Osaka - Sunday, May 22, 2011
In a popular morning TV programme this morning, there was an interesting short discussion on energy policy of Japan, which started with the excerpt of the recent comment of Prime Minister Naoto Kan about “separation of power generation and power transmission”.
The basic idea agreed by the panelists was that Japan is at the verge of change in its energy policy, which requires paradigm shift in the way of thinking, and that vision based on solid philosophy delivered effectively and clearly by the Prime Minister.
1. How has electricity power business in Japan been until today?
Currently, electricity power companies such as Tokyo/Tohoku Electric Power Co., Inc. (TEPCO) have been responsible for both generation and transmission of electricity/power, based on the concept of “stable electricity supply”. In short, it has been of centralization of power supply
Under this situation, electricity power companies allocated by regions of responsibility such as Tokyo/Kanto, Tohoku (north eastern Japan), Chubu (midlands including Aichi where Toyota is located), and Kansai (Osaka, Kyoto, Kobe etc.) have been monopolizing electricity power businesses in their region.
2. What is “separation of power generation and power transmission” and what could it mean?
It is to separate power transmission from power generation.
This means dispersion and diversification of power transmission from centralization. It is quite similar to the ongoing transformation of information by the emergence of the Internet and social media.
It can be also quite similar to what happened in capital by the financial policy change before 2000 that triggered “Financial Big Bang” and reorganization of financial industry/sector in Japan. This was due to implementation of principle of competition and market mechanism in the financial sector.
Separation of power generation and power transmission is expected to implement the same principle in the energy supply sector as well, allowing power supply companies enter the market. It could also mean individuals who generated electricity by such system as solar to provide electricity to the public.
As a result, it is quite possible that citizens would benefit from reduction in their monthly electricity fee payment.
3. Is there any country that implemented this policy with success?
Yes, there is. It is Germany.
As a result of separating power transmission from power generation, the supply of natural energy increased from 6% to 16%. And the country aims to further increase to 30% by 2015 or so.
4. What are other requirements to increase natural energy?
1) Financial support from the government
In the initial stage, support from the government, financial in particular, is required because cost of anything new to the market is extremely high. A good, easy-to-understand example is of AV product of new technology and/or format and the author would like to add the explanation of this mechanism.
For example, when first launched in the market, LCD and plasma flat panel TVs were so expensive that the general public could not afford. But with further technological innovation and others, the cost went down so it became more affordable for more people. The more people buy and use the product, the great the reduction of the price per unit due to reduction in production cost per unit.
And when it reaches a “critical mass”, the product becomes popular all of a sudden, which is usually said that when 16% of the people in the market use the product.
Financial support from the government at the initial stage could speed up the whole process in popularization of natural energy.
2) Vision, roadmap, regulations and systems set by the government
Easy-going approach would only lead to failure of natural energy popularization. Solid energy supply vision, roadmap, regulations and systems to achieve the vision. Not only Germany but all other countries that the government initiated popularization of natural energy developed and implemented them.
3) Environment to drive popularization
There may be many factors for an environment to drive popularization of natural energy. One is the recent popularization of smart grid.
5. What should happen to the nuclear power?
This is a question that provokes a hot discussion. There were interesting comments by a panelist of the TV programme, whom he said is that he is more of a person who has been initiating nuclear power.
That is that Japan is the only country that has been leveraging nuclear power for electricity use only and not for producing atomic bombs (although it is the only victim country from atomic bomb in World War II).
Japan is also a country that has engineers in this realm, and since there are many neighbouring countries that initiate nuclear power generation, Japan is expected to protect the engineers and allow/encourage them so that they can utilize their skills and know how to such countries.
6. What are the author’s final thoughts?
The author is not a specialist in this realm but from general understanding she fully understands what the panelists said and agrees, especially the comment about the nuclear power made at last as conclusion.
It might be ideal to abolish nuclear power immediately; however, it is simply not feasible to do so completely and immediately under current circumstances of power generation; i.e. balance of demand and supply of electricity. Should nuclear power be immediately abolished, serious electricity shortage would spread worldwide and not only in Japan which has been suffering from electricity shortage since March because operation of Fukushima and recently other nuclear power plants are halted.
The electricity shortage is expected to be a serious problem in summer when electricity use is at one of the peak in the year therefore the country has been making upmost efforts to overcome it by all possible means as mentioned in the previous article 15% Energy Cut without Production Cut – The Japan Disaster as well as planned blackouts in Kanto (e.g. Tokyo, Yokoyama, Chiba) in March but worldwide.
With such a reality, while Japan is expected to terminate the Fukushima nuclear power issue with help and support from around the globe while it is also expected to protect and support its nuclear power engineers and encourage them to leverage their skills and know how for “safe and appropriate use of nuclear power” globally. This is based on mutual help philosophy.
And of course, all countries and parties are expected to get together to make innovation for discovery and/or proliferation of alternative energy while saving energy for sustainability and prosperity of our planet.
2011年5月22日日曜日
2011年5月15日日曜日
15% Energy Cut without Production Cut – The Japan Disaster
Osaka - Sunday, May 15, 2011
Nikkei, Japan’s leading newspaper specialized in business and economy, reported on May 14 that parties throughout the industries are to take actions to meet the request of cutting energy use by 15% from the Japanese government and Tokyo/Tohoku Electric Power Co., Inc. The request has been discussed to reach a consensus and was officially announced on May 13.
Actions range from shift in operation days/hours and location to production transfer to implementation of energy saving equipments and systems, with the objective of fulfilling both business continuity and energy saving.
1. What request is made to companies?
With Fukushima nuclear plant issue triggered by the earthquake and tsunami that occurred on March 11, Fukushima nuclear plant has stopped its operation. This made Tokyo Electric Power Co., Inc. unable to sufficiently supply electricity to its responsibility area including key cities of economy such as Tokyo.
1) Request made to companies operating in the area responsible by Tokyo and Tohoku Electric Power
All companies operating in the area that use electricity supplied by Tokyo and Tohoku Electric Power, i.e. eastern Japan, are requested to cut electricity use by 15%.
Plants that produce electronic components used in wide a range of fields including automotive and electronics are concentrated in the area so the request has much meaning.
2) Exceptions
The Japanese government has been studying fields that are to be exceptions because electricity cut is extremely difficult in some cases, such as medical devices. There are some industries that request to be handled as exceptions and the government is currently studying what can be exceptions with extreme care and is to make final decision and announcement by the end of this month.
Examples of the cases/fields that are studied whether to be included as exceptions or not at present are as follows, all of which are those that could severely impact lives of citizens and economic activities. Related ministries and industries are requesting exceptions such as easing the target.
- hospitals
- railway during commuting hours (mornings, evenings)
- sewerage facilities
- refrigerator warehouses
- data centres
2. What actions are planned or studied by companies?
There are mainly 3 kinds of actions and initiatives planned and studied by companies.
1) Shift/change of operating days and hours, and location
(1) Shift some operating days from summer to spring and autumn and winter by Toshiba, Hitachi and Mitsubishi Heavy Industries.
(2) Change plant shut down days by nationwide automobile plants based on the policy by JAMA (Japan Automobile Manufacturers Association, Inc.) to change plant shut down days from weekends to Thursday and Friday.
(3) Operate during the Golden Week Holidays (April 29 – May 8) and instead increase number of days that plants are shut down in summer by Nikon.
(4) Implement summer time by Sony, Sumitomo Metal Industries and Aeon.
(5) Implement work from home system to cut electricity use in offices by NTT Data and Teijin.
2) Transfer of production, equipments and facilities
(1) Transfer production from eastern Japan to western Japan or overseas by Honda, Toray and JFE Steel.
(2) Transfer 30% of servers for development from eastern Japan (around Tokyo) to multiple locations in western and other parts of Japan.
