Japan Energy Update

Kae TakaseSenior Economist

Governance Design Laboratory

Energy and Economy to 2030 (reference)

Mill

ion

kl o

f cr

ude

oil e

quiv

alen

t

Billion yen (1995 prices)

Economy is assumed to grow by 2% to 2010, 1.7% to 2020, 1.2% to 2030. But energy demand is not supposed to grow, but to decrease since 2021.

0

100

200

300

400

500

600

700

800

1965

1969

1973

1977

1981

1985

1989

1993

1997

2001

2005

2009

2013

2017

2021

2025

2029

01000002000003000004000005000006000007000008000009000001000000

TFC TFCgov GDP

Gov. Reference

Reference assumption (2)

Economic growth

TFP (total factor productivity) is assumed to increase 1%/year.

Labor force will continue to decrease since 1997. Unemployment rate will be around 4%.

F.Y. 2010/2003 2020/2010 2030/2020

GDP growth 2.0 %/y 1.7 %/y 1.2 %/y

ΔCO2=ΔCO2/E＋ ΔE/GDP＋ ΔGDP

Japanese government expects very high E/GDP reduction for the future.

Renewable scenario for 2030 does not show much CO2/E reduction.

- 4.0- 3.0- 2.0- 1.00.01.02.03.04.05.0

ref cur.pol. ex.pol. ref efi ren

70- 90 90- 00 2000- 2010 2010- 2030CO2/ E E/ GDP GDP CO2

ΔCO2=ΔCO2/E＋ ΔE/GDP＋ΔGDP/POP+ΔPOP

- 4.0- 3.0- 2.0- 1.00.01.02.03.04.05.0

ref cur.pol. ex.pol. ref efi ren

70- 90 90- 00 2000- 2010 2010- 2030CO2/ E E/ GDP GDP/ POP POP CO2

Energy intensity of GDP (reference + higher efficiency)

0.4

0.5

0.6

0.7

0.8

0.9

1

1.1

1.2

1965

1969

1973

1977

1981

1985

1989

1993

1997

2001

2005

2009

2013

2017

2021

2025

2029

ref. high efi.

Energy intensity of GDP is assumed to decrease very fast.

CO2 Emission

207

286317 318 302

287311

258

299

0

350

ref cur.pol. ex.pol. ref efi ren

70 90 00 2010 2030

Mt-

C

Kyoto target is set to +-0% of 1990 level for CO2 emission from energy, and it is expected to be accomplished by ‘additional’ policies.

CO2 Emission in 2003

0.0

350.0

1965

1968

1971

1974

1977

1980

1983

1986

1989

1992

1995

1998

2001

Mt-

C

+13%

Final Demand by sector (reference)

0.7

0.75

0.8

0.85

0.9

0.95

1

1.05

1.1

1.15

1.2

2000 2010 2030

Industry RefResidential RefCommercial RefPassenger RefCargo Ref

Energy demand decrease in industrial sector, but increase in other sector (except for cargo after 2010).

Final Demand by sector (reference + energy saving tech.)

0.7

0.75

0.8

0.85

0.9

0.95

1

1.05

1.1

1.15

1.2

2000 2010 2030

Industry RefIndustry SavResidential RefResidential SavCommercial RefCommercial SavPassenger RefPassenger SavCargo RefCargo Sav

Kyoto target

Policy Measures for Kyoto target 1) Industry

Reference Current AdditionalVoluntary reduction by JFE* -192High performance furnace -30 -40High performance boiler -10 -50High performance laser -Cascading in complex - 100*Japan Federation of Economic Organizations (Nippon Keidanren)

Unit: 0000 kl (Crude oil equivalent)

Policy Measures for Kyoto target 2) Residential & Commercial

Reference Current Additional

Best efficient standard (current) -570

Best efficient standard (current) - 10

Reduction of stand-by elec. -40

Higher efficient house -240 -280 -300

Higher efficient building -250 -530 -560

Efficient boiler -20 -110 -260

Efficient lighting 0 -50

Efficient air conditioner for building - -30

HEMS 0 -50 -90

BEMS -120 -170

Strict implementation of energy efficiency law - 70

Unit: 0000 kl (Crude oil equivalent)

Policy Measures for Kyoto target 3) Transportation

Reference Current Additional

Best efficient standard (current) -870

Best efficient standard (current) - 10

More clean energy car -20 -60 -110

Introduction of sulfur-free fuel - 40

Introduction of no-idling car - 20

Comprehensive policies in transportation system

-310 -720 -980 to -1170

Unit: 0000 kl (Crude oil equivalent)

