Climate Change Policies & Measures in Japan

1

May 2013

Ministry of the Environment Japan

2 Source: Japan’s National Greenhouse Gas Emissions in Fiscal Year 2011 <Executive Summary>

1.3

1.0 0.9

0.8

1,254 Mt (-0.6% compared to

Base Year)

1.1

1.2

Emissions (Billion t-CO2 eq.)

Kyoto Protocol Target (2008 - 2012)

1,261 Mt

Base Year 2008 2009 2010 2011 (In principle, 1990)

1,282 Mt

Achievement Plan 3.8% by the promotion of forest carbon-sink measures

1.6% by the Kyoto mechanism

1,308 Mt (+3.7% compared to Base Year) ＜+4.0% compared to FY2010＞

1,186 Mt (-6% compared to

Base Year) 1,207 Mt

－8.8％

－13.8％

－10.2％

－4.0％

1,257 Mt

Decreasing rate of emissions compared to the base year considering forest carbon-sink measures target and the Kyoto mechanism credit , including credits transferred from the private sector to the government (-9.2% on average, FY 2008~2011)

Japan’s Greenhouse Gas Emissions The average GHG emissions from 2008 to 2011 including forest carbon sink and

credits from Kyoto mechanism are less than the 1990 level by 9.2%. It is likely that Japan achieves its 6% reduction target of the 1st period under the Kyoto

Protocol.

3

60Mt

87Mt

482Mt

419Mt

217Mt 230Mt

164Mt

248Mt

127Mt

189Mt

68Mt

41Mt 22Mt 26Mt

0

100

200

300

400

500

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

（Fiscal Year）

Energy Conversion Sector(Power Plant,

Transportation Sector

Residential

Industrial

Waste

Commercial and Other

Industrial Sector (Factories,

(MtCO2)

(＋50.6%)

(▲31.3%)

(▲13.1%)

(＋48.1%)

(＋28.8%)

(＋19.7%)

(＋5.9%)

Vs. Base year

CO2 Emissions by Sector

Emissions from the industrial sector, the largest source of CO2 emissions in Japan, decreased by 13.1% compared to 1990. CO2 Emissions from transportation sector peaked out around 2001, and has been decreasing recent years.

Source: Japan’s National Greenhouse Gas Emissions in Fiscal Year 2011

4

Non-energy CO2, CH4 and N2O emissions

Non-energy related CO2, CH4 and N2O emissions has been decreasing from 1990. ・CO2 from non-energy sources: mainly due to a reduction of cement production. ・CH4: mainly due to a reduction of volume of waste to be landfilled. ・N2O: mainly due to the installation of N2O decomposition units in adipic acid production plants.

0

10

20

30

40

50

60

70

80

90

100

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

（Fisical Year）

（MtCO2）

Non-energy CO267.6MtCO2

(▲17.5%) ［+0.0%］

CH420.3MtCO2

(▲36.8%) ［▲2.1%］

N2O21.6MtCO2

(▲31.5%) ［▲1.7%］

(comparison to 1990) [comparison to 2010] Source: Japan’s National Greenhouse Gas Inventory (2012)

5

F gas emission Trend

Emissions of F gases greatly decreased by 2005,but has slightly increased since then. The emissions in 2011 is down 51.2% from 1995 level. Only HFCs emissions has increased since 1995. PFCs and SF6 emissions have greatly

decreased from 1995, by 78.9% and 90.3%, respectively.

0

10

20

30

40

50

60

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

（Year）

（MtCO2）

HFCs 20.5MtCO2(+1.0%) ［+11.8%］

SF6 1.6MtCO2(▲90.3%) ［▲12.1%］

PFCs 3MtCO2(▲78.9%) ［▲11.5%］

(comparison to 1990) [comparison to 2010] Source: Japan’s National Greenhouse Gas Inventory (2012)

6

Low-carbon society

Sound material-

cycle society

Society in harmony

with nature

Low-carbon society

4th Basic Environment Plan (Cabinet Decision in April 2012)

The Law for Promotion of Global Warming Measures

(Adopted in 1998, revised in 2002, 2005, 2006 and 2008)

KP target achievement plan

Safe and secure society …

National Inventory

Accounting and Reporting

Trading in Kyoto Mechanisms

Center for Climate Change Actions, Promoters

Long Term Target in 2050 80% reduction from 1990

Outline of Japan’s Climate Change Policies

Vision of the Sound Environment Society

7

Target of Reduction and Removal of GHGs

Kyoto Protocol Target Achievement Plan (FY2008-2012)

* The Law for Promotion of Countermeasures to Global Warming was adopted in 1998, revised 4 times in 2002, 2005, 2006 and 2008. ** Estimation of emission shows emissions where countermeasures’ effect is maximum and where it is minimum.. While the maximum case should be pursued, the estimation is set to clear the Kyoto Protocol target even in the minimum case.

