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Japan: Harnessing Innovation for Climate Leadership

Prime Minister Suga recently announced an ambitious new plan for reaching carbon neutrality by 2050.
Transforming society and the economy with groundbreaking new technologies will be key to its success.

On a strip of rugged seacoast in Japan’s Fukushima Prefecture, a sprawling solar farm performs a neat double trick. Besides turning the sun’s rays into electricity for the local power grid, as standard solar plants do, the facility also produces hydrogen, a source of storable, transportable clean energy which will come to play a vital role in the future.

The cutting-edge operation, the world’s largest-class hydrogen plant powered by renewable energy, known as the Fukushima Hydrogen Energy Research Field (FH2R)*, was built by the government-affiliated New Energy and Industrial Technology Development Organization (NEDO) and a group of corporate partners. Japan sees this kind of innovation-driven, sustainability-focused investment as the key to achieving its ambitious national climate goal: net zero carbon emissions by 2050.

*Surrounded by a vast 20-mega-watt solar panel array, Fukushima Hydrogen Energy Research Field (FH2R) boasts one of the world's largest production facilities of hydrogen from renewable resources.

Naoko Ishii, Director of the Center for Global Commons at the University of Tokyo

“The biggest challenge facing humanity is to balance the natural system that we’re a part of — the Earth — with the economic system that exists on top of that,” says Naoko Ishii, Director of the Center for Global Commons at the University of Tokyo and an advisor to the government on climate-change policy. “This requires a new growth and investment strategy for the 21st century. Japan has the fundamental ability to innovate, but now the country as a whole must come together to deliver a credible net zero plan to transform the entire economy.”

Turning Green in Growth

Vast sums will need to be spent in the coming decades to wean the world off fossil fuels and prevent devastating climate disruption. One fear is that such spending will come at the expense of economic growth — a sacrifice worth making, many would agree, but still a sacrifice. But Japan sees things differently. Under Prime Minister Yoshihide Suga, who took office last year, the country has embraced the “green growth” view that shifting to a zero-carbon economy will lift the economy rather than weighing it down.

“We need to adjust our mindset,” Prime Minister Suga told parliament after announcing the 2050 carbon neutrality target. “Proactive climate change measures bring transformation of industrial structures as well as of our economy and society, leading to dynamic economic growth.”

It is a bold bet.

Making decarbonisation and wealth creation work together in a virtuous cycle will require commitment from all stakeholders in the economy. That includes government, business and financial markets, where facilitating so-called ESG (environmental, social and governance) investment will need to become a mainstay activity. Japan believes such a coordinated national effort is possible.

Heightened awareness of these issues has already begun taking shape in the private sector. The Task Force on Climate-related Financial Disclosures (TCFD), which recommends companies to disclose climate-related risks and opportunities, has over 400 supporters from Japan as of the end of May, more than any other country or region.

Disclosures for environmental efforts not only aid investors and financial institutions in their investment decisions, they also encourage firms to further engage in environmental issues in a constructive way. There is also a movement in the financial sector to invigorate sustainable finance and develop a “green international financial centre” in Japan.

Additionally, the government is leading high-impact coordinated national efforts to these ends. At the climate summit hosted by US President Joe Biden in April, Prime Minister Suga doubled down on his zero-carbon pledge.

An outsized share of Japan's greenhouse gas reductions will happen over the next decade, the prime minister said, setting a goal of reducing emissions by 46 percent from their 2013 levels by 2030. He also noted that Japan will continue strenuous efforts in its challenge to meet the lofty goal of cutting its emissions by 50 percent.

The reduction of 46 percent from 2013 levels by 2030 promised in April is 70 percent more than Japan’s previous goal. The new figure was selected as a clear waypoint that would set Japan on a direct path to reaching carbon neutrality by 2050. The reduction is especially ambitious given that Japan, which has been working to reduce its dependence on imported fossil fuels since the Oil Shocks of the 1970s, is already a highly efficient economy, accounting for 6 percent of global GDP but just 2.7 percent of greenhouse gas emissions.

