overall energy, as well as their electricity, from coal. Despite its progress in solar and wind, India generated more of its electricity from coal in 2021 than it did back in 1985 (74% vs. 62%). China, after letting coal’s share of electricity generation rise from 60% in 1985 to 80% in 2003, has come back to a still very high 63%. Coal emits twice as much CO2 as natural gas. Still, the fact that coal typically costs half as much as natural gas makes it attractive to developing countries striving to electrify.

            Despite immense progress in recent decades, a billion people still don’t have access to electricity, while for another 2.5 billion, the electric supply is unreliable, or they are too poor to afford to consume very much. Renewable-powered electricity requires not only costly investments in power plants, the grid, battery storage, and so forth, but also an increase in the income of its household customers.

As GDP Goes Up, Carbon Emissions Go Down

Even before the renewable revolution, the linkage was clear: if you want countries to emit less CO2, they need to become richer. From 1950 to 1921, as global per capita GDP (in 2015 dollars) quadrupled from a miserable $2,700 to $11,000, carbon emissions per dollar of GDP halved (see chart at the top). This was partly because richer countries need less energy to produce a dollar of GDP (for reasons to be detailed below) and partly because, as their income rises, they shift away from carbon-intensive fuels. The rise of renewables will accelerate this process.

            There is also a political factor. In more affluent countries where basic needs for food, shelter, appliances, and the like are satisfied, voters have both the economic wherewithal and the desire to reduce air and water pollution, as well as conquer climate change. A case in point is Japan’s famous “Pollution Diet” in 1970 which, under pressure from the public, passed, and then enforced, a series of pollution laws. China has faced pressure to cut the horrible pollution in Beijing. Similarly, investors in rich countries have put $2.7 trillion into ESG (Environmental, Social, and Governance) stock market funds in an effort to pressure companies on, among other goals, decarbonization (how successful they will be remains to be seen). The political factor explains the variation in renewables among rich countries. In Europe, solar and wind now provide 30% of all electric power, compared to 21% in Japan, and just 16% in the US where the political obstacles are higher.

Why Rich Countries Emit Less CO2

Poor countries don’t emit a lot of CO2 because they use so little energy . That’s a large part of what makes them poor. As countries get richer, emissions per person zoom as seen in the chart below (the chart at the top showed emissions per dollar of GDP). However, as shown by the trend line for 1990 and even more so in 2018, once a country reaches a certain level of affluence, emissions decelerate, then level off, and eventually start to fall. 

Source: see above

            Note in this chart that countries at a given level of per capita GDP in 2018 emitted a lot less emissions than countries at the same level did in 1960 or 1990. That’s because 2018 technology enables a steel plant, for example, to emit less CO2 than in the past. The advent of renewables will accelerate this process.

            While it’s obvious how technological progress drives growth, it’s also the case that growth drives technological progress. For one thing, richer countries can afford to educate the people and do the research and investment that has resulted in modern solar and wind power. More fundamentally, growth drives demand for technological improvements.

            As countries get rich enough, it’s not only emissions per dollar of GDP or per person that decline. It’s eventually the total amount of emissions (see chart below).

Source: see above Note: the chart ends in 2019 and so is not distorted by the Covid era

Why do richer countries emit less carbon? As countries get richer, a higher percentage of GDP is taken up by services, which are less carbon-intensive than manufacturing. Moreover, countries in the process of industrializing and urbanizing need an enormous amount of steel and cement to build infrastructure and buildings. Steel today accounts for a stunning 11% of global CO2 emissions. Cement adds another 8%. Once a country has built its basic infrastructure, buildings, and so forth, its need for steel and cement declines. So, in 2017, developing countries accounted for 39% of global GDP, but 74% of global steel demand. In contrast to industry, the entire service sector accounts for only 7% of total greenhouse gas emissions in the US, mostly due to its use of electricity from non-renewable sources.

Next: Economic Growth Necessary But Not Sufficient

While the economic and technological trends are going in the right direction, “business as usual” will not achieve net zero emissions by 2050. This issue will be detailed in the next posting.

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What a startling number. A half million Japanese have bought a book—Hitoshinsei no Shihonron [Capital in the Anthropocene]—that claims the answer to climate change is to shrink the economy. “Degrowth communism” is what the author, a formerly obscure 35-year-old Marxist professor named Kohei Saito, calls his policy. It’s a recipe for keeping billions of people in poor countries in abject poverty while lowering living standards throughout rich countries. Were the environmental movement to be associated with either communism or “degrowth”—as a minority of environmentalists in the US and Europe also advocate—that would be its political death knell, a gift to the peddlers of fossil fuels.

            The problem with capitalism, Saito contends, is that it worships economic growth. The problem with growth, he claims, is that it inevitably brings on ecological disasters. Whereas the actual Karl Marx claimed that growth under socialism would create abundance galore while still protecting nature, Saito is part of a group of academics that calls itself Marxist but has rewritten Marx as if he were a Malthusian. The real Marx regarded Malthus as “contemptible.” He was not alone. Dickens’ Ebenezer Scrooge echoes Malthus in saying let the poor die so as to reduce the “surplus population.” Marx rhapsodized over capitalism’s achievements in propelling economic growth through the application of science, machinery, chemicals, and so forth. While Saito claims Marx reversed his odes to technology-led growth during 1865-68, in reality, Marx elaborated them in Capital, whose first volume came out in 1867.