3) Implement energy saving equipments and systems
(1) Replace lights to energy saving ones such as LED by JX Nippon Oil & Energy Corporation, Marubeni and Seven Eleven.
(2) Rotate showing hours of movies at cinema by Shochiku.
(3) Terminate refrigerating hours of vending machines for 5 or 6 hours a day in turn by Coca Cola and other beverage companies.
3. What action is to be taken by Panasonic that enables achieving 15% electricity cut target without changing operation days/hours or transferring production?
1) Solution: installment of sensors to monitor and control electricity use
Panasonic is to install sensors in plants in the area to monitor and control electricity use to obtain data which will be used to streamline electricity use, with the objective of maintaining productivity while achieving the electricity cut target.
2) Benefit from the solution
The solution enable the company to avoid decrease in operating days and hours and transfer of plants so the company can avoid stagnation in its economic activities. This is amazing and can be a best practice when it is estimated that with 15% electricity cut initiative 50,000 jobs will be lost and wage of employees will be cut by 0.2%, leading to reduction of GDP growth by 0.3% in 2011.
It would require total of over 100 million yen investment for this initiative but the company estimates that it can earn back the investment in 3 years. The initiative for the upcoming summer focuses on those of immediate results and improvements will be added continuously next year onwards.
3) Upcoming actions
The sensors will be installed in all 30 plants in the area that produce products such as LCD panels and LCD flat panel TVs. 20 staff members are to start installation one after the other from the week starting May 16. The company is to add analysis and simulation with their unique software to establish a system in which they can continue lean, streamlined production by plants by the end of June.
When the sensors are installed, the company will be able to monitor use of electricity, gas and water, and temperature and humidity by production lines and equipments. The company is to initiate reviewing humidity control in clean rooms, reduction in compressors and short time operation halts in addition to reduction in lights and frequent termination in power.
As a result, the company is confident that it can achieve 15% reduction in electricity use at the peak this summer from last summer and has made agreement with Tokyo and Tohoku Electric Power to be provided with total of 160,000 kW. The company has tried using the sensor in multiple plants in other parts of Japan such as Wakayama.
Resources:-
To fulfill the request from the Japanese government of cutting electricity use by 15%, companies are taking measures to achieve the target such as shift/change of working days/hours and locations, production transfer and implementation of energy saving equipments and systems. An interesting solution by Panasonic is installing sensors in plants to monitor and control electricity use that enable achieving target while avoiding economic activity stagnation by change/shift of working days/hours and production transfer.
Nikkei, Japan’s leading newspaper specialized in business and economy, reported on May 14 that parties throughout the industries are to take actions to meet the request of cutting energy use by 15% from the Japanese government and Tokyo/Tohoku Electric Power Co., Inc. The request has been discussed to reach a consensus and was officially announced on May 13.
Actions range from shift in operation days/hours and location to production transfer to implementation of energy saving equipments and systems, with the objective of fulfilling both business continuity and energy saving.
1. What request is made to companies?
With Fukushima nuclear plant issue triggered by the earthquake and tsunami that occurred on March 11, Fukushima nuclear plant has stopped its operation. This made Tokyo Electric Power Co., Inc. unable to sufficiently supply electricity to its responsibility area including key cities of economy such as Tokyo.
1) Request made to companies operating in the area responsible by Tokyo and Tohoku Electric Power
All companies operating in the area that use electricity supplied by Tokyo and Tohoku Electric Power, i.e. eastern Japan, are requested to cut electricity use by 15%.
Plants that produce electronic components used in wide a range of fields including automotive and electronics are concentrated in the area so the request has much meaning.
2) Exceptions
The Japanese government has been studying fields that are to be exceptions because electricity cut is extremely difficult in some cases, such as medical devices. There are some industries that request to be handled as exceptions and the government is currently studying what can be exceptions with extreme care and is to make final decision and announcement by the end of this month.
Examples of the cases/fields that are studied whether to be included as exceptions or not at present are as follows, all of which are those that could severely impact lives of citizens and economic activities. Related ministries and industries are requesting exceptions such as easing the target.
- hospitals
- railway during commuting hours (mornings, evenings)
- sewerage facilities
- refrigerator warehouses
- data centres
2. What actions are planned or studied by companies?
There are mainly 3 kinds of actions and initiatives planned and studied by companies.
1) Shift/change of operating days and hours, and location
(1) Shift some operating days from summer to spring and autumn and winter by Toshiba, Hitachi and Mitsubishi Heavy Industries.
(2) Change plant shut down days by nationwide automobile plants based on the policy by JAMA (Japan Automobile Manufacturers Association, Inc.) to change plant shut down days from weekends to Thursday and Friday.
(3) Operate during the Golden Week Holidays (April 29 – May 8) and instead increase number of days that plants are shut down in summer by Nikon.
(4) Implement summer time by Sony, Sumitomo Metal Industries and Aeon.
(5) Implement work from home system to cut electricity use in offices by NTT Data and Teijin.
2) Transfer of production, equipments and facilities
(1) Transfer production from eastern Japan to western Japan or overseas by Honda, Toray and JFE Steel.
(2) Transfer 30% of servers for development from eastern Japan (around Tokyo) to multiple locations in western and other parts of Japan.
3) Implement energy saving equipments and systems
(1) Replace lights to energy saving ones such as LED by JX Nippon Oil & Energy Corporation, Marubeni and Seven Eleven.
(2) Rotate showing hours of movies at cinema by Shochiku.
(3) Terminate refrigerating hours of vending machines for 5 or 6 hours a day in turn by Coca Cola and other beverage companies.
3. What action is to be taken by Panasonic that enables achieving 15% electricity cut target without changing operation days/hours or transferring production?
1) Solution: installment of sensors to monitor and control electricity use
Panasonic is to install sensors in plants in the area to monitor and control electricity use to obtain data which will be used to streamline electricity use, with the objective of maintaining productivity while achieving the electricity cut target.
2) Benefit from the solution
The solution enable the company to avoid decrease in operating days and hours and transfer of plants so the company can avoid stagnation in its economic activities. This is amazing and can be a best practice when it is estimated that with 15% electricity cut initiative 50,000 jobs will be lost and wage of employees will be cut by 0.2%, leading to reduction of GDP growth by 0.3% in 2011.
It would require total of over 100 million yen investment for this initiative but the company estimates that it can earn back the investment in 3 years. The initiative for the upcoming summer focuses on those of immediate results and improvements will be added continuously next year onwards.
3) Upcoming actions
The sensors will be installed in all 30 plants in the area that produce products such as LCD panels and LCD flat panel TVs. 20 staff members are to start installation one after the other from the week starting May 16. The company is to add analysis and simulation with their unique software to establish a system in which they can continue lean, streamlined production by plants by the end of June.
When the sensors are installed, the company will be able to monitor use of electricity, gas and water, and temperature and humidity by production lines and equipments. The company is to initiate reviewing humidity control in clean rooms, reduction in compressors and short time operation halts in addition to reduction in lights and frequent termination in power.
As a result, the company is confident that it can achieve 15% reduction in electricity use at the peak this summer from last summer and has made agreement with Tokyo and Tohoku Electric Power to be provided with total of 160,000 kW. The company has tried using the sensor in multiple plants in other parts of Japan such as Wakayama.
Resources:-
To fulfill the request from the Japanese government of cutting electricity use by 15%, companies are taking measures to achieve the target such as shift/change of working days/hours and locations, production transfer and implementation of energy saving equipments and systems. An interesting solution by Panasonic is installing sensors in plants to monitor and control electricity use that enable achieving target while avoiding economic activity stagnation by change/shift of working days/hours and production transfer.
