Topic Area: GHG abatement
Geographic Area: Japan
Focal Question: The case of Japan's energy policies and how it pertains to GHG abatement
Source:
(1) Fukasaka , Energy and Environment Policy Integration. The Case of Energy Conservation Policies and Technologies in Japan. Energy Policy , v.23 (12). December 1995.
Reviewer: R. Scott Ames, Colby College '96
Review:

During the late 1940's until the early 1960's, the Japanese economy was heavily reliant on the production of domestic coal as its main source of energy. However, during the 1950's as the world price of petroleum was significantly declining petroleum became the main energy source in Japan. By 1962 the use of petroleum as the primary energy source exceeded that of domestic coal.

In 1967, the Advisory Council for Energy began pursuing long term energy goals, one of which was the decrease in sulphur content of heavy oil to 1.7% by 1969 and the stabilization of petroleum supplies. Environmental quality was apparently of concern in Japan long before it became a global concern. This is supported by the Air Pollution Regulation Law (1962) and the Basic Law for Pollution Control (1967). These laws were stimulated by the deterioration of environmental quality due to policies to generate high economic growth during the post war period of 1945 to the late 1950's. This economic growth was coupled with severe industrial pollution which was found to be the cause of serious health problems.

In order to curb the health deterioration associated with industrial pollution, the Basic Law established environmental quality standards and introduced pollution prevention measures for highly industrialized areas. Due to the "economic harmony" clause in the Basic Law that stated some form of economic development associated with environmental protection, the law was hardly enforced due to ambiguities in which should take precedence. This lead to the reformation of the Law in 1970 which defined the pollution standards in Japan. To stimulate the acceptance of these laws by the industrial sector, various forms of fiscal measures were taken. These included low interest government loans, preferential tax treatment and special depreciating schemes for the industrial sector. These measures stimulated massive investments by the industrial sector in technological innovation in order to meet the environmental standards set forth in the revised Basic Law of 1970.

Investments in desulphurization equipment did yield a decrease in SOx emissions, but Japan, like the rest of the world, felt the effects of the 1973 oil shock. This would not have been hazardous to the Japanese economy had it's petroleum demand not accounted for 80% of the total energy demand in Japan. This forced regulators to take action to try to diminish the reliance on petroleum products and its consumption. In 1975, the Advisory Committee for Energy outlined four guides to insure energy security: (1) to reduce the dependency on petroleum by finding alternative energy sources and diversifying its energy sources, (2) to stabilize the petroleum supply, (3) to promote energy conservation, and (4) to facilitate the research and development of new energy sources, stressing the stabilization of petroleum supplies and the conservation of energy.

In 1979, the Energy Conservation Law established standards for all energy consuming sectors and called for the increase in energy efficiency in consumer products. These long range goals for economic development and environmental protection through the reduced dependency on petroleum and emissions standards coincided with the second oil crisis of 1979. Although this oil shock affected petroleum prices more than did the first, it hindered the Japanese economy less. Actions taken by regulators had curtailed the dependency and consumption of oil through the diversification of energy and the implementation of fiscal reform and strict enforcement of environmental policies.

The effects of Japan's energy diversification policy and enforcement of emission standards has in no way hindered the Japanese economy. Macro data suggests the opposite. In fact, the percent change in Japan's GDP from 1980 to 1991 is in the vicinity of 57% in contrast to that of the United States which was at 26% and Germany which had a percent change in GDP around 28%. This is significant economic growth and far surpasses that of the traditionally strong economic growth seen in the United States and Germany. However, this increase in GDP was accomplished along with significant reductions in air pollutants and GHG's like SOx, NOx, and CO2. In fact, as of 1991, Japan emitted 0.5 kg per 1000 USD in GDP of SOx, 0.8 kg per 1000 USD in GDP of NOx, and 0.57 kg per 1000 USD in GDP of CO2. These numbers contrast significantly with the emissions in the United States and Germany. The Japanese emissions are 90%, 80% and a little more than 50% less than the United States emissions in SOx, NOx, and CO2 respectively. In the case of Germany, the data are very similar, with Japanese emissions more than 90% of the SOx emitted in Germany, around 75% of the NOx and more than 40% of the CO2. This is startling data especially given the almost double percent change in GDP as compared to these countries.

This case study was presented to show that economic activity does not have to be foregone in order to meet environmental objectives. Japan serves as an excellent example due to its strong economic growth from 1980 to 1991 which coincided with the implementation of strict environmental protection laws and energy conservation programs.