Rich Countries Delink Growth and CO2 Emissions

Growth and technological progress are not the problem; they’re the answer. The two billion people who still rely on animal dung and wood emit a lot more carbon emissions when they cook or heat their homes than people in richer countries who can afford modern sources of energy. The biggest growth in emissions comes from countries that are neither poor nor rich, but are in transition. Once countries get rich, carbon emissions slow and eventually decline. In part, this is due to automatic processes as the economy adopts better production methods and renewable energy becomes increasingly cheap. This process will be detailed in Part II. These natural processes are not sufficient to avoid catastrophe but are being accelerated by government policies, which often find their greatest support in the richer countries.

            In both Japan and Europe, CO2 emissions rose in tandem with GDP during the transition to affluence. However, beginning in the 1970s, CO2 emissions in Japan slowed, then flattened out, and finally in the last decade started to fall.

Source: World Bank, Our World in Data

In Europe, CO2 emissions peaked in 1980 and fell 30% by 2019!

Similar tendencies show up in the US.

They may have already begun in China a decade ago, but it’s too early to be sure this trend will last.

Marx: Right on Techno-Optimism; Wrong On Capitalism

It’s worth recalling what the real Karl Marx wrote since there is a revival of interest in Marx in Japan among young people, a revival partly catalyzed by Saito. While Marx got so much wrong regarding the possibilities of well-regulated democratic capitalism, he was far ahead of his time in being a “techno-optimist.” He correctly saw that the problems created by growth and technology could be solved by even more growth and even better technology. In this regard, he had more in common with the economists of today than with the great “classical” economists like Adam Smith, David Ricardo, and John Stuart Mill. They all believed that the economy was doomed to eventually hit a “stationary state” of zero growth due to the law of diminishing returns. The latter states that, if you give a farmer a horse-drawn plow, he can produce far more crops. However, if you give him a second plow, it will do no good at all. What they failed to notice—and Marx put at the core of his theories—was the miracle of technology. If you replace the horse-drawn plow with a tractor and add some fertilizer and better soil management, output will zoom. It took nearly a century before Nobel laureate Robert Solow formalized this common sense notion into a mathematical model demonstrating that technological improvements can overcome diminishing returns and keep per capita GDP rising forever. Solow’s work is the foundation of modern growth theory.

            So, while Malthus famously predicted that people would starve because population increases geometrically and food output cannot keep up, in reality, the opposite has occurred. From 1960 to 2010, the number of people on the planet has more than doubled, while farmland increased only 10%. Still, food output has tripled.

            What Marx got wrong was his insistence that capitalism could not solve the problems it created. In his view, it made working people poorer despite growth in GDP. Moreover, by degrading both labor and nature, it would eventually put a fetter on the very growth and technological progress that it had previously set in motion. No reforms were capable of solving these inherent problems. Consequently, capitalism would collapse of its own “contradictions.” Socialism could produce growth without these defects. This, of course, he got woefully wrong. In the last 70 years, while the global population has tripled, global GDP has increased 12-fold.

            Saito and other “degrowthers” retort: this progress is all temporary because it’s destroying the environment and therefore cannot be sustained. Even without climate change, there is still an absolute limit to resources. However, as both Marx and modern economists have demonstrated, what counts as a resource is technologically-determined. In the 1800s, people feared running out of firewood and predicted that city streets would be covered in disease-spreading horse manure (see photo at the top). The firewood crisis was solved by coal and eventually oil, which technology converted from a nuisance to a resource. Autos ended the horse manure malady.

            The history of humankind is that problems evoke solutions, and those solutions eventually create their own problems, ad infinitum. The culprit today is neither growth nor capitalism, it’s fossil fuels. The “degrowth” movement endangers the effort to defeat climate change.

            Part II will detail how economic growth is essential to the fight against climate change.

In October of last year, Japanese Prime Minister Yoshihide Suga announced that Japan was shifting course. The country—which in 2020 came in a miserable 45th out of 61 countries in addressing climate change—would now commit itself to achieving net-zero greenhouse gas emissions by 2050, a goal the country had once hoped to achieve sometime between 2050 and 2100.
That Tokyo’s record on climate change has been so dismal might surprise observers who associate Japan with technological innovation. But almost a third of the country’s electricity derives from coal—the single largest contributor to anthropogenic climate change. Worse yet, Japan is currently constructing 15 new coal-fired plants and is planning another seven, all to be finished within the next five years. Its carbon tax is a mere $3 per ton of carbon dioxide, compared with $33 in France and $126 in Sweden. That makes Suga’s new stance a significant reversal for Japan.

Now what Suga has stepped down, will Japan stay serious to just mutter pious promises? One of the new, positive factors is a business lobby pushing for serious action. It’s called the Japan Climate Initiative (JCI) and it includes around 400 of Japan’s leading companies. Late last year, four of its members, SONY, Kao (household goods producer), Nissay Asset Management, and Ricoh Office machines met with Taro Kono, at the time Minister for Environmental Reform, an ardent proponent of vigrous action of climate change, and later a contender to succeed Suga. SONY told Kono that, unless Japan upped its renewables-based electricity generation to 40% or more by 2030, SONY and other companies could be forced by its customers to shift much production offshore. That’s because companies like Apple will eliminate by 2030 suppliers who don’t use 100% renewable electricity. SONY’s facilities in Europe can meet this demand, but not those in Japan.

See the state of play on this issue in English and Japanese.

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