2011年5月14日土曜日
LNG as an Alternative Energy Replacing Nuclear Power – The Japan Disaster
Osaka - Saturday, May 14, 2011
Nikkei, Japan’s leading newspaper specialized in business and economy, reported on May 12 that electricity and trading companies have managed to obtain additional LNG (Liquefied Natural Gas) of 5 million ton to overcome the anticipated electricity shortage in summer when the electricity use is at the peak because of termination of nuclear plant operation (Fukushima and Hamaoka) since the Japan disaster.
It is estimated that total of additional 10 million ton of LNG would be necessary and therefore the companies are making upmost efforts to do so.
This means increase in thermal power plant in mid and long term; therefore, companies of heavy industries are planning to increase their production capacities of large gas turbines.
1. What is the background of electricity and trading companies obtaining additional LNG as an alternative energy of nuclear power?
With Fukushima nuclear plant issue triggered by the earthquake and tsunami that occurred on March 11, Fukushima nuclear plant has stopped operating. This made Tokyo Electric Power Co., Inc unable to sufficiently supply electricity to its responsibility area including key cities of economy such as Tokyo.
Taking this incident into account, the Japanese government recently decided to terminate operation of Hamaoka nuclear plant as well that supplies electricity to Chubu including key area of Aichi where Toyota is located. This is because experts estimate that earthquake of magnitude 8 or larger is to occur in Tokai area where Hamaoka nuclear plant is located within 30 years with possibility of 87%.
Under such a situation, it is almost impossible to open new nuclear plants or re-start nuclear plant operation and therefore replacement to alternative energy is urgent.
Currently LNG is the optimum alternative energy because the cost is stable due to technology innovation meaning stable supply of energy, and also CO2 emission is lower than other energy such as coal and oil.
2. How have the constituents of energy supply been and how are they to change?
Thermal power including LNG has been the primary source of energy supply constituting 64%, followed by nuclear power constituting 29%. Other forms of energy supply includes hydraulic power that constitutes 6% and others including new energy that constitutes 1% or less.
Nuclear power supply is to decrease from current 288.2 billion kW to 200 billion kW if operation of total of 6 nuclear plants including Fukushima Daiichi and Hamaoka are to remain terminated. It could even decrease to as low as 100 billion kW if operation of other nuclear plants that are currently under regular inspection cannot re-started.
This means the nuclear power supply would drop from 29% to 10 - 20%, and the decrease in nuclear power supply is planned to be replaced by LNG that currently constitutes 30%.
3. How much additional LNG needs to be obtained?
To replace the energy which had been generated by Fukushima and other north eastern nuclear plant, Tokyo Electric Power Co., Inc and Tohoku Electric Power Co., Inc need to additionally obtain LNG of 6.2 – 8.6 million ton.
To replace the energy which had been generated by Hamaoka nuclear plant, Chubu Electric Power Co., Inc need to additionally obtain LNG of 3.2 million ton.
This means that when Japan has been the largest LNG importer in the world importing LNG of 70 million ton a year, the country needs to additionally import 10 million ton, i.e. 14% of its current import.
The Japanese government has requested companies in Tokyo Electric Power area to cut electricity use by 15% in upcoming summer when it is at the peak. Even if the 15% reduction target is achieved, it is estimated that 55 million kW will be short.
4. What actions have been taken by companies to make up for the estimated electricity shortage?
1) Obtain additional LNG
According to related parties, Tokyo Electric Power is said to have obtained additional LNG of 2 – 3 million ton required to supply 55 million kW.
Tohoku Electric Power, which managed to gain word of “provide maximum support to supply LNG” from Katar, is said to have obtained additional LNG of 1 million ton.
Other electricity companies are said to have obtained 5 million in total.
However, additional 5 million ton would be necessary as risk management; i.e. in case electricity shortage should occur despite such efforts of electricity companies and of electricity use cut of 15%, and to be prepared to the next peak of electricity use in winter.
For this reason, trading companies such as Mitsubishi Corporation and Mitsui ＆Co., Ltd are planning to additionally obtain from such countries as Malaysia, Indonesia, Russia and Katar (and even Nigeria and UAE if necessary) by one-time trading. They plan to do so by leveraging the project they belong through investment.
2) Establish and increase operation rate of thermal electric power plant by gas
Additional electricity supply by LNG requires additional establishment and increase in operation rate of thermal electric power plant by gas.
This kind of investment is rationale even if fuel cost (total cost of oil and LNG) would increase by 1.15 trillion yen at maximum if all energy supply is to be replaced by thermal power by gas because unit cost of power generation by LNG thermal power is lower that that of oil thus stable energy supply can be expected.
3) Increase production capacity of gas turbines
Mitsubishi Heavy Industries is to increase production capacity of gas turbine plant in Takasago, Hyogo from 20/year to 36/year within 2011. The additional gas turbines produced are mainly to be supplied to electricity companies mainly in Japan such as Tokyo Electric Power and Tohoku Electric Power. Their new plant in the U.S. is to start operating in 2012. As a result, more than 50/year in total can be produced and supplied from plants in Japan and the U.S.
IHI is to increase the production capacity in Hiroshima from 10/year to 20/year. The company is also to shorten the lead time that is currently approximately 1 year by reviewing processes.
Such investments are rationale because cost and time required to produce new gas turbines are far lower and shorter than producing new nuclear plant equipments. It requires as much as 400 billion yen and 7 years to produce one new nuclear plant equipment when it requires less than 100 billion yen and 1 year to produce one new gas turbine equipment.
Nikkei, Japan’s leading newspaper specialized in business and economy, reported on May 12 that electricity and trading companies have managed to obtain additional LNG (Liquefied Natural Gas) of 5 million ton to overcome the anticipated electricity shortage in summer when the electricity use is at the peak because of termination of nuclear plant operation (Fukushima and Hamaoka) since the Japan disaster.
It is estimated that total of additional 10 million ton of LNG would be necessary and therefore the companies are making upmost efforts to do so.
This means increase in thermal power plant in mid and long term; therefore, companies of heavy industries are planning to increase their production capacities of large gas turbines.
1. What is the background of electricity and trading companies obtaining additional LNG as an alternative energy of nuclear power?
With Fukushima nuclear plant issue triggered by the earthquake and tsunami that occurred on March 11, Fukushima nuclear plant has stopped operating. This made Tokyo Electric Power Co., Inc unable to sufficiently supply electricity to its responsibility area including key cities of economy such as Tokyo.
Taking this incident into account, the Japanese government recently decided to terminate operation of Hamaoka nuclear plant as well that supplies electricity to Chubu including key area of Aichi where Toyota is located. This is because experts estimate that earthquake of magnitude 8 or larger is to occur in Tokai area where Hamaoka nuclear plant is located within 30 years with possibility of 87%.
Under such a situation, it is almost impossible to open new nuclear plants or re-start nuclear plant operation and therefore replacement to alternative energy is urgent.
Currently LNG is the optimum alternative energy because the cost is stable due to technology innovation meaning stable supply of energy, and also CO2 emission is lower than other energy such as coal and oil.
2. How have the constituents of energy supply been and how are they to change?
Thermal power including LNG has been the primary source of energy supply constituting 64%, followed by nuclear power constituting 29%. Other forms of energy supply includes hydraulic power that constitutes 6% and others including new energy that constitutes 1% or less.
Nuclear power supply is to decrease from current 288.2 billion kW to 200 billion kW if operation of total of 6 nuclear plants including Fukushima Daiichi and Hamaoka are to remain terminated. It could even decrease to as low as 100 billion kW if operation of other nuclear plants that are currently under regular inspection cannot re-started.
This means the nuclear power supply would drop from 29% to 10 - 20%, and the decrease in nuclear power supply is planned to be replaced by LNG that currently constitutes 30%.