“The first decade is crucial,” says Professor Ishii, who called the new mid-term goal “very positive.” “If we don’t retool the economy now, it will be very hard to do it down the line.”

Toward the goal of achieving carbon neutrality by 2050, the government has drawn up a new Green Growth Strategy that includes support for carbon-reducing innovations in key industrial fields, such as hydrogen and carbon recycling. Much of the support will come from a 2 trillion yen ($19 billion) Green Innovation Fund. The hope is that government support will encourage the private sector to also invest. Official projections suggest the strategy will produce $900 billion a year in economic gains by 2030, and $1.9 trillion a year by mid-century.

The Technology to Decarbonise

Japan already has a long track record of green innovation, leading the world in renewable energy patents. It is hoped that this past success will inspire a snowball effect for future breakthroughs.

“The higher the hurdle, the more energised inventors get,” says Akira Yoshino, Director of the Global Zero Emission Research Center (GZR), National Institute of Advanced Industrial Science and Technology (AIST), who shared the 2019 Nobel Prize in chemistry for his work on lithium-ion batteries, which have turned renewable technologies like energy storage for solar and wind power from theoretical ideas into practical innovations. “Once a direction is set, the market coalesces around it, enabling further development,” he says.

The combined solar-and-hydrogen plant in Fukushima is the product of a collaboration between NEDO and five private-sector companies. Hydrogen is widely produced by processing fossil fuels, but FH2R’s hydrogen is fully green: the plant uses the power from its solar panels to split water into its component hydrogen and oxygen atoms through electrolysis.

The plant carries symbolic power, too. It is located in the town of Namie, whose residents have endured a multi-year evacuation and decade-long recovery following the tsunami and nuclear accident in 2011. The people of Namie have hope that new energy resources like this will lend a hand in the revitalisation of their town, and of local economies throughout Japan.

Other Japanese companies are working on different pieces of the hydrogen economy puzzle. Toyota is pioneering hydrogen-powered transport with the Mirai, a car that runs on electricity generated by on-board hydrogen fuel cells. Kawasaki Heavy Industries has developed the world's first liquefied-hydrogen carrier ship, which will deliver liquefied hydrogen to Japan from Australia this year.

“In the past, some said that hydrogen was not economically viable, but the technology is maturing and the cost is coming down,” says Yasuhiko Hashimoto, Kawasaki Heavy’s President and CEO. “We believe that liquefied hydrogen will be the next game-changer.”

Innovation is happening in other areas, too. IHI Corporation, a major engineering group, is developing a way to make jet fuel from microalgae. The company has tested its “bio-jet” fuel in Japan and Thailand and received international accreditation. It plans to begin supplying Japanese airlines for demonstration flights this year, with the aim of establishing bio-jet as a reasonably priced, carbon-neutral alternative to standard jet fuel by 2030.

Even mundane materials like concrete are ripe for green innovation. 

Ordinary concrete is a big source of emissions — producing it releases several billion tonnes of CO2 each year. Mitsubishi Corporation, in cooperation with several other energy and construction companies, has worked to develop high-tech concrete that absorbs carbon dioxide as it hardens. The new version, called CO2-SUICOM, turns the tables, making concrete a vessel for trapping and safely storing the greenhouse gas. According to a 2017 report from the Institute of Energy Economics, Japan (IEEJ), Japan could reduce its CO2 emissions by roughly 22 million tonnes a year by replacing regular concrete with CO2-SUICOM.

Carbon-eating building materials are just one of a number of creative new Japanese approaches to keeping carbon out of the atmosphere. Japan is aiming to take a 30 percent share of the 10 trillion yen ($96 billion) potential market for carbon capture, which would translate to approximately 2.5 billion tonnes of recovered CO2 a year.

