Japan’s Policy Measures for Promoting Development and Investments Asia-Pacific Low Carbon Technology Summit October 19, 2016 Japan’s Policy Measures for Promoting Low Carbon Technology Development and Investments Xianbing LIU Senior Policy Researcher Institute for Global Environmental Strategies (IGES), Japan E-mail: liu@iges.or.jp 1

The joint crediting mechanism (JCM) L2-tech Japan initiative Japan’s policy measures for low carbon technology development and investment, and the examples The joint crediting mechanism (JCM) L2-tech Japan initiative 2

Japan’s mitigation target in the INDCs GHG emissions per GDP: More than 40% ↓ GHG emissions per capita: About 20% ↓ Energy efficiency: 35% ↑ Share of renewable energy in total power generation: Approx. 22-24% Overall target: A reduction of 26.0% of GHG emissions by FY 2030 compared to FY 2013 (25.4% reduction compared to FY 2005) (approx. 1.042 billion t-CO2eq as 2030 emissions) 1278 TWh Geothermal: 1.0-1.1% Economic growth: 1.7%/a Energy savings: 17% Biomass: 3.7-4.6% 1065 TWh Energy savings + renewable energies: 40% Wind: 1.7% Renewables: 19-20% Renewables: 22-24% 966.6 TWh Energy savings: 196.1 TWh (-17% from the case w/o savings) 980.8 TWh Solar: 7.0% Hydropower: 8.8-9.2% Nuclear: 17-18% Nuclear: 20-22% Power generation mix in FY2030 LNG: 22% LNG: 27% Electricity demand Electricity generation Coal: 25% Coal: 26% Oil: 3% Oil: 2% FY 2013 FY 2030 FY 2030 3 3

A mix of policy measures for de-carbonization Other Budget Renewables Approx. JPY 100 trillion through 2030 (cumulative) Investment for de-carbonization Approx. JPY 1 trillion in 2015 Feed-in tariff scheme Taxation incl. tax reduction measures Regulation and standard Special account for energy policy [METI] JPY 3677 bill. mainly for industry and energy conversion [MOEJ] JPY 1564 bill. mainly for commercial and residential sectors e.g., Energy Conservation Law, top-runner program JPY 289* “Carbon Tax as Global Warming Countermeasures” Add. carbon tax rate Petroleum and coal tax JPY 779 Crude oil/ Oil products JPY 400 Gaseous hydrocarbon (LPG/LNG) Energy tax rate JPY 301 Coal Tax rate: JPY 289/t-CO2 for all fossil fuels; Enforcement: Since Oct. 2012, increasing over 3.5 years (Apr. 1, 2014 and Apr. 1, 2016); Revenue: JPY 39 bill. (1st year); JPY 260 bill. (since Apr., 2016); Tax use: Earmarked for curbing energy-related emissions. 4

MOEJ’s measures for renewable energy development For the maximal introduction, measures are taken in all phases of RD&D → Demonstration of floating offshore wind power generation → Gathering info of EIA regarding wind and geothermal Wind Geothermal → Promotion of low-carbon society utilizing geothermal power → Promotion of communities using wood-based biomass power and heat → Building a regional-recycling biogas system → Promotion of low emission waste -to-energy system Biomass → Promotion of hydropower generation utilizing in waterworks Hydropower → Demonstration of tidal power generation Maximum usage of regional-based renewable energy resources Ocean Utilization of renewables with hydrogen and battery Utilize residual renewables to produce and utilize hydrogen for fuel cell and FCVs. Utilize batteries to normalize fluctuations of solar and wind power generation. Financial support for local municipalities ‘Green New Deal’ fund; Create leading low-carbon and renewable-oriented communities. 5

An example: Support for building low-carbon society Realize an autonomous, distributed and disaster resilient low-carbon communities by: Full demonstration of renewables, storage, and interchange with micro-grids Scheme MOEJ Nonprofit Organization Municipalities/ Private firms Period: Up to three years; Grant: Up to 75% Sites Period Renewables Nanao, Ishikawa FY2014-16 PV, BDF, binary cycle power Higashi-matsushima, Miyagi PV, BDF Suita, Osaka FY2014-15 PV Nagoya, Aichi PV, biomass, gas-CHP 6

Another example: Demon. floating offshore wind turbine More potential of offshore wind turbines than that of onshore in Japan Stable and efficient power generation by offshore wind turbines Expectation to floating turbines introduced in deep sea areas (50 m or deeper) Started in FY2010, pilot scale and commercial scale models installed in FY 2012 and 2013 Associated technologies and systems established by FY 2015 toward practical application Full-fledged demonstration off the coast of Kabashima, Goto City, Nagasaki The world’s first hybrid spar model [Significant cost reduction by Japanese technologies] 2 MW demonstration model Design and construction of a floating structure resistant to typhoons, etc. Coordination with the fishing industry/system in harmony with fisheries Environmental assessment method In addition, demonstrate technologies and systems to produce hydrogen using surplus electricity 7

One more case: Hydrogen demonstration and deployment Low-carbon hydrogen supply chain image: Production Storage Transportation Application FCV H2 H2 H2 FC bus FCV Tube trailer/Liquid tanker Compressed-gas and liquefied-gas storage Renewable energy Unutilized energy Fuel cells Rep. entity Demonstration site Energy source Application Toyota Yokohama, Kanagawa (incl. Kawasaki) Renewables (Wind) FC forklifts, etc. Air Water Shikaoi town, Hokkaido Renewables (Biogas) FC, etc. Tokuyama Shunan, Yamaguchi; Shimonoseki, Yamaguchi Unutilized energy (Byproduct hydrogen) FC, FCV, etc. Showa Denko Kawasaki, Kanagawa Unutilized energy (used plastics) Toshiba Shiranuka town, Hokkaido Renewables (micro hydropower) 8