3. How much additional LNG needs to be obtained?
To replace the energy which had been generated by Fukushima and other north eastern nuclear plant, Tokyo Electric Power Co., Inc and Tohoku Electric Power Co., Inc need to additionally obtain LNG of 6.2 – 8.6 million ton.
To replace the energy which had been generated by Hamaoka nuclear plant, Chubu Electric Power Co., Inc need to additionally obtain LNG of 3.2 million ton.
This means that when Japan has been the largest LNG importer in the world importing LNG of 70 million ton a year, the country needs to additionally import 10 million ton, i.e. 14% of its current import.
The Japanese government has requested companies in Tokyo Electric Power area to cut electricity use by 15% in upcoming summer when it is at the peak. Even if the 15% reduction target is achieved, it is estimated that 55 million kW will be short.
4. What actions have been taken by companies to make up for the estimated electricity shortage?
1) Obtain additional LNG
According to related parties, Tokyo Electric Power is said to have obtained additional LNG of 2 – 3 million ton required to supply 55 million kW.
Tohoku Electric Power, which managed to gain word of “provide maximum support to supply LNG” from Katar, is said to have obtained additional LNG of 1 million ton.
Other electricity companies are said to have obtained 5 million in total.
However, additional 5 million ton would be necessary as risk management; i.e. in case electricity shortage should occur despite such efforts of electricity companies and of electricity use cut of 15%, and to be prepared to the next peak of electricity use in winter.
For this reason, trading companies such as Mitsubishi Corporation and Mitsui ＆Co., Ltd are planning to additionally obtain from such countries as Malaysia, Indonesia, Russia and Katar (and even Nigeria and UAE if necessary) by one-time trading. They plan to do so by leveraging the project they belong through investment.
2) Establish and increase operation rate of thermal electric power plant by gas
Additional electricity supply by LNG requires additional establishment and increase in operation rate of thermal electric power plant by gas.
This kind of investment is rationale even if fuel cost (total cost of oil and LNG) would increase by 1.15 trillion yen at maximum if all energy supply is to be replaced by thermal power by gas because unit cost of power generation by LNG thermal power is lower that that of oil thus stable energy supply can be expected.
3) Increase production capacity of gas turbines
Mitsubishi Heavy Industries is to increase production capacity of gas turbine plant in Takasago, Hyogo from 20/year to 36/year within 2011. The additional gas turbines produced are mainly to be supplied to electricity companies mainly in Japan such as Tokyo Electric Power and Tohoku Electric Power. Their new plant in the U.S. is to start operating in 2012. As a result, more than 50/year in total can be produced and supplied from plants in Japan and the U.S.
IHI is to increase the production capacity in Hiroshima from 10/year to 20/year. The company is also to shorten the lead time that is currently approximately 1 year by reviewing processes.
Such investments are rationale because cost and time required to produce new gas turbines are far lower and shorter than producing new nuclear plant equipments. It requires as much as 400 billion yen and 7 years to produce one new nuclear plant equipment when it requires less than 100 billion yen and 1 year to produce one new gas turbine equipment.
2009年12月6日日曜日
GHG Emission Reduction Outlook of Japanese Manufacturers (13.9%) vs. Government’s Target (25%)
Saturday, December 5, 2009 – Osaka, Japan
On December 3, Nikkei, Japan’s leading newspaper specialized in economy/business and news, reported that according to their survey result of Environment Management, outlook of total GHG (Global Greenhouse Gas) reduction by primary Japanese companies by 2010 is 13.9% vs. 1990. Prime Minister Hatayama had set an extremely aggressive target of 25% and made a speech on it in the at the United Nation’s Climate Change Summit held on September 22 in New York, as mentioned in the previous article Japan Takes Lead in GHG Emission Reduction in the UN’s Climate Change Summit, and therefore there is a big gap between the target and the outlook. If the companies are to achieve the target, it is possible that they are forced to bear heavy burden such as purchasing emission allocation from overseas and therefore they cannot continue production in Japan.
The survey was executed in the beginning of November to which 835 companies including non-manufacturers answered. To the question regarding the degree of GHG emission reduction by 2020 by introducing energy saving equipments etc., 160 manufacturers answered and the weighted average was 13.9% vs. 1990. Industry section including manufacturers covers 37% of total Japan domestic GHG emission. 183 non-manufacturers (excluding electricity and gas companies) answered and their weighted average was 14.3% vs. 1990.
Mid-term target set under the previous Aso administration was 15% reduction vs. 2005, which is equivalent to 8% vs. 1990 and this target can be achieved without problem, but not the target set by the Hatoyama administration. Looking the outlook by industry, the drivers of GHG emission reduction are electronics that expects demand increase of solar batteries and EV cars is 33.1%, and automobile and components is 28.1%. Indeed, companies in such industries are the main players in top 20 of the Environment Management Ranking.
Environment Management Ranking
(Source: Nikkei, translated by the author)
Ranking(2009) / Ranking(2008) / Company Name / Score (500 = max)
1 / 4 / Panasonic / 490
2 / 17 / Sharp / 487
3 / 14 / Mitsubishi Electric / 485
4 / 5 / NEC / 483
5 / 1 / Toyota / 482
6 / 2 / Toshiba / 478
7 / 9 / Kyocera / 474
7 / 11 / Canon / 474
9 / 6 / Fuji Film Holdings / 473
9 / 22 / Nissan / 473
9 / 30 / Canon Electronics / 473
12 / 6 / Denso / 470
13 / 34 / Toyota Boshoku / 469
13 / 29 / Sumitomo Rubber Industries / 469
13 / 12 / Ricoh / 469
16 / 40 / TDK / 467
16 / 13 / Sanyo / 467
18 / 86 / NEC Tokin / 466
19 / 14 / Toyota Gosei / 465
19 / 24 / Dainippon Printing / 465
Scores were calculated in 5 fields: global warming countermeasure, product countermeasure, resource recycling, environment management organization, and countermeasures in contamination and biological diversity. Manufacturers were ranked by total scores of the 5 fields across the industry, and non-manufacturers were ranked by their own industry.
Panasonic, ranked #4 last year, was #1 this year, with highest score in environment management organization, and countermeasures in contamination and biological diversity, and with second highest score in global warming countermeasure. Department specialized in environment management strategy has been established which is directly controlled by the CEO, which has been promoting company-wide purchasing, equipment investment and development. As a result, they succeeded in promoting natural energy equipment installation such as natural gas implementation and use of solar energy to generate electricity to achieve their own GHG emission reduction mid-term target of minus 510 ton vs. 2006 in 2008, 1 year ahead of the original plan. Increasing energy saving products, that are the #1 in energy saving in its product category at the point of launch, totaled 233 in 2008, which was 3 times that of 2007, and Mr. Ohtsubo, the CEO, says that this will be further promoted when the acquisition of Sanyo is complete.
Sharp, ranked #17 last year, was #2 this year, with highest score in environment management organization together with Panasonic. Long term target is set in which by 2020 GHG emission reduction is to be tripled from original plan with new energy saving products by such measures as leveraging solar batteries.
Mitsubishi Electric, ranked #3 this year, has set the target of GHG emission upon production by 2021 by 30% vs. 1990. Representatives for this task have already been located in worldwide production sites and environmental experts from Global & Group HQ have been visiting the sites once every two years. NEC, ranked #4 this year, scored the highest in global warming countermeasures and products.
Toyota, that had been #1 for three consecutive years, was #5 this year. They have been aggressively launching EV cars, accumulating total reaching 2 million cars at the end of August this year. Nissan, which has also been aggressively promoting eco-car strategy, improved its ranking from #22 to #9.
