This is a much-expanded elaboration of my contribution in the East Asia Forum.
Beliefs of nation states become policy. Misguided beliefs become bad policy.
This is what’s happening in Japan’s efforts to decarbonize its energy sector.
Part I of this three-part series summarized the most notable parts of the agreement of the G7 Ministerial Meeting on Climate, Energy and Environment that happened in Sapporo, Japan this April. Part II shed light on the disagreements that shaped that agreement.
I admit this exercise was (as one of my grad school professors called my course paper) workmanship-like. But it was useful in highlighting at least one broad conclusion: Japan’s approach to the clean energy transition is…what’s the right word? Unique. Eccentric. Recalcitrant.
For the sake of convenience, I’ll call this approach the pseudo-decarbonization paradigm.
Building a nation’s energy future on shaky theoretical grounds is a critical error. Critical not only for the third wealthiest economy in the world, but also for the decarbonization of the Asia-Pacific region for the next several decades.
By now, a slew of questions should have arisen in your mind. What’s the pseudo-decarbonization paradigm? Why is it “pseudo?” Who holds it? How does it affect the broader Asia-Pacific?
Here’s a quick summary of this rather long article. You can read on for the full articulation of these points.
What’s the pseudo-decarbonization paradigm?
It’s an interlocking set of beliefs about the energy needs and transition pathways in Japan and Asia. It consists of a broad worldview that distinguishes Asia and Japan from the rest of the developed economies, policy goals that prioritizes energy security, advanced fossil fuel technologies, and promotes existing industrial players.
Why is it “pseudo?”
While this paradigm does take it for granted that the world is facing a climate crisis and that reducing GHG emissions is necessary, it seems to prioritize industrial competitiveness over emissions mitigation. It’s also “pseudo” because many of the policy goals it advocates don’t lead to emissions reduction.
Who holds it?
The paradigm is shared by METI officials, LDP politicians, and large energy and industrial companies.
How does it affect the broader Asia-Pacific?
Japanese officials are proactively forging diplomatic ties with countries in the Asia-Pacific under the auspices of helping them achieve decarbonization goals. Yet a large part of their objective seems to be to export Japanese technology and expertise whose climate mitigation potential is deeply dubious.
A neologism needs to be defined and described. The pseudo-decarbonization paradigm is made up of several characteristics (check out the cool diagram above👆🏽). They can be divided into 2 parts:
Elements of a broad worldview
Policy goals that result from that worldview
Those policy goals produce specific consequences. We’ll get into those later in this post. First, let’s spend some time with these characteristics.
Worldview
The pseudo-decarbonization paradigm is not climate denialism in any way. It accepts that Mothership Earth is getting warmer. It agrees that the warming is human-caused. It knows that this is bad and that slashing greenhouse gas (GHG) emissions is the unavoidable solution.
So what is distinctive about the pseudo-decarbonization paradigm? Its worldview can be disaggregated into at least three specific narratives:
Asia’s energy needs are different than those of the west
Japan’s energy needs are different than those of the west
Decarbonization in the long-term, ensuring energy security in the short-term
Let’s look at each in turn.
Asia is Different
The pseudo-decarbonization paradigm holds a global perspective. First and foremost, the paradigm taunts the mantra of “common goal, diverse pathways,” the principle that Japan tried to promulgate at the G7 (starting around 24:49 in the video).
As if climbing Mt. Net Zero, the paradigm argues, there are several routes to the top. Some routes are steep and direct, others are long and winding. More important, these paths demand different tools, technologies and timelines. For the developed economies of the West, the path to decarbonization is paved with renewable energy. For the developing countries of Asia, the road is more complicated.
The paradigm claims that, in Asia, the potential for ramping up renewable energy bumps up against a geographic and demographic ceiling. Wind is modest and there is a shortage of underutilized flat land in the region. Contrast this to wind-abundant Europe and the vast sunny and windy parts of North America.
At the same time, the population is growing in Asia. That means energy demand over the next generation will also be rising rapidly. A far cry from the aging and stagnant demographies in the advanced economies.
