Japan's decarbonization fails to improve for 25 years

Nikkei -- Nov 23
The Japanese economy has failed to improve its reduction of carbon emissions over the last quarter-century, Nikkei has learned.

When carbon emissions per unit of gross domestic product are compared by country, the figure for Japan has remained flat since the 1990s. European countries, where use of renewable energy has grown rapidly, have slashed their carbon emissions per unit of GDP by one-half to one-third during the same period. Although the Japanese government has pledged to reduce greenhouse-gas emissions to net zero by 2050, the country now lags other advanced economies in the effort to decarbonize.

Keiko Shiga, Sony's general manager in charge of sustainability, feels the dilemma as a company with factories in Japan. "In Japan, buying renewable energy is challenging. It is difficult to attract investors if we are evaluated on the same basis as foreign companies," Shiga told Nikkei.

Among investors, there is a growing trend to select companies based on "ESG" or environmental, social and corporate governance principles. And carbon emissions, which are easy to measure and compare across companies, have a significant impact on investment decisions.

Japan has not made progress in reducing carbon emissions to create added value in its economy. If greenhouse gas emissions are divided by GDP, Japan produces around 2.5 tons of CO2 for every $10,000 in its GDP, largely unchanged from 1995.

After the Arab oil embargo in the 1970s, resource-scarce Japan improved its technology to enhance energy efficiency and became the world leader in terms of fewest carbon emissions per unit of economic output. Japanese companies also developed clean technologies to control pollution.

However, in the 2000s, France and the U.K. overtook Japan and the gap is widening. The main difference lies in how electricity is generated. In Europe, the cost of producing electricity using renewables has fallen below that of fossil-fuel power plants. In 2018, renewables accounted for 34% of the electricity supply. The increase in low-carbon electricity has pushed the U.K.'s carbon emissions per unit of GDP to fall to about a third of what they were in 1995.

- Nikkei