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MILJØ OG ENERGI

In September 2009 the newly elected Japanese government confirmed a target of a 25% reduction of greenhouse gas emissions by 2020. Furthermore, the new Japanese government promises to promote three key areas regarding energy supply: The use of renewable energy, development of innovative technologies, and energy conservation. This supports an already existing national strategy for reducing dependency on traditional sources of energy. These goals should point towards a promising future on the Japanese market for companies involved in new energy technologies.

Introduction

Japan's limited domestic energy resources combined with its huge energy demand means the country depends on foreign sources for 96% of its energy supply. Imports of crude oil account for the largest portion. This makes Japan the third largest oil consumer in the world behind the United States and China, and the second largest net importer of oil. Additionally, Japan is the largest importer of liquefied natural gas in the world and the world’s third-largest producer of nuclear power.

Market Indicators

According to the latest figures, Japan’s energy is supplied by the following distribution of sources. Oil accounts for 49% of all energy supplied; coal, 20%; natural gas (LNG), 14%; nuclear power, 13%; hydroelectric energy, 3%; and other sources (including "new energy"), 1%. Since the seventies, dependence on oil has gradually declined while reliance on nuclear power and natural gas has increased. Since the late nineties, Japan has also had a continuous development in the use of photovoltaic (PV) and wind energy. These are, however, still minor contributors in comparison with the other sources of energy.

In the decades since the oil crises, consumption of energy by industry has remained fairly steady while consumption for residential and commercial use and passenger and freight transportation has tended to increase, regardless of economic trends. Total energy consumption from 2003 to 2030 is forecast to grow by 0.3 percent per year on average.

Given that Japan already relies on the Middle East for around 90% of its oil and also depends on imports for most of its non-oil energy resources, it is clear that the country's energy supply structure is even more fragile than that of other industrial nations. Under these conditions, reducing energy risk by securing stable supplies will continue to be a critical issue for Japan's energy policy. To reduce energy risk and prepare for emergency situations, Japan is pursuing measures for stockpiling oil, encouraging independent development of resources, and promoting cooperation with oil producing countries.

In 2002 the government passed the Basic Law on Energy Policy in order to promote comprehensive and integrated energy policies. This law sets forth the basic energy policy principles of "ensuring a stable energy supply," "harmonization with the environment," and "utilization of market mechanisms," and it also mandates the preparation of a "Basic Energy Plan" that promotes a systematic, long-term, comprehensive approach to policies concerning energy supply and demand.

Market trends

In May 2006 the Japanese government announced “New National Energy Strategy”. The focuses of the strategy are mainly to increase Japan’s independence of energy, environmental compatibility, high-technology energy sources and integrated resource diplomacy. The main numerical targets for 2030 are as following:

Increase energy efficiency by 30%
Decrease Japan’s oil dependability to less than 40% of primary energy supply
Keep the nuclear energy supply level at minimum 30% of the total generated energy, possibly raising it to 40%
Strengthen Japanese companies’ interests and rights to inquiry and extraction of natural recourses outside of Japan by an increase to 40%

Nuclear energy

Given the present-day difficulties involved in ensuring the reliability and large-scale supply of new energy, nuclear energy is playing an important role as a substitute for oil and as a type of energy that does not produce carbon dioxide in Japan. Based on the premise that operational safety can be ensured, the government is promoting nuclear power as a key source of electricity for the country.

As of 2006, the 55 commercial nuclear reactors in operation had a total electric power generation capacity of 45.74 million kilowatts and supplied about one-third of the country's electricity. Private electric power companies own and operate all the nuclear reactors. Efforts to build new nuclear power plants have been greatly complicated by the fact that the public's confidence in the safety of nuclear energy has been greatly shaken by a series of nuclear-power related accidents in Japan since the mid-1990s.

It is estimated that the operating nuclear power plants of the type known as "light water reactors" (which burn uranium fuel) will, within about 60 years, exhaust the world's currently known deposits of natural uranium. With this in mind, Japan has proceeded with a plutonium thermal use plan in which spent nuclear fuel is reprocessed to create a plutonium-uranium mixed oxide (MOX) fuel for use in light water reactors. It is presently unknown if the new Japanese government will proceed with the original plan of building 13 new nuclear power plants before 2050. The development in this area is therefore surrounded by a great deal of uncertainty.