Mitsubishi Heavy Industries Engineering (MHIENG) has developed a proprietary solvent that can be used to capture more than 90 percent of the CO2 from flue gas emitted by power plants, chemical factories and other fossil-fuel-burning facilities. Some of the recovered CO2 can even be used productively — to enhance fertilisers, for instance, or to make dry ice. So far, the company has built 13 plants worldwide by February 2019 that incorporate its technology, called the KM CDR Process, including the world’s largest post-combustion CO2 capture facility, at the Petra Nova Carbon Capture Project in Texas.

Other Japan-based companies, meanwhile, are developing direct-air capture (DAC) technologies to remove CO2 directly from the air. Although most carbon capture systems remain experimental or expensive, Japan has set a goal of reducing costs by three-quarters by 2050, with an eye to creating an economically viable carbon-recycling ecosystem.

Japan’s Green Growth Strategy 2020 aims to reduce the cost of hydrogen down to 30 yen (27.5 cents) per Nm3 by 2030 (less than one third of the current sales price at hydrogen refueling stations), by increasing hydrogen supply up to 3 million tonnes. Japan has been advancing hydrogen-related infrastructure such as hydrogen stations nationwide, and now the government is further accelerating its initiatives to facilitate market growth.
*Source: Ministry of Economy, Trade and Industry

From Local Action to the Global Stage

While technological innovations will play a major role in the future, efforts to implement decarbonisation solutions using existing technology are already being taken throughout Japan as a whole, with city-level solutions being developed to fit local conditions, and the Japanese government providing financial and technological support for cities seeking to reach carbon neutrality. So far, nearly 400 municipalities around the country, encompassing about 90 percent of the population, have declared their intentions to become “zero-carbon cities,” committing to net-zero emissions by 2050. As climate actions are promoted among local communities, it is hoped they will lead to a series of “decarbonisation domino effects” as neighbouring communities adopt successful programs and spread them outward.

One example of community-level decarbonisation is the city of Ishikari, on Japan’s northern island of Hokkaido, which has developed a long-range plan combining business stimulus and public services to create sustainable economic growth. At the heart of this is the Ishikari Data Center, Japan’s first to be 100 percent powered by renewable energy, which is produced locally from a combination of solar, wind and biomass sources.

Climate change is a global crisis threatening human security, especially for those who are vulnerable to the adverse impact of extreme weather events, and Japan sees its role as a provider of solutions for the world. Solutions from city-level projects are being applied overseas, with Japan providing support aimed at achieving renewable energy goals in Pacific Island countries including Fiji, Tuvalu, Kiribati, the Federated States of Micronesia and the Marshall Islands through the Japan International Cooperation Agency (JICA), a governmental foreign-aid organisation of Japan. Based on programs successfully implemented in Japan’s southern island prefecture of Okinawa, Japan will assist these countries in maximising their integration of renewable energy generation and stable power supply.

Akira Yoshino, Director of the Global Zero Emission Research Center (GZR), who shared the 2019 Nobel Prize

The Japanese government is also contributing a total of $3 billion to the Green Climate Fund, supporting the transition to decarbonisation in developing countries through innovation and technology, including using Japan’s leading technologies and experience.

Popularising renewable energy works both ways, says Dr. Yoshino. Through these programs, Japan can “take cutting-edge renewable energy technology overseas, then come back with renewed experience and know-how. Technological innovation and international cooperation are both necessary.”

The Next Steps

The next big event on the global climate policy calendar is COP26 in Scotland in November. There, the world's nations will discuss rules and targets, along with demonstrating their performance. Japan has declared its intent to play a leading role — in the conference and the sustained global efforts that must follow — through a mix of innovative technological solutions, forward-looking policies and international cooperation aimed at achieving its ambitious 2030 goals.

As Prime Minister Suga told parliament: “We will lead the green industry globally and realise a virtuous cycle of the economy and the environment.”

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