The cherry on the cocktail is that the large fleet coal-fired power plants in Asia are much younger than those in Europe and the US. These coal plants, the paradigm points out, are too young for forced retirement and provide important base load power for the energy-hungry region. Plus, coal is cheap, cheaper than the capital expenditure required to develop renewable energy and energy storage projects, making it a good fit for the still-comparatively-poor economies of Asia.
(An important caveat here is that China is clearly excluded from the Japanese conception of Asia’s energy transition. For Japanese authorities, China is a geopolitical rival, competing for influence and markets for energy technology in the rest of developing Asia. I hope to write about this in a future post.)
In the pseudo-decarbonization paradigm, “Asia is different” fits hand-in-glove with “common goal, diverse pathways.” It argues that because of its economic, demographic, and energy profile, the Asia-Pacific region must tread a different path toward decarbonization. A path, that is, that relies on existing (and some new) fossil fuel power generation but whose emissions will be reduced through new and emerging technologies. More on that later.
Terazawa Tetsuya at the Institute of Energy Economics Japan elaborates on these points. You can listen to the whole interview or read the transcript (pages 4-6 are the relevant parts).
Japan is Different
Japan is also different in the worldview of the pseudo-decarbonization paradigm.
If you’re familiar with the energy discourse in Japan, this won’t be new to you. It goes like this. Japan’s mountainous terrain, steep shorelines, and densely populated land make it hard to scale up renewables like wind and solar power. The government has long emphasized that, as a resource-starved nation, Japan must rely on many trade partners to import fuel to ensure its energy security. Crude oil from Saudi Arabia, the UAE, and other parts of the Middle East. Liquefied natural gas from Australia, Malaysia, Qatar, and the US. Coal from Australia, Indonesia, and Russia (as of 2021). All of these fossil fuels made up 85% of Japan’s primary energy supply in 2019.
That’s right - Japan is a big-time customer on the global fossil fuel market. A big part of the reason is the idea that Japan’s geographic and demographic reality militates against an aggressive build-out of renewables.
And indeed, renewable deployment had been sluggish in Japan, at least until around 2012. More details on the nuanced track record of renewables below.
Long-Term vs. Short-Term
Because it accepts the scientific consensus on the causes and consequences of climate change, the pseudo-decarbonization paradigm also accepts that a thoroughgoing decarbonization does indeed need to happen. In the long term.
But since Japan and Asia are different from the West and thus quickly deploying renewables is virtually off the table, the paradigm draws a boundary between the long-term and short-term. It’s a blurry and implicit boundary.
Because the Japan and the developing world has to balance energy security and decarbonization, this logic goes (p. 4), the energy transition will need to happen over a long time. In that long transition period, fossil fuels, especially natural gas and LNG, will be the base load power that keeps people’s lives stable.
This logic was baked into the “common goal, diverse pathways” idea at the G7. It’s also an important element of the pseudo-decarbonization paradigm’s worldview.
Policy Goals
Let’s review the argument so far. The differences in Japan’s and the rest of the G7’s positions can be explained by Japan’s pseudo-decarbonization paradigm. This paradigm’s worldview can be summarized in 3 sentences:
Asia’s energy needs are unique and distinct from those of the west
Japan’s energy needs are also unique and distinct from those of the west
Decarbonization is a necessary and inescapable long-term goal, but enhancing energy security through fossil fuels is paramount in the short-term.
If nation states’ beliefs become policy, what policy goals does this worldview give rise to?
(Note the difference between policy goals and policies. Policy goals are the social, economic, or political outcomes that governments try to bring about through specific policies. Those policies might come in the form of dozens of legislation, regulatory reforms, and (a favorite of Japanese bureaucrats) administrative guidances.)
Primacy of Energy Security
In only a short step away from the three narratives above, we arrive at the primacy of energy security. That is, the absolute importance of ensuring a stable supply of energy sources so that citizens can use electricity and fuel at a reasonable cost without disruption.
Over the last half century, Japan has suffered several acute energy crises. These experiences produced Japan’s energy angst today. The primacy of energy security at the top of the country’s energy policymaking agenda translates to a very clear policy goal.