Policy Measures for Kyoto target 4) Trans-sectoral

Reference Current Additional

More information of efficient appliances

- -100

R&D in energy efficiency - -110

Unit: 0000 kl (Crude oil equivalent)

Policy Measures for Kyoto target 5) Transformation

Reference Current Additional

Nuclear Capacity factor 83-77% 87-88%

Renewables 9 G liter 15 G liter 19 G liter

NG cogeneration 3030 MW 4620 MW 4910 MW

Fuel cell 40 MW 2200 MW

Summary of Government Outlook (1)

Energy demand is expected to increase gradually to 2030. Structural change in economic activity Demand grows for residential, commercial, and

passenger transportation. Nuclear generation plan has became smaller

since last outlook. (+13 +4 plants until 2010) Policy to raise capacity factor for Kyoto target. From 2010 to 2030

High nuclear case: 4+13 (capacity factor 90%) reference: 4+6 (85%) Low nuclear case: 4+4 (85%)

Summary of Government Outlook (1)

Kyoto target is set to +-0% of 1990 level, but it is a challenging target.

-6% is planned to meet by flexibility measures (emission trading, CDM, etc) and carbon tax.

Japan LEAP model for AES04

Scenarios1. Reference

Follows IEEJ (Institute of Energy Economics, Japan) forecast in 2002.

2. National Alternative Additional policies for less nuclear and more

renewables and energy efficient technologies.

3. Regional Alternative Additional policies with North East Asian regional

cooperation. All scenarios are calculated from 2000 to 2030.

Regional Alternative (1)

Pipeline Oil Import from Siberia 1 million bbl/day, from 2010, $1.5/bbl

higher price Pipeline Gas Import from Sakhalin

6 million ton from 2015, price is set $3/GJ in 2005 (rise at the rate of crude oil price)

Electricity import from Sakhalin 2GW from 2012, 4GW from 2014, 5

USC/kWh (fueled by natural gas)

Regional Alternative (2) Oil Refining on Commission with China

10,000 bbl/day in 2004, increase to 60,000 bbl/day in 2010, remain same until 2015, finish in 2016

Commission fee is set $3/bbl Regional Cooperation in Nuclear

Funds Nuclear Research: 8 million USD from 2007 to 2015, raise to 100 million

USD until 2025, raise to 300 million USD by 2030 Waste Agreement: 8 million USD from 2006 to 2015, 25 million USD from

2016 to 2030 Cooperation in Energy Efficiency and Renewables

Funds Energy Efficiency: cost $1/HH since 2006 (approx. 50 million USD/year),

Renewables: cost 50 million USD/year to Elec. Gen. Effect

2 years earlier implementation of technologies in energy efficiency and renewables

Cost reduction by 10%

Total Cost of scenariosBillion Japanese yen (2002 Price)

*These costs are annual (not cumulative) costs, and are relative to the reference case.

NA=National Alternative, RA=Regional Alternative

0.0

200.0

400.0

600.0

800.0

1000.0

1200.0

1400.0

2000

2003

2006

2009

2012

2015

2018

2021

2024

2027

2030

NA RA

Difference with reference (Primary)

-222 -304

-1,217 -1,264 -1,308 -1,339-361

-506

-1,546-1,691

-1,814 -1,912

314 308930 947 912 859

-5000

-4000

-3000

-2000

-1000

0

1000

2000

NA RA NA RA NA RA

2010 2020 2030

Oil Coal Natural gas Hydro-p Nuclear Renewables Heat

Unit: 10^10kcal

Comparison with other outlook Final Energy Demand

10000110001200013000140001500016000170001800019000

2000 2010 2020 2030

gov2004 gov04c gov04agov04sav COMPASS04ref COMPASS04bCOMPASS04c IEEJ 2002 AES05REFAES05NA AES05RA

Unit: 10^15J

Self-sufficiency

EJ, % 20002030

BAU NA RA

Rate of self-sufficiency (%)

20% 23% 22% 22%

Rate of NEA sufficiency (%)

33%

Definition of self-sufficiency : production of fossil fuel, renewable energy (including geothermal , hydropower, and waste), and nuclear energy.

CO2 Emission

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

2000

2003

2006

2009

2012

2015

2018

2021

2024

2027

2030

BAU NA RA

BAU

NA

RA

Index: 2000=1

reference

Summary Regional cooperation needs higher cost in early ye

ars, but results in lower cost in a long run (comparing with national alternative). More energy efficiency measure and renewables are inst

alled in RA, but the cost of them decline, and the total cost becomes lower even more are installed.

Regional cooperation policy would result in higher regional-self-sufficiency. (BAU 23%, NA 22%, RA 33%)

CO2 emission: slightly lower emission in regional alternative than national alternative