The gap between gap between the outlook from the survey result of 13.9% for manufactures and the aggressive target of 25% set by the government and the current outlook of 13.9% is large and eliminating the gap is extremely tough. However, the author believes that the companies are capable of further driving innovation to drastically decrease GHG emission, eliminating the gap in the end.
On December 3, Nikkei, Japan’s leading newspaper specialized in economy/business and news, reported that according to their survey result of Environment Management, outlook of total GHG (Global Greenhouse Gas) reduction by primary Japanese companies by 2010 is 13.9% vs. 1990. Prime Minister Hatayama had set an extremely aggressive target of 25% and made a speech on it in the at the United Nation’s Climate Change Summit held on September 22 in New York, as mentioned in the previous article Japan Takes Lead in GHG Emission Reduction in the UN’s Climate Change Summit, and therefore there is a big gap between the target and the outlook. If the companies are to achieve the target, it is possible that they are forced to bear heavy burden such as purchasing emission allocation from overseas and therefore they cannot continue production in Japan.
The survey was executed in the beginning of November to which 835 companies including non-manufacturers answered. To the question regarding the degree of GHG emission reduction by 2020 by introducing energy saving equipments etc., 160 manufacturers answered and the weighted average was 13.9% vs. 1990. Industry section including manufacturers covers 37% of total Japan domestic GHG emission. 183 non-manufacturers (excluding electricity and gas companies) answered and their weighted average was 14.3% vs. 1990.
Mid-term target set under the previous Aso administration was 15% reduction vs. 2005, which is equivalent to 8% vs. 1990 and this target can be achieved without problem, but not the target set by the Hatoyama administration. Looking the outlook by industry, the drivers of GHG emission reduction are electronics that expects demand increase of solar batteries and EV cars is 33.1%, and automobile and components is 28.1%. Indeed, companies in such industries are the main players in top 20 of the Environment Management Ranking.
Environment Management Ranking
(Source: Nikkei, translated by the author)
Ranking(2009) / Ranking(2008) / Company Name / Score (500 = max)
1 / 4 / Panasonic / 490
2 / 17 / Sharp / 487
3 / 14 / Mitsubishi Electric / 485
4 / 5 / NEC / 483
5 / 1 / Toyota / 482
6 / 2 / Toshiba / 478
7 / 9 / Kyocera / 474
7 / 11 / Canon / 474
9 / 6 / Fuji Film Holdings / 473
9 / 22 / Nissan / 473
9 / 30 / Canon Electronics / 473
12 / 6 / Denso / 470
13 / 34 / Toyota Boshoku / 469
13 / 29 / Sumitomo Rubber Industries / 469
13 / 12 / Ricoh / 469
16 / 40 / TDK / 467
16 / 13 / Sanyo / 467
18 / 86 / NEC Tokin / 466
19 / 14 / Toyota Gosei / 465
19 / 24 / Dainippon Printing / 465
Scores were calculated in 5 fields: global warming countermeasure, product countermeasure, resource recycling, environment management organization, and countermeasures in contamination and biological diversity. Manufacturers were ranked by total scores of the 5 fields across the industry, and non-manufacturers were ranked by their own industry.
Panasonic, ranked #4 last year, was #1 this year, with highest score in environment management organization, and countermeasures in contamination and biological diversity, and with second highest score in global warming countermeasure. Department specialized in environment management strategy has been established which is directly controlled by the CEO, which has been promoting company-wide purchasing, equipment investment and development. As a result, they succeeded in promoting natural energy equipment installation such as natural gas implementation and use of solar energy to generate electricity to achieve their own GHG emission reduction mid-term target of minus 510 ton vs. 2006 in 2008, 1 year ahead of the original plan. Increasing energy saving products, that are the #1 in energy saving in its product category at the point of launch, totaled 233 in 2008, which was 3 times that of 2007, and Mr. Ohtsubo, the CEO, says that this will be further promoted when the acquisition of Sanyo is complete.
Sharp, ranked #17 last year, was #2 this year, with highest score in environment management organization together with Panasonic. Long term target is set in which by 2020 GHG emission reduction is to be tripled from original plan with new energy saving products by such measures as leveraging solar batteries.
Mitsubishi Electric, ranked #3 this year, has set the target of GHG emission upon production by 2021 by 30% vs. 1990. Representatives for this task have already been located in worldwide production sites and environmental experts from Global & Group HQ have been visiting the sites once every two years. NEC, ranked #4 this year, scored the highest in global warming countermeasures and products.
Toyota, that had been #1 for three consecutive years, was #5 this year. They have been aggressively launching EV cars, accumulating total reaching 2 million cars at the end of August this year. Nissan, which has also been aggressively promoting eco-car strategy, improved its ranking from #22 to #9.
The gap between gap between the outlook from the survey result of 13.9% for manufactures and the aggressive target of 25% set by the government and the current outlook of 13.9% is large and eliminating the gap is extremely tough. However, the author believes that the companies are capable of further driving innovation to drastically decrease GHG emission, eliminating the gap in the end.
2009年9月23日水曜日
Japan Takes Lead in GHG Emission Reduction in the UN’s Climate Change Summit
Wednesday, September 23, 2009 – Osaka, Japan
Mr. Hatoyama, the new Japanese Prime Minister, made a speech pledging Japan’s mid-term target of 25% GHG (global greenhouse gas = CO2) emission reduction vs.1990 by 2020 at the United Nation’s Climate Change Summit held on September 22 in New York, his debut to the diplomatic setting. He also advocated his initiative of providing to developing and emerging countries Japan’s energy saving technologies and capital aid to help them drive global warming countermeasures. His speech in English won great applause and appreciation in the summit, and it is probably the first time that a speech made by a Japanese Prime Minister won such an applause. However, his aggressive target has not been provoking positive reactions back in Japan.
1. Facts On GHG Emission Reduction Mid-Term Target
Mid-term target of reducing GHG emission is the primary focus of the negotiation among participant countries on post Kyoto Protocol (COP3) after 2013, United Nations Framework Convention on Climate Change / UNFCCC, FCCC. The deadline of the negotiation is COP15 United Nations Climate Change Conference Copenhagen 2009 to be held in Denmark this year.
2. Background of Prime Minister Mr. Hatoyama’s Speech
The target set by the former Prime Minister, Mr. Aso, was 15% reduction vs.2005 (8% reduction vs. 1990); therefore, it is evident that Mr. Hatoyama’s target is extremely aggressive (equivalent to 30% reduction vs. 2005). He had set this target as his policy, mentioned in his speeches in Tokyo earlier this month, and announced to Japanese media on 20th this month, although he may well have been aware that there would be resistances from Japan domestic (industries and economy opinion leaders). His intention is to take the initiative in the upcoming international negotiation settings by advocating aggressive target and supporting measures in his debut diplomacy setting in his own words. (First policy he set was taking the initiative from bureaucrats in making speeches at press conferences etc. so that politicians will be delivering their message in their own words). Such a “performance” in the international community conference symbolizes and delivers strong message on the change in political administration and of his style of politics, which is “politician taking the initiative”.
- 25% Reduction of CO2, Message to be Delivered in Upcoming Diplomatic Settings by Prime Minister Mr.Hatoyama
http://megoyanagi.blogspot.com/2009/09/new-japanese-government-officially.html
- How Japanese Government to Develop New Information Disclosure System with Media, Achieving Objectives & Promoting Interactive Communication with Media
http://megoyanagi.blogspot.com/2009/09/how-japanese-government-ti-develop-new.html
The new target announced is the most aggressive among all participant countries, as is shown from the table below. (Source: September 23 Japanese article from Nikkei, Japan’s leading newspaper specialized in economy and politics; translated by the author).