Protocol Base Year

Target Emissions in FY2010* Emissions Base-year total emissions ratio

Energy-originated CO2 1,059 1,076 – 1,089 +1.3% – +2.3% Industrial sector 482 424 – 428 -4.6% – -4.3% Commercial and other sector 164 208 – 210 +3.4% – +3.6% Residential sector 127 138 – 141 +0.9% – +1.1% Transport sector 217 240 – 243 +1.8% – +2.0% Energy industries sector 68 66 -0.1%

Non-energy-originated CO2, CH4, N2O 151 132 -1.5% Non-energy-originated CO2 85 85 0.0% CH4 33 23 -0.9% N2O 33 25 -0.6%

Three fluorinated gases 51 31 -1.6% HFC 20 22 0.1% PFC 14 5 -0.7% SF6 17 4 -1.0%

Greenhouse Gas Emissions 1,261 1,239 – 1,252 -1.8% – -0.8% CO2 removal by sinks -3.8% Kyoto Mechanisms -1.6%

The KP Target Achievement Plan (decided by the Cabinet in March 2008) sets out detailed emission targets by GHGs and sectors, removals and use of KP credits.

8

Tax Rate per t-CO2 of “Carbon Tax as Climate Change Countermeasure”

“Carbon Tax as Global Warming Countermeasure” JPY 289*

Additional tax rate

Petroleum and Coal Tax Crude oil/

Oil products

JPY 779

Gaseous hydrocarbon (LPG/LNG)

JPY 400

Coal JPY 301

Current tax rate

Tax Rate

* Approx.US$3.64 (The rate of May 22, 2012)

To be used for introduction of renewable energy and enhancement of energy-saving measures, etc.

[1st year] JPY 39.1 billion ; [Normal year] JPY 262.3 billion (about US$3.31 billion)

Phase-in Enforcement

Object of Taxation Current Tax Rate From Oct. 1, 2012 From Apr. 1, 2014 From Apr. 1, 2016 Crude oil/Oil products

[per 1 kl] (JPY 2,040) + JPY 250 + JPY 250 + JPY 260 (JPY 2,290) (JPY 2,540) (JPY 2,800)

Gaseous hydrocarbon [per 1 t] (JPY 1,080) + JPY 260 + JPY 260 + JPY 260

(JPY 1,340) (JPY 1,600) (JPY 1,860)

Coal [per 1 t] (JPY 700) + JPY 220 + JPY 220 + JPY 230 (JPY 920) (JPY 1,140) (JPY 1,370)

Tax Revenue

Carbon Tax Tax rate corresponding to the amount of CO2 emissions for all fossil fuels (JPY 289/t-CO2) Enforced from Oct. 2012 and will increase the tax rate over 3 and a half years by Apr. 2016 All the tax revenue will be allocated for curbing energy-oriented CO2 emissions

9

Thermal efficiency improvements in thermal power plants

Thermal efficiency of thermal power plants

Efficiency of thermal power plants in Japan has gradually improved: 44% in 2009, which is the world top-class. This was driven by introduction e.g. LNG combined-cycle electric power generation,

an improvement of combustion temperature of gas turbine and high efficiency of boiler-turbines.

Source: International Comparison of Fossil Power Efficiency and CO2 intensity (2012) (ECOFYS)

10

57

130

178256

365

523

737

0

100

200

300

400

500

600

700

800

July

Augu

st

Septe

mber

Octo

ber

Novem

ber

Decem

ber

January

2012(fiscal year)

Cum

ula

tive a

ppro

ved C

apacity[1

0M

W]

Biomass

Geothermal

Hydro

Wind

PV (except Mega Solar)

PV (Mega Solar)

Deployment of Renewable Energy

Cumulative Approved Capacity under FIT※

※ Cumulative approved capacity is different from installed capacity”. It shows capacity of RE power plants approved by the minister of METI which may not always be installed and operated.

