Energy Innovation Strategy to Aim at Strong Economy and CO2 Reduction

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On April 18, 2016, Japan's Ministry of Economy, Trade and Industry laid out the Energy Innovation Strategy. METI had drawn up energy related goals in July 2015, including a 35% improvement in energy conservation and a doubling of renewables usage, which are in line with Japan's energy mix, and the strategy, as outlined below, has been designed to comprehensively develop legislation and systems to achieve these goals.

The strategy will implement specific measures for vigorous energy conservation, expansion of renewable energy sources and development of new energy systems.

As approaches for vigorous energy conservation, the strategy proposes expanding the Japanese top-runner program across all industries and advancing energy conservation among mid- and small-sized businesses, housing and transport sectors. The Industrial Top Runner program will be introduced in distribution and service industries, expanding to 70% of all industries in the next three years.

The current support system for energy efficiency investment will be enhanced and improved so that small and medium size businesses will have better access to such support when improving the energy efficiency of each facility. Measures for housing, under the recent growth of the house-reforming market, include subsidies for high-performance window glazing and frames, and other renovation works to improve the building's thermal insulation. For the transportation sector, there will be measures in place to create an initial demand for next generation vehicles and to put self-driving cars into practical use.

For expansion of renewable energy, the strategy aims at lower utility bills for consumers while maximizing output from renewable sources. Specifically, the current certification program as well as non-operational renewable energy generation facilities will be reviewed, and a scheme to promote long-term stable energy generation will be developed. The strategy also promotes the introduction of renewables in a cost-effective manner, expanding the use of renewables with longer lead time, and reviewing FIT and related systems to take advantage of power supply system innovation to advance renewable usage.

In terms of building new energy systems, the strategy will promote newcomers to the power industry and work on CO2 emission reductions at the same time. It will also launch an energy system that is aggressive in both incorporating renewables and seeking energy conservation. Going along with power industry's voluntary scheme, the strategy will streamline systems to promote improvement of power generation efficiency and decarbonizing the power supply. In order to launch the new energy system, industry-academia cooperation opportunities will be set up. Other measures include streamlining communication standards for energy-related devices, developing rules for starting a megawatt market, and organizing new measurement rules.

In addition to the above measures, METI will implement steps to achieve the following goals, which are focused on potential energy situations:

1. Paradigm shift in energy conservation policy, making energy conservation an industry-wide or supply chain-wide effort rather than an individual company effort, and make power suppliers the main players in energy conservation businesses.
2. Creating a low-carbon power market and restructuring the renewable energy industry.
3. Energy industry innovation through IoT.
4. Developing strategies for a hydrogen society after 2030.
5. Realizing the Fukushima New Energy Society Plan with Fukushima Prefecture as a hub for the new energy society model.

METI expects that the strategy will encourage energy-related investment to significantly improve energy efficiency, which will in turn lead to simultaneous pursuit of a strong economy and CO2 emission reductions.