GHG Emission Reduction Target by 2020 of Developed Countries
(The reason that some target is not specific is that the target is specified under specific condition such as “in the case which other countries advocate sufficient reduction target”)
Country Name / Reduction Rate (%) / Standard Year / Availability of Purchasing Emission Quotas
Japan / 25 / 1990 / yes
The U.S. / 14 / 2005 -
EU / 20 - 30 / 1990 / yes
Canada / 20 / 2006 / -
Russia / 10 - 15 / 1990 / -
Switzerland / 20 - 30 / 1990 / yes
Australia / 5 - 25 / 2000 / yes
* Composed by Nikkei based on documents on framework of the U.N. climate change agreement owned by the agreement offices
3. How Mr. Hatoyama Was Careful In Making His Speech
Prime Minister Mr. Hatoyama was careful in making his speech, not forgetting to be considerate in presenting such an aggressive target. His speech included concrete measures compared with his previous speeches made in Tokyo, Japan, but he deliberately made the expression regarding “reduction compared with which year“ not to be too specific, using the expression such as “if I would state comparing with 1990” instead of “vs. 1990”, taking into consideration of the U.S. who had set the 2005 as the standard year in setting the target. He also was careful to avoid misunderstanding from other countries that Japan is prominent in presenting such an aggressive target. He did so by encouraging major GHG emission countries including the U.S., China and India to actively join in his initiative, advocating his Hatoyama initiatives including the principles below.
Hatoyama Initiatives
1) Public and private sectors of developed countries will contribute to additional capital aid.
2) Rules for measuring the effectiveness of aid will be developed.
3) Co-existence of capital aid and preservation of intellectual property right will be fulfilled.
4. Positive Reactions From The International Community
The speech was highly evaluated, with positive comments from participants. The overall reaction from the international community is positive from each standpoint.
The U.S. gave positive reaction backed up by President Obama’s positive speech in the summit, who said that countermeasure for global warming is the U.S. focus and is resolved to take actions. Regarding the reduction target he emphasized that both developed and developing countries need to take responsibility to achieve the target. He also showed his intention of reaching international consensus on this issue at CPO15 to be held in December in Copenhagen, Denmark. He advocated the need of making consensus among all countries including emerging countries, stating hat the only solution is all major countries collaborate to take measures, while developing countries (that had been emitting global warming gasses) have responsibilities to initiate the discussion.
EU evaluated the Japanese aggressive target. EU had been positive in activating trading CO2 emission quotas among countries with the objective of reducing CO2 emission globally, and therefore they would like to deepen collaboration with Japan and lead debate on this issue in the international community. Mr. Okada, the new Minister of Foreign Affairs, had meetings with Ministers of Foreign Affairs of Sweden, the current chairperson of EU, and Spain. The EU side agreed on the importance of solving climate change issue and highly evaluated Japan’s mid-term target of 25% reduction of CO2 emission vs.1990. In addition, the Minister of Climate Change and Energy of Denmark also evaluated the aggressive target of Japan.
Reactions from developing and emerging countries are subtle but not negative at all. Emerging countries including China and India have been strengthening initiatives to reduce global warming gasses in individual sectors such as generation of electricity. One point to note is that their consistent stance is that it is the developed countries responsible for the past global warming that should commit to the aggressive reduction target to be achieved by 2020.
5. Negative Reactions from Japan Domestic Opinion Leaders
It is true that aggressive target has been triggering technological innovation and creation of new industry and employment, but the reaction from Japan so far has been rather negative. This is because Mr. Hatoyama has not yet sufficiently explained to industries and related opinion leaders that are to bear the burden in accomplishing the target. Another reason is that whether emerging countries such as China would really participate in this international initiative of GHG emission reduction is still under question.
To achieve the target, industries would need to reduce 20-30% GHG emission from manufacturing plants, which would be a big burden. It is possible that industries whose GHG emission is large such as iron and steel would be forced to reduce its production, which could lead to drastic production shift from Japan to overseas. And if sufficient CO2 emission reduction is not achieved, they would need to purchase GHG emission quotas from overseas. This is estimated to cost more than 1 trillion yen, according to a government official.
Reaction from economy and commerce associations is quite negative because the target would clearly mean increase in cost. There have been critical comments, requesting the new government to set target taking into consideration both fairness among the international community and reasonability of Japanese citizen’s burden. In fact, there are series of evidences that many Japanese industries/companies are still suffering from high cost and are negatively impacted by new government’s policy, so it is more than natural that the industry and other opinion leaders would react negatively. The break even point of many manufacturing companies has been deteriorating drastically which means that their cost competitiveness under current circumstances is tough. And the recent stock pricing trend of Japan imply that Japanese companies are already negatively impacted by new government’s policy, and it is natural that they would give negative reaction.
- Drastic Deterioration in Break Even Point Ratio of Japanese Manufacturers May Well Indicate Further Tough Job Market in Japan
http://megoyanagi.blogspot.com/2009/09/drastic-deterioration-in-break-even.html
- New Coalition Government Policy, High Yen and Supply & Demand Oppressing Japanese Companies, Being Behind Worldwide Stock Prices Trend
http://megoyanagi.blogspot.com/2009/09/new-coalition-government-policy-high.html
6. Upcoming Challenges For The New Hatoyama Administration To Overcome
Having succeeded in debut the highest-level international conference advocating an aggressive target, a practical “international commitment”, Prime Minister Hatoyama needs to tackle tough challenges upon returning to Japan. He would need to minimize domestic resistances, and draft and execute action plans to achieve the target, taking initiative of post COP3 debate in the international community.
Achieving the target is not easy even if the international community’s reaction is positive, because even internationally, the entire environment is quite tough. It was when Mr. Obama changed the U.S. policy on this issue of proactively reducing GHG emission to cooperate and make harmony with the international community that the international negotiation for GHG emission reduction started to drive. However, Mr. Obama also has health care reform issue to handle and the U.S. Diet is now focusing on this issue, so the deliberation in the Diet of bill regarding GHG is behind schedule. If there is no concrete progress in the G20 summit started 24th this month, it is quite possible that the targeted consensus to be made in December becomes rather difficult.
The feasibility of capital aid execution by developed countries is still a question. EU would like to make consensus of reduction target leveraging capital aid of a tens of billions of dollars. However, discussions among developed countries, that are to raise funds for the capital aid, are still ongoing, far behind the original timeline.
And, even if Mr. Hatoyama manages to convince Japanese industries, related associations, opinion leaders and citizens, the hurdle is still quite high. According to the estimation developed during the former Aso administration, it is vital to increase the solar cell implementation by 5500% (55 times the current implementation) and shift 90% of new car sales to EV cars in order to achieve 25% reduction in GHG emission vs.1990.
Achieving an extremely aggressive target would require something very drastic, some kind of breakthrough. It is passive and conservative target that people tend to agree to easily but they are usually not so much energized by such target, not coming up with innovative ideas, thus often failing to achieve the target. But history teaches us that although at first people are negative at first because it seems absolutely unrealistic, they finally agree and support extremely aggressive target set under tough environment. Such a target delivered by a leader with passion energizes and wins support from followers and related stakeholders. They will then get united to exert maximum effort, leading to creation of innovation and break through, and as a result being successful in achieving the target.
Reduction in GHG emission is an issue that each one of us on this planet is required to take action for the sustainability of human kind, and it is possible to convert this issue to business opportunities as well. It has potential to drive innovations and creation of new industry and employment, meaning growth in world economy and sustainable growth. It is highly hoped that the international community and all stakeholders in each country come in consensus and take their own responsibility to achieve their respective goal.
* The information on the summit is based on series of articles in Nikkei, Japanese leading newspaper specialized in economy and politics, dated September 23, 2009.