Cumulative Installed Capacity before FIT

The use of RE has been enhanced by the commencement of Feed-in Tariffs(FIT) in July 2012, and the installed-capacity for 7 months from July 2012 to the end of January 2013 increased up to approximately 7,300 MW. 7,470MW of Wind and Solar PV was installed by 2011, and approximately the same amount has

been approved within less than a year after the introduction of FIT.

64 86 113 142 171 192 214263

362

491

4668

93109

149167

188

219

247

256

747

609

482

402

359320

251

206

154

110

0

100

200

300

400

500

600

700

800

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

(fiscal year)

Cum

ula

tive Inst

alle

d C

apacity[1

0M

W]

WindPV

Source: JPEA, JWPA, METI and other organizations

11 Source: “Feed-in Tariff Scheme for Renewable Energy” (METI, October 2011)

Business

Home

Those engaged in power generation business using RE 1.Solar PV 2.Hydro (>30,000 kW) 3.Wind 4.Geothermal 5.Biomass

Those who generate power at home Ex: Solar PV for residences (>10kW)

Electricity utility

Electricity customers

Supply Electricity

Purchase electricity at a

fixed price for a specified period

Collect surcharge together with the electricity charge

Sell electricity from RE sources

Feed-in Tariffs (FIT) for renewable energy

After open examination at the third party committee, the purchase price and the purchase period shall be decided.

Example of the purchase price and the purchase period April 2012

Source Capacity or Category

Rate, tax incl. (JPY per kWh) Period (year)

PV > 10 kW 42.00 yen 20 < 10 kW 42.00 yen 10

Wind > 20 kW 23.10 yen 20 < 20 kW 57.75 yen (1 yen ≈ 1 euro cent)

12

CO2 Emissions in the Industry sector

Trend in CO2 Emissions and CO2/GDP in the Industry sector (after distributing electricity and heat)

The CO2 emissions from the industry sector in 2011 has decreased significantly by 13.1% compared to 1990.

The emissions per unit of GDP has been decreasing significantly: 20.1% reduction

from 2001.

0

100

200

300

400

500

600

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

(fiscal year)

Em

issi

ons（

MtC

O2）

0

1

2

3

4

5

6

CO

2/G

DP（tC

O2/m

illio

n y

en）

CO2 Emissions

CO2/GDP

Source: Japan’s National Greenhouse Gas Inventory (2012)

13

GHG Emissions Accounting, Reporting and Disclosure Program

Government

Gen

eral

pub

lic,

bus

ines

s op

erat

or

Public

Announcement The emission

information are made public. Reporting

Disclosure

The emission information on a specific operator is disclosed upon request.

Requests

Reading

※ If a specified emitter considers that its competitive interests could be harmed by a public announcement of its emissions data, then the emitter may request the protection of its rights and interests.

※ Emitters may submit relevant information such as the reason of increases or declines in its emissions.

③ The notified information is publicly announced/disclosed to the general public.

② The competent ministers compile the reported information

※Penalty is provided for reporting-obligation violation or false report.

Specified emitters

Business operators, etc. (including public sector that emit considerably large amounts of GHG are covered.

Calculation

① Covered entities calculate their emissions and report the emission information

Large scale emitters are obligated to count and report their GHG emissions, and the government collects the data and publishes them.

14

(1)Measures that contribute to GHG control in business activities

(Industry, service, waste management sectors)

★Activities for the proper and effective implementation ・Management of the emission amounts, facilities installation and operation status ・Collection and organization of the information ・Implementation of PDCA ★Measures for emission control, etc ・Present measures regarding how to select and use facilities, Ex) Updating to energy efficient boilers / Improvement of thermal efficiency / Maintenance of heat source facilities etc.

mea

sure

s Guidelines for GHG Emission Control

(2)Measures that contribute to GHG control by provision of products used by consumers

★General measures ・Manufacture of high energy efficient products ・Provision of the information through the use of "visualization“ such as carbon footprint system, etc. ★Concrete measures ・Present the measures to be taken for the manufacture of apparatus Ex) Lighting, heating and cooling equipment etc.

