Japan’s economy is highly dependent on fossil fuels which accounted for around 90% of Total Primary Energy Supply (TPES) in 2019 (renewables accounted for 6.4% of the total in that year). The largest contribution to TPES, around 39%, is oil, primarily used in transport and industry. Coal and natural gas contribute 28% and 22% to TPES respectively. The supply of the latter is almost entirely imported, making Japan the world’s largest importer of LNG. Imports are likely to decrease in the coming years mainly due to nuclear restart and a greater uptake of renewables.
In the power sector, coal has steadily expanded, driven by the country’s recent liberalisation of the power market, without effective policies in place to reflect the external cost of fossil fuels: Japan’s carbon price is set at 2-3 USD/tCO₂ making it difficult for low carbon sources to compete.,, Although the government has announced plans to phase out inefficient coal plants, its energy strategy still sees coal providing a quarter of the country’s power a decade from now., Given the government’s emissions reductions targets, existing and planned coal-fired power plants face stranded asset risk.,,
Nuclear energy historically provided about 15% of the country’s TPES, but all plants were suspended after the 2011 Fukushima nuclear accident. Although these plants are slowly being brought back online, it is unclear whether the government’s NDC target of 20-22% will be achievable given more stringent safety standards now in place.,
Renewables have started to make inroads into Japan’s electricity sector, primarily spurred by support for solar PV, one of the biggest potential renewable sources in Japan. Of the total renewable share of around 19% in 2019, hydropower and solar PV accounted for about a third each, followed by biomass. Its NDC target of 36-38% renewable share is set to be (over) achieved without additional effort and recent regulatory improvements should speed up adoption of solar energy.
Japan is also formulating a plan to develop its largely untapped offshore wind potential., Renewable energy accounted for about 6% of TPES in 2019. In their Green Growth Strategy, Japan has indicated that offshore wind and hydrogen fuel will play key roles in decarbonising the country’s power and overall energy sectors.
Cars are Japan’s largest export products followed by machinery including computers. A recent ministerial report has recommended setting a GHG emissions reduction target for all new vehicles produced by Japanese car manufacturers of 80% by 2050, relative to 2010 levels. Given the country’s role in the world’s automotive market, this domestic target could be a key driver of global emissions reduction in the transport sector.
Japan has no binding targets or emissions reduction policies for the industry sector, but relies on voluntary commitments from business associations. Nevertheless, industrial emissions have seen the largest decreases, dropping by a third in the last three decades, due to a combination of reduced activity and reduced emissions per output.The strongest reductions have come from the cement sector.