At a very basic level, ensuring energy security means relying on every source of energy available — fossil fuels, nuclear, solar and wind, hydropower, geothermal, biofuels and waste. It’s a clear case of eggs in all baskets. This explains why even METI’s 2030 projection of Japan’s energy mix projection includes all of these sources.
Japan’s resource-poor status implies that the “eggs in all energy baskets” principle has a corollary: the reliance on as many trade partners as possible to ensure stable fuel imports, as we saw above.
This dependency on fossil fuel imports became even more acute after the government shut down all nuclear reactors in response to the 2011 Fukushima nuclear accident. While Japan has reduced its import dependency by increasing renewable energy capacity and restarting several nuclear plants since then, its energy self-sufficiency rate still stood at 12% in 2019, second lowest among the thirty-one member countries of the International Energy Agency.
The primacy of energy security explains much of Japan’s position at the G7 ministerial meeting in April, especially its request to include a provision allowing for continued investments in natural gas and LNG, and the use of nuclear power.
Japan’s obsession over energy security is also at the root of its decision to keep its stake in a major natural gas project in Russia, even after Russia began its invasion of Ukraine. Mitsui and Mitsubishi continue to own 12.5% and 10% of the Sakhalin 2 project, respectively. While Japan has drastically reduced oil and coal imports from Russia, it considers LNG imports a lifeline, despite the clear diplomatic and geopolitical risks of continuing to lean on Russia.
Advanced Thermal Power
But if fossil fuels are a key to bolstering Japan’s energy security, and if renewable power development has lagged, how does Japan hope to meet its emissions reduction goals?
This leads us to the second overarching policy goal of the paradigm: the development of advanced thermal technology. (Thermal power simply refers to fossil fuel power generation in Japanese policy lingo.)
These technologies are meant to either 1) reduce the carbon emissions intensity of new and existing fossil fuel plants, or 2) increase the efficiency of fossil fuels so that they can generate more electricity with less fuel, thereby effectively reducing their emissions intensity.
The star technologies that garner these hopes are:
High-efficiency coal technology, including ultra super critical coal plants and integrated coal gasification combined cycle
plantsCarbon capture and storage (and maybe utilization)
Ammonia and hydrogen co-firing: By mixing these non-GHG emitting fuels with either coal or natural gas, the hope is to reduce the emissions from these fossil fuels
To these we can add the Japanese government’s plans to expand the role of hydrogen as a clean fuel across the economy. Although hydrogen is not “thermal,” the vast majority of hydrogen that Japan uses today and will be using for the foreseeable future is produced from fossil fuels.
Given these policy goals, the GX (“Green Transformation”) Plan unveiled by the Kishida administration in February features blue hydrogen, ammonia co-firing, coal gasification, carbon capture and storage, natural gas and LNG as cornerstones.
Promotion of Industrial Incumbents
Japan’s energy transition strategy are inextricably tied to its ambition for a revitalized economy. Since the collapse of its bubble economy in the early 1990s, Japanese authorities have tried time and again to summon the lost dynamism. They’ve tried loose monetary policy, financial liberalization, digitalization, and many other measures. Climate action and energy policy are, predictably, part of this economic toolkit.
In my mind, decarbonization with economic growth is prudent (we’ll need to save the very important discussion of “green growth vs. degrowth” until some other day). But it’s the way that the Japanese government is attempting to use the energy transition for economic growth that’s worthy of our attention. It’s by promoting major existing industrial companies.
If we look at the participant lists of the administrative committees that METI convenes to inform policy proposals, we see that these industrial incumbents and the financial institutions that fund them are overrepresented.
If we look at the private firms that are beginning to develop the aforementioned thermal technologies and large-scale renewable energy infrastructure with government support, it becomes very clear that it’s long-standing energy, manufacturing, and trading giants that are carrying out the bulk of the transition.
Industrial interests have a strong hand in deciding how Japan goes about its energy transition, and in implementing it. There are virtually no new entrants or disruptors.