Based on the Law on Promotion of Global Warming Countermeasures, the government developed the guidelines for industry, service, waste management sectors respectively which business operators of each sector would follow.

15

Nippon Keidanren (Japan Business Federation) took the lead in formulating Voluntary Action Plan on the Environment, and established the target of controlling CO2 emissions in FY2010 below FY1990 levels. In addition to this Voluntary Action Plan, individual businesses in sectors including commercial and other and transport, both affiliated and unaffiliated with Nippon Keidanren, have set up GHG emissions reduction.

These voluntary action plans cover approximately 80% of the emissions from the industrial and energy conversion sectors, and around 50% of those from all sectors.

The voluntary Action Plan is placed as an important component of Kyoto Protocol Target Achievement Plan and the progress is reviewed deliberately every year. This is an unique example of collaboration between the government and private sectors as the effectiveness of voluntary action is enhanced by being authorized by government.

Voluntary Action Plan of Japan Business Federation

CO2 Emissions by the Industrial and Energy-Conversion Sectors

Target level

Abatement by Depreciation of Credits Actual Emissions

Kyoto Protocol commitment period

10.1% decreased compared to 1990FY

450

(MtCO2)

400

350

500

550

Source: Results of the Fiscal 2012 Follow-up to the Voluntary Action Plan on the Environment (Summary) —Section on Global Warming Measures— < Performance in Fiscal 2011 > (Keidanren)

16

CO2 emission of the transportation sector

Trend in CO2 Emissions and CO2/traffic from passenger transport

CO2 Emissions from transportation sector has already peaked out, and has had a decreasing trend in recent years. CO2 Emissions from passenger transport had been increasing since 1990, but has had a

decreasing trend since its peak in 2001. The improvement of vehicle fuel efficiency greatly contributes to this. CO2 Emission from freight transport has had a decreasing trend since its peak in 1996.

0

20

40

60

80

100

120

140

160

180

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

（Fisical Year）

Em

issi

ons（

MtC

O2）

80

90

100

110

120

CO

2/tr

affic（gC

O2/pa

ssenge

r km

）

CO2 Emissions

CO2/traffic

0

20

40

60

80

100

120

140

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

（Fisical Year）

Em

issi

ons（

MtC

O2）

140

160

180

200

220

CO

2/tr

affic（gC

O2/to

nne k

m）

CO2 Emissions

CO2/traffic

Trend in CO2 Emissions and CO2/traffic from freight transport

Source: Japan’s National Greenhouse Gas Inventory (2012), Handbook of Energy & Economic Statistics in Japan (EDMC), Statistical Report on Motor Vehicle Transport (MLIT)

17

Measures in the transportation sector

ownership and ratio of clean energy vehicles Trend in average fuel efficiency of vehicle

The “Top-runner” Fuel efficiency standards based on the most fuel efficient vehicle in keeping with future prospects of the technology development. Green automobile tax, eco-car tax reduction, eco-car subsidy: For the purchase of a

fuel efficient vehicle and vehicles with low emissions, a tax reduction and a subsidy for the purchase is granted. It contributed to the expansion of clean energy vehicles.

8.0

10.0

12.0

14.0

16.0

18.0

20.0

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

（Fisical Year）

Fuel Eff

icie

ncy（km

/l）

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

Vehic

le O

wnersh

ip（th

ousa

nd　

Vehic

les）

Vehicle Ownership

Average fuel efficiencyin ownership

Average fuel efficiencyin Sales

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

（Fisical Year）

（N

um

ber

of

Vehic

le）

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

Methanol Fuel Vehicle

Electric Vehicle

LPG Vehicle

Natural Gas Vehicle

Hybrid Vehicle

Share in the number of vehicle

Source: Japan’s National Greenhouse Gas Inventory (2012), Handbook of Energy & Economic Statistics in Japan (EDMC), Statistical Report on Motor Vehicle Transport (MLIT), webpage of Japan Automobile Manufactures Association, webpage of Automobile Inspection & Registration Information Association

18

Energy consumption of the residential and commercial sectors

Trend in Energy consumption, Household and Energy consumption/Household of the residential sector

Increase of the number of households (31.6% increase from 1990) causes of the increase of the energy consumption in residential sector. However, the energy consumption per the household of 2011 is decreased compared to that of 1990. Increase of the business floor expanse (42.7% increase from 1990) causes the

increase of the energy consumption in commercial sector. However, the energy consumption per the business floor expanse of 2011 is decreased compared to that of 1990.

