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Green Shoot: Abenomics and the 3rd Arrow via Japan Focus

By Andrew DeWitt

This article describes the impressive, resilience-targeted greening of Japan, evident in nationwide deployments of renewable energy, radical efficiency, and other core aspects of sustainability. These developments are already underway, and include public- and private-sector actors as well as community groups. The greening also has promising stamina due to being increasingly deeply inscribed in the fiscal, regulatory and other mechanisms of a rapidly emergent industrial policy.
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The third arrow is also packed with numerous examples of constructive, resilience-building deregulation. Last year’s (July 1, 2012) implementation of the feed-in tariff13 has been followed by a flood of initiatives to sweep away the regulatory network that impedes the rapid diffusion of renewable energy.14 These rules include unduly strict regulations governing the use of waterways, farmland and other ecosystem assets.15 Japan’s regulatory network governing waterways, for example, was meant to protect local residents’ and other actors’ rights to water from rivers. But these same rivers are now an energy resource where small hydro (i.e. not traditional large-scale dams, but rather small-scale hydropower generation equipment) can be deployed. The problem with current rules is that they impede the deployment of small hydro, even where it does not impede local and downstream residents’ rights to the water per se. The diffusion of small hydro simply harvests some of the energy within the moving water rather than – in contrast to the so-called “golden age” of gas fracking in America and elsewhere – consuming the water itself or polluting it.16 – See more at: http://www.japanfocus.org/-Andrew-DeWit/3965#sthash.38kMExgV.dpuf
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These initiatives matter a great deal for a number of reasons. One is that the power business is the fastest growing sector in Japan. On June 13, the Tokyo Shoko (“Commerce”) Research Ltd, established in 1892 as Japan’s first credit reporting agency, released its “National Business Starts” survey for 2012. During the year, there was an increase of 1.2% in new businesses, to a total of 103,074 firms. Within the specific are of electricity, gas, heat distribution and water, the 2011 total of 82 firms grew by over ten times to total 826 businesses.17 The tally for this year will almost certainly be far larger, as very large capital has entered the fray. For example, from July 1 of this year, Toyota Motors entered the power-supply market through a new subsidiary “Toyota Turbines and Systems.” And in June the internet business, Rakuten, set up “Rakuten Energy” in order to provide services in solar deployment as well as energy conservation. Both of these initiatives directly threaten the monopolized utilities’ business models.18 – See more at: http://www.japanfocus.org/-Andrew-DeWit/3965#sthash.38kMExgV.dpuf
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One key item worth noting is that Japan is likely to represent fully 40% of global LED sales in 2012 and 2013.19 Lighting is roughly 20% of global power consumption, and the development and deployment of LEDs not only crunches power demand and material consumption, but also helps bring down prices to make cheap and efficient lighting available in the developing world. Other notable developments include a new (opening in July of 2013) Honda factory in Saitama Prefecture, whose power consumption and emissions are 40% below conventional factories, and which is selling power generated by rooftop solar through the feed-in tariff.20 Another inspiring initiative in the building sphere is the diffusion of “smart malls,” beginning with the March 15 opening of refurbished Aeon Mall in the city of Kitakyushu. This project is the first phase in a Ministry of Lands, Infrastructure and Transport (MLIT)-led initiative to halve energy demand in the Aeon Group (Japan’s largest retailer) by 2020.21 These smart industrial policy projects are plentiful. Another example is seen in the July 5 Nikkei report that a long-life (20 year) large-scale vanadium redox flow battery will be installed in Hokkaido in order to facilitate the uptake of renewable energy. The battery will be built by Sumitomo Electric, and will be installed and operating on the grid by 2015. The installation cost for the battery will be in the neighborhood of YEN 20 billion. One reason for installing this new battery is that the regional utility’s storage capacity is at present only 60,000 kWh, which is roughly equivalent to the daily consumption of 6000 average homes. But a larger ambition is at work as well: the Ministry of Economy, Trade and Industry (METI) aims to stimulate renewables as well as the electricity storage business by funding this project, in line with a government decision last July to adopt a battery storage industrial policy strategy. Sumitomo Electric is thus at present in the process of testing a 5,000 kWh version of the battery at its factory in Yokohama. From next year, it will begin large-scale production of these batteries at its factory in Osaka. The present outlook is for a business of approximately YEN 100 billion over the next 5 to 6 years. The core of the strategy is to develop next-generation battery storage and raise Japan’s share of the global market from the current level of under 20% to roughly half by 2020.22 Another example of fast and smart action is seen in the July 4 Nikkei report on Sumitomo Heavy Industry’s development of a gear motor with roughly 40% increased efficiency. This motor will be put onto the market from October, and integrates a reduction drive and motor complex that uses materials with lower resistance as well as a refashioned iron core. The motor is to comply with METI’s new efficiency standards that are to be introduced from April 2015. The new rules apply to 0.75 to 375 kilowatt industrial use motors, and require an average of 6% efficiency increases. Sumitomo’s device is in the 0.75 to 11 kilowatt range, and it plans to introduce larger high-efficiency motors from 2014. Sumitomo commands roughly 70% of the domestic market for gear motors as well as reduction drives, but has less than 10% of the global market. It is hoped that this new motor series will help it to gain a larger foothold in the Western and Chinese and other markets that have higher efficiency standards. It also plans to raise the level of sales for its machine components that include these reduction drives by 6% over the previous year to a total of YEN 97 billion.23

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◇See also Japan’s Growth in Renewable Energy Dims as Nuclear Strives for Comeback.

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