Consequences
To review: We saw that the pseudo-decarbonization paradigm’s distinctive worldview gives rise to three broad policy goals:
need to protect and enhance energy security
need to develop advanced thermal power technologies
promotion of existing industrial players
These policy goals yield very concrete consequences for each of the major energy sources and energy technologies.
Persistence of Fossil Fuels
The first is the stubborn persistence of fossil fuels in Japan. Even after pledging to cut GHG emissions by 46% compared to 2013 by 2030 and to achieve carbon neutrality by 2050, the government’s energy outlook for 2030 still includes 41% of primary energy use coming from fossil fuels (20% from LNG, 19% from coal, and 2% from oil) (p. 20). And sure enough, there are 169 coal-fired power plants in operation in Japan today.
Not only do fossil fuel assets persist; they’re set to grow in Japan. Enormous natural gas power plants and two new coal plants are being planned as we speak. These kinds of investments are encouraged by the fact that the G7 OK’d the continued investments in gas infrastructure and by its failure to agree on a coal phase-out date. In June 2022, Japan committed to “the goal of accelerating phase-out of domestic unabated coal power generation,” but since it doesn’t consider the new efficient coal plants to be “unabated,” coal lives on.
Investigating the narratives promulgated by METI and industrial actors promoting coal, Trencher et al. (2019) conclude that “While narratives related to clean coal, energy security and cost superiority are used by coal regime actors in other countries… the degree to which Japanese energy policy and climate mitigation targets are designed to permit continued exploitation of coal as a baseload power source is striking” (p. 792).
Fossil-Preserving Technology
Serving as a justification for the continuing use of fossil fuels is the belief that, with the development of cutting-edge technologies, emissions from fossil fuels can be reduced to net zero. This belief is moving the Japanese government to make huge investments in these technologies. A recent GX Action Conference specified that the development of CCS will receive ¥4 trillion (USD 28.4 billion) and hydrogen and ammonia, including their uses for co-firing in fossil fuel plants, will get ¥7 trillion (USD 49.7 billion) over the next decade. Not only will these technologies lock-in emissions for several decades to come, they will eat up valuable funds that could be going to more effective and cheaper decarbonization solutions like renewable energy.
Hesitant Promotion of Renewables
The influence of incumbent industries, combined with the worldview that Japan’s geography makes it hard to drastically increase renewable energy (and a handful of other structural barriers) results in just that: a slow rollout of solar and wind.
To be sure, we shouldn’t overstate this. The history of renewable energy in Japan is not a simple one. The 2011 Fukushima disaster and the shut-down of nuclear reactors did act as a kind of catalyst for renewable energy deployment. As Andrew DeWit points out, Japan’s annual deployment of renewables was modest up to 2012, at 20.6 GW of installed capacity in June of that year. But from July 2012 to 2016, 35.39 GW of new renewable generation capacity was added (that’s a rate of 26% increase per year). Over 90% of this new capacity was solar. Key to this growth was the feed-in-tariff (FIT) scheme and METI’s subsidies for renewable energy producers to install megawatt-sized storage batteries.
But this growth in renewables certainly didn’t make Japan a clean energy powerhouse. After around 2015, annual solar power installation slowed down. The sway of the regional electric power companies was at the root of this slowdown, who claimed that their grids were reaching the limits of how much more solar capacity they could absorb. Even the “ambitious outlook” in METI’s 6th Strategic Energy Plan (p. 12) envisions that renewable energy will only reach 36-38% of the country’s overall energy mix in 2030.
Reliance on Nuclear Power
Although we haven’t mentioned it yet in this article, nuclear power fits comfortably in the pseudo-decarbonization paradigm and uneasily with Japanese society. Since the start of government-sponsored R&D in the 1950s and the start of commercial nuclear power in the mid-1960s, the government has promoted nuclear power through financial incentives, public relations, and pro-nuclear science curricula on atomic energy for kids. The LDP positions nuclear power as an important pillar for enhancing Japan’s energy self-sufficiency, emissions reduction in line with Japan’s commitments under the 2015 Paris Agreement, and a valuable source of base load electricity.