60

70

80

90

100

110

120

130

140

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

（Fisical Year）

Energy consumption

Household

Energy consumption/Household

（1990＝100）

Trend in Energy consumption, Business floor expanse and Energy consumption/Business floor expanse of the commercial sector

60

70

80

90

100

110

120

130

140

150

160

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

（Fisical Year）

Energy consumption

Business floor expanse

Energy consumption/Business floor expanse

（1990＝100）

Source: Japan’s National Greenhouse Gas Inventory (2012), Population Census (Ministry of Internal Affairs and Communications), Handbook of Energy & Economic Statistics in Japan (EDMC)

19

Measures in residential and commercial sectors

Improvement of average energy efficiency（sales based）

3,000

3,500

4,000

4,500

5,000

5,500

1th 2th 3th 4th 1th 2th 3th 4th 5th 1th 2th 3th 4th 1th 2th 3th 4th

2011 2010

Peak

elec

trici

ty（

10M

W）

Jun Jul Aug Sep

week

Reduction of electricity demand in East Japan in Jul-Sep. 2011 (in the area where supplied by the Tokyo Electric Power Co.Ltd)

The Top Runner criteria introduced into consumer electronics: Energy consumption efficiency of air conditioning, refrigerator, TV, etc. have improved. Electricity demand control: To respond to the energy crisis after the East Japan Great

Earthquake, Japan as a whole tackled to control electricity demand last summer in 2011. As a result, electricity demand was significantly reduced compared with previous years (16% reduction from 2010 on average).

EquipmentImprovement rate ofaverage energy efficiency

magnetic disk 85.7%(2001→2007)electronic calculator 80.8%(2001→2007)

air conditioner※67.8%(1997→2004)16.3%(2005→2010)

refrigerator55.2%(1998→2004)43.0%(2005→2010)

light※ 35.7%(1997→2005)television 29.6%(2004→2008)

freezer29.6%(1998→2004)24.9%(2005→2010)

toilet seat 14.6%(2000→2006)※ criteria based on performance per energynot ※ criteria based on Consumption

Improvement of energy efficiency

Source: Catalog of energy saving performance of consumer electronics(2012)(METI) Source: Electric Power System Council of Japan（ESCJ）

20

Comprehensive measures to cover whole life cycle of CFCs/HFCs -The government will develop guidelines to reduce emissions at each stage of production and use. (1)Producers and importers of HFCs: enhance to introduce alternatives (with no or less GWP) and/or reused HFCs

(2) Producers of HFCs containing products: shift to products with HFC alternatives by a target year to be decided for each product

(3) Large-scale Users of the products (e.g. Supermarkets): conduct a periodical check for reducing leakage. measure and report of amount of leakage

(4) Collectors/destructors plus re-users of HFCs: to be designated by local authorities

Revision of the Law for countermeasures to CFCs, HCFCs and HFCs

More HFC alternatives

フロン類

Revision planned Current status

Low collection rate

HFCs Producers

Supermarkets

Supermarkets

Users of the products

Users of the products

Insulators

producers of HFC containing products

HFC Collectors HFC destructors

HFCs

Leakage

(1) Reduce HFC production (2)Shift to HFC

alternatives HFC producers

re-use (to promote

collection)

再生品

Designated HFC destructors and re-

users

Periodical check

低ＧＷＰ 再

生品

Revising the Law

Current scheme

Air conditioner

Dust blowers

Fridges

Expand the scope to cover whole life cycle of HFCs

Measure and report of leakage

Designated refillment/collection

agent

Report of refilled amount

- CFCs emissions reduced significantly. - On the contrary, emissions of HFCs are increasing rapidly: expected to be doubled in 2020. - Current scheme obligates to collect and destruct CFCs and HFCs while dumping products which contain CFCs/HFCs only. - The scheme is not enough due to relatively low collection rate (about 30%) and leakage during the use of products. - Internationally HFCs countermeasures become more and more important.

Increase of

HFC production

(4) Refill and collect properly

(3) Control leakage in the use of products (4) Re-use

(certification by authorities)

2020

Mt-CO2

Obligation to collect and destruct HFCs

Products with non-HFCs or lower GWP

producers of HFC containing products