The joint crediting mechanism (JCM) L2-tech Japan initiative Japan’s policy measures for low carbon technology development and investment, and the examples The joint crediting mechanism (JCM) L2-tech Japan initiative 9

The joint crediting mechanism (JCM): Scheme Japan Partner Country Joint Committee (Secretariat) Notifies issuance of credits Notifies issuance of credits Development/revision of the rules, guidelines and methodologies Registration of projects Discusses the JCM implementation Issuance of credits Government Issuance of credits Government Reports issuance of credits Reports issuance of credits Conduct policy consultations Request registration of projects Request issuance of credits Request registration of projects Request issuance of credits Submit PDD /monitoring report Submit PDD /monitoring report Project participants Implementation & monitoring of projects Project validation Verification of emission reductions or removals Third party entities Project participants Implementation & monitoring of projects Inform results of validation /verification Inform results of validation /verification JCM website: https://www.jcm.go.jp/ 10

JCM partner countries (16 as of July 15, 2016) Mongolia Jan. 8, 2013 （Ulaanbaatar） Bangladesh Mar. 19, 2013 (Dhaka) Ethiopia May 27, 2013 (Addis Ababa) Kenya Jun. 12,2013 (Nairobi) Maldives Jun. 29, 2013 (Okinawa) Viet Nam Jul. 2, 2013 (Hanoi) Lao PDR Aug. 7, 2013 (Vientiane) Indonesia Aug. 26, 2013 (Jakarta) Costa Rica Dec. 9, 2013 (Tokyo) Palau Jan. 13, 2014 (Ngerulmud) Cambodia Apr. 11, 2014 (Phnom Penh) Mexico Jul. 25, 2014 (Mexico City) Saudi Arabia May 13, 2015 Chile May 26, 2015 (Santiago) Myanmar Sep. 16, 2015 (Nay Pyi Taw) Thailand Nov. 19, 2015 (Tokyo) 11

JCM project flow and support from MOEJ JCM Support by MOEJ *USD1=JPY110 F/S Support Capacity building and feasibility studies FY2015: JPY 2.6 Bill. (USD 23 Mill.) FY2016: JPY 1.1 Bill. (USD 10 Mill.) Project Formation ・　Includes City-to-City Collaboration Program Small/medium-scale projects (JPY several tens of million to several hundreds of million) Model projects (over 3 years) FY2015: JPY 2.4 Bill. (USD 22 Mill.), JPY 7.2 Bill. (USD 65 Mill.) FY2016: JPY 2.2 Bill. (USD 20 Mill.), JPY 6.7 Bill. (USD 61 Mill.) Project Development Financial Support Project Implementation Infrastructure (ADB pipeline projects) (JPY several billion to over 10 billion) ADB Trust Fund (JFJCM: Japan Fund for JCM) FY2015: JPY 1.8 Bill. (USD 16 Mill.) FY2016: JPY1.2 Bill. (USD 11 Mill.) Acquisition of JCM Credits Emission reductions acquired by Japan under the JCM will be appropriately counted as Japan’s reduction in accordance with the Paris Agreement. Accumulated reductions by FY2030 via governmental JCM programs: 50 to 100 million t-CO2. 12 12

Examples of JCM model projects Indonesia Vietnam Vietnam Waste heat recovery in cement plant Eco-driving with digital tachograph High efficient transformers in power distribution Mongolia Palau Indonesia High efficient boiler for heating Solar PV on the top of building roof Gas engine co-generation at the automobile assembly plant 13

The joint crediting mechanism (JCM) L2-tech Japan initiative Japan’s policy measures for low carbon technology development and investment, and the examples The joint crediting mechanism (JCM) L2-tech Japan initiative 14

L2-tech Japan initiative Technologies in the list Enhance public awareness and ensure producer reliability by offering information  Announced by MOEJ in March 2014  Refers to ‘Leading Low-carbon Technologies’  Compiling information on leading low-carbon technologies for reference when spreading them at home and abroad Merits Possible support: 1) Subsidy from carbon tax revenue; 2) Support for tech. development Field Technologies in the list Industry and commercial 　 Air conditioning, heat sources, etc.　　 Industry (sector-specific manufacturing equipment etc.) Industries, including iron and steel, chemical, paper and pulp manufacturing, petrochemical, automobile manufacturing, construction machinery, agricultural instruments (for cultivation), agriculture (horticultural facility) Transportation　 Automobiles (passenger cars, commercial vehicles, heavy vehicles), two-wheeled vehicles, railways, shipping, aircraft Residential　 Domestic electrical appliances, water heaters, window glass, etc. Energy conversion　 Renewable energy, natural gas-fired power plants, etc. Waste treatment and recycling General wastes treatment, industrial wastes treatment, material recycling, sewage treatment, sewage sludge treatment, etc. 15

Image of L2-tech information structure Equipment and instruments that contribute to low-carbonization (worldwide) CO2 reduction High Low A B C G H I Level Settable Standard evaluation Disable Select important ones 【L2-Tech List】 Includes equipment and instruments superior in CO2 reduction for attaining target of 80% reduction by 2050 Standard evaluation is settable 【L2-Tech Standard List】 Indicates highest performance of ‘superior products’ commercialized as L2-Tech standard Certify products used in equipment and instruments 【L2-Tech Certified Product List】 Products certified by MOEJ as presenting highest CO2 reduction efficiency 16

Thank you for the attention! 17