Mr. Hatoyama, the new Japanese Prime Minister, made a speech pledging Japan’s mid-term target of 25% GHG (global greenhouse gas = CO2) emission reduction vs.1990 by 2020 at the United Nation’s Climate Change Summit held on September 22 in New York, his debut to the diplomatic setting. He also advocated his initiative of providing to developing and emerging countries Japan’s energy saving technologies and capital aid to help them drive global warming countermeasures. His speech in English won great applause and appreciation in the summit, and it is probably the first time that a speech made by a Japanese Prime Minister won such an applause. However, his aggressive target has not been provoking positive reactions back in Japan.
1. Facts On GHG Emission Reduction Mid-Term Target
Mid-term target of reducing GHG emission is the primary focus of the negotiation among participant countries on post Kyoto Protocol (COP3) after 2013, United Nations Framework Convention on Climate Change / UNFCCC, FCCC. The deadline of the negotiation is COP15 United Nations Climate Change Conference Copenhagen 2009 to be held in Denmark this year.
2. Background of Prime Minister Mr. Hatoyama’s Speech
The target set by the former Prime Minister, Mr. Aso, was 15% reduction vs.2005 (8% reduction vs. 1990); therefore, it is evident that Mr. Hatoyama’s target is extremely aggressive (equivalent to 30% reduction vs. 2005). He had set this target as his policy, mentioned in his speeches in Tokyo earlier this month, and announced to Japanese media on 20th this month, although he may well have been aware that there would be resistances from Japan domestic (industries and economy opinion leaders). His intention is to take the initiative in the upcoming international negotiation settings by advocating aggressive target and supporting measures in his debut diplomacy setting in his own words. (First policy he set was taking the initiative from bureaucrats in making speeches at press conferences etc. so that politicians will be delivering their message in their own words). Such a “performance” in the international community conference symbolizes and delivers strong message on the change in political administration and of his style of politics, which is “politician taking the initiative”.
- 25% Reduction of CO2, Message to be Delivered in Upcoming Diplomatic Settings by Prime Minister Mr.Hatoyama
http://megoyanagi.blogspot.com/2009/09/new-japanese-government-officially.html
- How Japanese Government to Develop New Information Disclosure System with Media, Achieving Objectives & Promoting Interactive Communication with Media
http://megoyanagi.blogspot.com/2009/09/how-japanese-government-ti-develop-new.html
The new target announced is the most aggressive among all participant countries, as is shown from the table below. (Source: September 23 Japanese article from Nikkei, Japan’s leading newspaper specialized in economy and politics; translated by the author).
GHG Emission Reduction Target by 2020 of Developed Countries
(The reason that some target is not specific is that the target is specified under specific condition such as “in the case which other countries advocate sufficient reduction target”)
Country Name / Reduction Rate (%) / Standard Year / Availability of Purchasing Emission Quotas
Japan / 25 / 1990 / yes
The U.S. / 14 / 2005 -
EU / 20 - 30 / 1990 / yes
Canada / 20 / 2006 / -
Russia / 10 - 15 / 1990 / -
Switzerland / 20 - 30 / 1990 / yes
Australia / 5 - 25 / 2000 / yes
* Composed by Nikkei based on documents on framework of the U.N. climate change agreement owned by the agreement offices
3. How Mr. Hatoyama Was Careful In Making His Speech
Prime Minister Mr. Hatoyama was careful in making his speech, not forgetting to be considerate in presenting such an aggressive target. His speech included concrete measures compared with his previous speeches made in Tokyo, Japan, but he deliberately made the expression regarding “reduction compared with which year“ not to be too specific, using the expression such as “if I would state comparing with 1990” instead of “vs. 1990”, taking into consideration of the U.S. who had set the 2005 as the standard year in setting the target. He also was careful to avoid misunderstanding from other countries that Japan is prominent in presenting such an aggressive target. He did so by encouraging major GHG emission countries including the U.S., China and India to actively join in his initiative, advocating his Hatoyama initiatives including the principles below.
Hatoyama Initiatives
1) Public and private sectors of developed countries will contribute to additional capital aid.
2) Rules for measuring the effectiveness of aid will be developed.
3) Co-existence of capital aid and preservation of intellectual property right will be fulfilled.
4. Positive Reactions From The International Community
The speech was highly evaluated, with positive comments from participants. The overall reaction from the international community is positive from each standpoint.
The U.S. gave positive reaction backed up by President Obama’s positive speech in the summit, who said that countermeasure for global warming is the U.S. focus and is resolved to take actions. Regarding the reduction target he emphasized that both developed and developing countries need to take responsibility to achieve the target. He also showed his intention of reaching international consensus on this issue at CPO15 to be held in December in Copenhagen, Denmark. He advocated the need of making consensus among all countries including emerging countries, stating hat the only solution is all major countries collaborate to take measures, while developing countries (that had been emitting global warming gasses) have responsibilities to initiate the discussion.
EU evaluated the Japanese aggressive target. EU had been positive in activating trading CO2 emission quotas among countries with the objective of reducing CO2 emission globally, and therefore they would like to deepen collaboration with Japan and lead debate on this issue in the international community. Mr. Okada, the new Minister of Foreign Affairs, had meetings with Ministers of Foreign Affairs of Sweden, the current chairperson of EU, and Spain. The EU side agreed on the importance of solving climate change issue and highly evaluated Japan’s mid-term target of 25% reduction of CO2 emission vs.1990. In addition, the Minister of Climate Change and Energy of Denmark also evaluated the aggressive target of Japan.
Reactions from developing and emerging countries are subtle but not negative at all. Emerging countries including China and India have been strengthening initiatives to reduce global warming gasses in individual sectors such as generation of electricity. One point to note is that their consistent stance is that it is the developed countries responsible for the past global warming that should commit to the aggressive reduction target to be achieved by 2020.
5. Negative Reactions from Japan Domestic Opinion Leaders
It is true that aggressive target has been triggering technological innovation and creation of new industry and employment, but the reaction from Japan so far has been rather negative. This is because Mr. Hatoyama has not yet sufficiently explained to industries and related opinion leaders that are to bear the burden in accomplishing the target. Another reason is that whether emerging countries such as China would really participate in this international initiative of GHG emission reduction is still under question.
To achieve the target, industries would need to reduce 20-30% GHG emission from manufacturing plants, which would be a big burden. It is possible that industries whose GHG emission is large such as iron and steel would be forced to reduce its production, which could lead to drastic production shift from Japan to overseas. And if sufficient CO2 emission reduction is not achieved, they would need to purchase GHG emission quotas from overseas. This is estimated to cost more than 1 trillion yen, according to a government official.
Reaction from economy and commerce associations is quite negative because the target would clearly mean increase in cost. There have been critical comments, requesting the new government to set target taking into consideration both fairness among the international community and reasonability of Japanese citizen’s burden. In fact, there are series of evidences that many Japanese industries/companies are still suffering from high cost and are negatively impacted by new government’s policy, so it is more than natural that the industry and other opinion leaders would react negatively. The break even point of many manufacturing companies has been deteriorating drastically which means that their cost competitiveness under current circumstances is tough. And the recent stock pricing trend of Japan imply that Japanese companies are already negatively impacted by new government’s policy, and it is natural that they would give negative reaction.
- Drastic Deterioration in Break Even Point Ratio of Japanese Manufacturers May Well Indicate Further Tough Job Market in Japan
http://megoyanagi.blogspot.com/2009/09/drastic-deterioration-in-break-even.html
- New Coalition Government Policy, High Yen and Supply & Demand Oppressing Japanese Companies, Being Behind Worldwide Stock Prices Trend
http://megoyanagi.blogspot.com/2009/09/new-coalition-government-policy-high.html
6. Upcoming Challenges For The New Hatoyama Administration To Overcome
Having succeeded in debut the highest-level international conference advocating an aggressive target, a practical “international commitment”, Prime Minister Hatoyama needs to tackle tough challenges upon returning to Japan. He would need to minimize domestic resistances, and draft and execute action plans to achieve the target, taking initiative of post COP3 debate in the international community.
