OECD's Environmental Performance Reviews: Japan

  • Evaluation
    • Japan has shown strong commitment to the global effort against climate change. In the framework of the 2009 Copenhagen Accord, Japan submitted its target of reducing greenhouse gas (GHG) emissions by 25% by 2020 compared to the 1990 level. This target is "premised on the establishment of a fair and effective international framework in which all major economies participate and on agreement by those economies on ambitious targets".
    • Under the Kyoto Protocol, Japan committed to a 6% reduction in its GHG emissions in the 2008-12 period on average compared with the 1990 level. However, national net emissions increased, and in 2007 they were 9% above the base-year level. This was largely driven by rising emissions from electricity generation, due to the increased share of fossil fuels, especially coal, in the energy mix. Consequently, progress in reducing CO2 intensities has been slow compared to other OECD countries.
    • The economic recession had a downward effect on energy demand and GHG emissions in 2008, which were 6.4% below the 2007 emissions. However, this effect is likely to be temporary and achieving the ambitious 2020 targets will require the use of significantly more cost-effective policy instruments.
    • Unlike many OECD countries, Japan made remarkable progress in the transport sector; emissions have decreased by nearly 7% since 2000. Technological advancement and favorable tax treatment have helped to considerably improve the average fuel efficiency of the road vehicle fleet. Efficiency of freight transport has also improved.
    • Japan has effectively integrated energy and climate policies, with a strong focus on energy efficiency, R&D and, more recently, renewable energy sources. Japan is a world leader in climate-related R&D, which benefits from growing public spending. However, the share of renewables in energy supply has remained fairly stable at a much lower level than in many other OECD countries.
    • Further diversifying the energy mix, including by developing renewable energy sources, would contribute to improving Japan's energy security and reducing its GHG emissions.
    • Energy intensity has been steadily declining, although not as much as in other countries. Energy efficiency of manufacturing has further improved; Japan's major industrial sectors are among the most energy efficient in OECD.
    • Overall, Japan's energy conservation policy is largely based on promoting technological progress and pays insufficient attention to demand-side management. There is further scope to reduce domestic and commercial energy consumption and GHG emissions.
    • Tax rates on energy products, including transport fuels, are among the lowest in OECD and do not convey a strong price signal. The government has postponed the introduction of a carbon tax for several years. The trial emissions trading system (ETS) is a novel initiative, but it remains voluntary and marginal.
    • Negotiated agreements, such as the Voluntary Action Plan in the manufacturing sector, dominate Japan's policy mix to achieve its climate objectives. Negotiated and voluntary targets should be made more transparent and take into account what would be achieved by business-as-usual technological progress.
  • Recommendations
    It is recommended to:
    • examine the cost-effectiveness of the climate policy mix, particularly of negotiated agreements, looking across a range of alternative measures;
    • put a consistent price on carbon through emissions trading in combination with climate-related taxes; transform the trial emissions trading system (ETS) into a mandatory cap-and-trade scheme that is compatible as far as possible with trading schemes in other countries; gradually introduce auctioning of permits;
    • establish a consistent and long-term framework to develop renewable energy sources and reduce reliance on fossil fuels, avoiding technology-specific targets;
    • further expand integrated public transport systems in smaller cities and rural areas, and improve traffic demand management to tackle congestion in large metropolitan areas and along expressways;
    • develop a comprehensive climate change adaptation strategy; mainstream adaptation into land-use and sectoral plans; as part of broader international efforts, provide additional finance to further integrate climate change mitigation and adaptation into development co-operation.