After the 2011 Fukushima nuclear disaster, stringent safety regulations and citizens’ class-action lawsuits against nuclear reactors ensured that nuclear was a political third rail. But even then, the LDP never committed to phase out nuclear power - only keeping quiet on the issue so as not to antagonize voters. Prime Minister Kishida’s belief that Japan needs nuclear power is no different from his predecessors. The sharp rise in energy prices triggered by Russia’s invasion of Ukraine strengthened the argument that nuclear is indispensable for enhancing energy security. For the House of Councilors election last July, the LDP removed its pledge to reduce reliance on nuclear power from its platform. It instead committed to make maximum use of nuclear energy, while making safety the top priority.
Now, public opinion seems to be getting less hostile to nuclear, giving the LDP a window of opportunity to reintroduce it. METI’s 6th Strategic Energy Plan (p. 12) set an ambitious goal to increase nuclear power to 20-22% of the overall energy mix by 2030. The government’s GX Basic Policy (p. 7) echoed it. The Kishida administration hopes to do this in two ways. First is by extending the time period that nuclear power plants can remain in operation beyond the current limit of 60 years by excluding the time spent on inspections from the total service life. Second, the Cabinet proposes to replace aging nuclear facilities with new technologies like next generation light-water reactors, small nuclear reactors and nuclear fusion.
Yet both of these methods are fraught. New nuclear technologies are far from being commercially viable. And while public opinion might be shifting, the threat of lawsuits hasn’t disappeared and safety standards by the independent Nuclear Regulation Authority will remain stringent. At the rate at which idled reactors are coming online, it’s doubtful that nuclear power can reach its 2030 target.
Japanese Fossil Fuels in Asia
This is where I think Japan’s pseudo-decarbonization paradigm has regional, and maybe even global reverberations. The Japanese government extends its worldview to developing countries in Asia, giving rise to its “various pathways” concept on display at the G7.
We saw this above: the idea is that while Asian economies must lower emissions from their energy sectors, they can’t do it through renewables alone. Asia’s growing population, growing economies, and young coal plants call for lowering emissions from thermal power is key to the energy transition. Most importantly for this narrative, it is the Japanese government and industry that will be the leading partners in this unique transition pathway.
To this end, Japanese leaders have been rolling out the diplomatic red carpet to open Asian energy markets to Japanese firms. Over the last several years, the Kishida administration spearheaded the Asia Energy Transition Initiative and the Asian Zero Emission Community to jointly develop blue hydrogen, ammonia and carbon capture technologies for continued use of coal plants in emerging Asian economies. These initiatives were followed by a slew of bilateral agreements with Indonesia, the Philippines, Australia, Thailand, and Vietnam to develop these technologies. Such agreements are reliable predictors of international fossil fuel investments, and indeed, Japan ranks first among G20 countries in international public financing for fossil fuel projects between 2019 and 2021, with many of these projects located in Asia.
Worryingly, these “various paths” espoused by Japan do not lead to the goal of limiting global warming to under 1.5C°. There is strong evidence that new coal technologies, ammonia co-firing and fossil fuel-derived hydrogen are excessively costly and fail to achieve sufficient emissions reduction. Meanwhile, the global potential of hydrogen in the electricity sector remains uncertain, not least because three-quarters of the energy is lost throughout its value chain. The prospect for CCUS is even less sanguine, as over 70% of the CO2 captured annually is used to produce more oil and gas.
Conclusion
Disagreements are routine in international negotiations. But the gap between Japan and the rest of the G7 particularly stood out this past April. At the root of this gap, I think, was Japan’s pseudo-decarbonization paradigm.
There are many organizations and research studies that contest each of the narratives that compose this paradigm. But the insular nature of Japanese policymaking seems to prevent the accumulation of that knowledge from impacting policy thinking, much less policy outcomes.
But I think there are promising signs. Even the large industrial companies that are promoting the very technologies I criticize here are hedging their bets by developing renewable energy infrastructure. Ironically, the increasing frequency and severity of extreme weather events and heat waves battering Japan and elsewhere are raising public awareness about the urgency of climate action. That’s generating more interest among Japanese citizens and investors about what their government and companies are doing to to combat climate change.