Photovoltaic (PV)

Japan has the third largest installed capacity of photovoltaic units behind Germany and Spain. In 2008 Japan had an installed capacity of just under 2GW. The current government target is to greatly increase the capacity to almost 5GW within 2010.

Japan has a PV cell/module production of around 1GW, with four of their PV manufacturers in the world top ten. These are Sharp, Sanyo, Kyocera, and Mitsubishi Electric in order of their world ranking. Sharp is a global market leader, controlling 25% of the market, and expecting to continue to increase its annual production capacity.

The Japanese Ministry of Economy, Trade and Industry (METI) expects the electricity price by solar cells to reach a 50% reduction in 2010 compared with 2006 from 50 to 23 yen/kWh, with a forecast reduction to 14 yen/kWh by 2020, and 7 yen/kWh by 2030, which is equivalent to the present price of thermal power. In its New Energy Vision outlined in the “New National Energy Strategy” METI expects that in the future 2/3 of the new energy is to be generated by Photovoltaic technology.

Wind Energy

High oil prices have spurred an interest in wind energy in Japan, and today the country is the 9th largest generator of wind power in the world. In 2008 Japanese wind turbines produced almost 2GW. The Japanese government expects to increase the capacity to 3 GW during 2010. In comparison, as of 2009, Denmark has 3.1 GW of installed capacity. Compared to Denmark, wind energy is still a very minor factor in Japan's total energy supply, contributing less than 1% of the primary energy. However, wind power's generating cost has become competitive at 7-11 yen/kWh, near the 6.5yen/kWh of thermal plants. Major wind power developers are active, not only in Japan but also in foreign markets. The leading developer, Eurus Energy, is involved in projects that total 312 MW in Japan, 344 MW in USA, and 546 MW in Europe. Eurus entered the Korean market in 2006 as participant in a 98 MW wind farm project.

European wind turbine manufacturers dominate the market, and the only domestic supplier MHI occupies less than 10% of the market. The total world market has been doubled from 59 GW installed capacity in 2005 to 120.8 GW in 2009. However, due to hesitance towards large scale implementation, Japan has not contributed much to this development. Because Japan is mountainous with a rough costal climate, some domestic scepticism can be found concerning the suitability of large capacity wind turbines in Japan.

Biomass

The government announced in 2002 “Biomass Nippon Comprehensive Strategy” to promote maximum utilization of biomass as an energy source. The project calls for utilization of biomass wastes, and unused biomass by 2010. Further on, by around 2020, cultivation of crops for energy conversion is supposed to be implemented. The national strategy aims for minimum 80 % utilisation of waste biomass.

Besides the energy angle, the project also looks at potential revitalization of the local communities where agriculture or forestry plays an important role. The government plan aims at involving 500 local municipalities or communities by providing subsidies and support.

Market Evaluation

In order to accommodate the targets of becoming less dependent on fossil fuels, and to lessen unpredictability in energy supply for the future, Japan’s energy sector is looking into a broad range of solutions. One of the quickest evolving technologies is photovoltaic technology. This is an area in which Japan has ambitions to stay in the forefront in both development and implementation. Energy conservation is another area in which Japan will make efforts to become the benchmark for other countries. Danish companies with expertise within these areas may very well find opportunities in Japan. Other areas in which it is believed that Danish companies could find attractive business opportunities are:

Wind turbines and components. Despite a slow development, Japan already faces bottle-neck problems concerning components for wind turbines
Bio-fuel technology. Among others, enzymes for the breakdown process of celluloid material are of great interest in this market
Heat pump technology. Increased efficiency is an area that attracts increasing attention regarding the need to meet future energy demands
Fuel cell technology. It is expected that full cell units will become an integrated part of the Japanese energy supply in both small and large scale in the future

Maki Terao

Commercial Advisor
E-mail makter@um.dk

Jesper Vibe-Hansen
Commercial Counsellor
E-mail: jesvib@um.dk

Redigeret 14. januar 2010