Achieving the target is not easy even if the international community’s reaction is positive, because even internationally, the entire environment is quite tough. It was when Mr. Obama changed the U.S. policy on this issue of proactively reducing GHG emission to cooperate and make harmony with the international community that the international negotiation for GHG emission reduction started to drive. However, Mr. Obama also has health care reform issue to handle and the U.S. Diet is now focusing on this issue, so the deliberation in the Diet of bill regarding GHG is behind schedule. If there is no concrete progress in the G20 summit started 24th this month, it is quite possible that the targeted consensus to be made in December becomes rather difficult.
The feasibility of capital aid execution by developed countries is still a question. EU would like to make consensus of reduction target leveraging capital aid of a tens of billions of dollars. However, discussions among developed countries, that are to raise funds for the capital aid, are still ongoing, far behind the original timeline.
And, even if Mr. Hatoyama manages to convince Japanese industries, related associations, opinion leaders and citizens, the hurdle is still quite high. According to the estimation developed during the former Aso administration, it is vital to increase the solar cell implementation by 5500% (55 times the current implementation) and shift 90% of new car sales to EV cars in order to achieve 25% reduction in GHG emission vs.1990.
Achieving an extremely aggressive target would require something very drastic, some kind of breakthrough. It is passive and conservative target that people tend to agree to easily but they are usually not so much energized by such target, not coming up with innovative ideas, thus often failing to achieve the target. But history teaches us that although at first people are negative at first because it seems absolutely unrealistic, they finally agree and support extremely aggressive target set under tough environment. Such a target delivered by a leader with passion energizes and wins support from followers and related stakeholders. They will then get united to exert maximum effort, leading to creation of innovation and break through, and as a result being successful in achieving the target.
Reduction in GHG emission is an issue that each one of us on this planet is required to take action for the sustainability of human kind, and it is possible to convert this issue to business opportunities as well. It has potential to drive innovations and creation of new industry and employment, meaning growth in world economy and sustainable growth. It is highly hoped that the international community and all stakeholders in each country come in consensus and take their own responsibility to achieve their respective goal.
* The information on the summit is based on series of articles in Nikkei, Japanese leading newspaper specialized in economy and politics, dated September 23, 2009.
2009年9月20日日曜日
25% CO2 Reduction, Message to be Delivered in Upcoming Diplomacic Settings by Prime Minister Mr.Hatoyama - What Does This Mean?
Sunday, September 20, 2009 – Osaka, Japan
The Chief Cabinet Secretary of the new Japanese government, Mr. Hirano, announced today which was just broadcasted in the 9 o’clock evening news, that 25% reduction of CO2 emission vs. 1990 is to be fulfilled by 2020. Mr. Hirano also said that this message will be strongly delivered by Mr. Hatoyama, the new prime minister of Japan, in his diplomacy debut, his first visit to the U.S. to meet President Obama, and at the United Nations General Assembly.
This policy was clearly stated in the manifest of the DPJ, the current ruling party, and although it is in line with the global trend of co-existence with the global environment, it is possible that this policy will provoke hot discussions and resistance from the industry world and Japanese citizens.
This policy would mean possible severe regulation and allocation of reduction in CO2 emission to each industry sector and companies operating in Japan (including Japan branch of foreign capital companies). Automobile companies have already taken this trend as a business opportunity and started aggressively to develop and market EV cars. And electronics companies are focusing on environmentally friendly energy and battery business and on developing and marketing eco (environmentally friendly, energy saving and economic) electric appliances. Such automobile and electronic companies had been recently benefiting from the old ruling party’s policy of “Eco Point”, leading to increase in sales. However, in general, severe regulation and allocation of reduction in CO2 emission would be a burden and negatively impact from cost perspective. This negative impact has already been seen reflected in the stock price, as stated in the article posted on September 19.
New Coalition Government Policy, High Yen and Supply & Demand Oppressing Japanese Companies Resulting in Behind Worldwide High Stock Prices Trend
This policy should drive energy saving in all settings (public and private; work place, public places and home settings), and therefore minimum use of electricity including further warm and cool biz is likely to be promoted. This kind of promotion at workplace may well encourage employees to improve productivity and go home as early as possible which also may mean work-life balance and further driving energy saving at public places and home settings. But too much promotion could lead to negative impact, such as debate leading to refraining illumination at amusement and shopping quarters and people would be deprived of entertainment at night and the town would lose “vigour”.
The Japanese new government needs to come into consensus on this policy with the industry world opinion leaders and win the positive public opinion. The government surely would not want to drop its supporting rate with this issue; from Mr. Koizumi’s reform, it is apparent that the “life line” of the Hatoyama government to successfully solve many problems to change Japan. As in the previous article posted on September 6,
The DPJ Expected to Lead Japan to Change Similarly to Turnaround of Ailing Companies but with More Dynamism and Complexity
this policy is not highly evaluated by the governor and citizen so it may well be tough for the new government to convince key members, but this process cannot be ignored, similarly to turnaround and change management of global companies.
The Chief Cabinet Secretary of the new Japanese government, Mr. Hirano, announced today which was just broadcasted in the 9 o’clock evening news, that 25% reduction of CO2 emission vs. 1990 is to be fulfilled by 2020. Mr. Hirano also said that this message will be strongly delivered by Mr. Hatoyama, the new prime minister of Japan, in his diplomacy debut, his first visit to the U.S. to meet President Obama, and at the United Nations General Assembly.
This policy was clearly stated in the manifest of the DPJ, the current ruling party, and although it is in line with the global trend of co-existence with the global environment, it is possible that this policy will provoke hot discussions and resistance from the industry world and Japanese citizens.
This policy would mean possible severe regulation and allocation of reduction in CO2 emission to each industry sector and companies operating in Japan (including Japan branch of foreign capital companies). Automobile companies have already taken this trend as a business opportunity and started aggressively to develop and market EV cars. And electronics companies are focusing on environmentally friendly energy and battery business and on developing and marketing eco (environmentally friendly, energy saving and economic) electric appliances. Such automobile and electronic companies had been recently benefiting from the old ruling party’s policy of “Eco Point”, leading to increase in sales. However, in general, severe regulation and allocation of reduction in CO2 emission would be a burden and negatively impact from cost perspective. This negative impact has already been seen reflected in the stock price, as stated in the article posted on September 19.
New Coalition Government Policy, High Yen and Supply & Demand Oppressing Japanese Companies Resulting in Behind Worldwide High Stock Prices Trend
This policy should drive energy saving in all settings (public and private; work place, public places and home settings), and therefore minimum use of electricity including further warm and cool biz is likely to be promoted. This kind of promotion at workplace may well encourage employees to improve productivity and go home as early as possible which also may mean work-life balance and further driving energy saving at public places and home settings. But too much promotion could lead to negative impact, such as debate leading to refraining illumination at amusement and shopping quarters and people would be deprived of entertainment at night and the town would lose “vigour”.
The Japanese new government needs to come into consensus on this policy with the industry world opinion leaders and win the positive public opinion. The government surely would not want to drop its supporting rate with this issue; from Mr. Koizumi’s reform, it is apparent that the “life line” of the Hatoyama government to successfully solve many problems to change Japan. As in the previous article posted on September 6,
The DPJ Expected to Lead Japan to Change Similarly to Turnaround of Ailing Companies but with More Dynamism and Complexity
this policy is not highly evaluated by the governor and citizen so it may well be tough for the new government to convince key members, but this process cannot be ignored, similarly to turnaround and change management of global companies.
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