Environmental, regulatory and tax policy in Japan

20-Aug-2019 Intellasia | CoinTelegraph | 6:02 AM Print This Post

Japan has inadequate energy resources and imports 87.4 percent of its hydrocarbon energy. It is the world’s largest importer of liquefied natural gas and third-largest importer of oil and coal.

Japan has lower levels of subsidies for fossil fuel consumption when compared to other G-7 countries, but higher subsidies for oil and gas exploration and coal production. Because efforts to compensate for the drop in nuclear power generation after the Fukushima nuclear crisis which was triggered by the 9.1 Tohoku tsunami in Japan and which forced the shutdown of Japan’s entire fleet of nuclear 48 reactors, effectively terminating the plan to supply half the country’s electricity with nuclear power resulted in far more support for fossil fuels and increased CO2 emissions compared to renewable energy.

Japan provides billions in taxpayer dollars for building highly polluting coal plants in Japan as well as overseas. Japan’s largest banks MUFG and SMBC Group along with other banks, have reportedly continued to finance fossil fuels with $1.9 trillion since the adoption of the Paris climate agreement. Therefore, Japan is the second-worst performer when it comes to reforming fossil fuel subsidies, according to a report by the Natural Resources Defense Council.

In October 2012, Japan implemented a carbon tax of 289 Japanese yen (about $3) per tonne of CO2 equivalent. The government plans to use the revenues of $2 billion generated from this carbon tax to finance clean energy and energy-saving projects. Hydrocarbon air pollution is a drag for renewable energy. Dust and other sky-darkening air pollutants slash solar energy production by an estimated 11.5 percent to 13 percent. The haze blocks sunlight from reaching the solar panels, and if the particles land on a panel’s flat surface, they cut down on the area exposed to the sun.

Japan also introduced a feed-in tariff (FIT) system in 2012 to lower solar power generation costs, which are double that of Europe thereby shifting the price of solar energy on the public to the tune of 2.4 trillion yen (roughly $22 billion) in the 2019 fiscal year alone, with a cumulative total of about 10 trillion yen (nearly $100 billion) since its introduction in July 2012. The government’s steady lowering of the FIT purchase price, which stands at 14 yen ($0.13) per kilowatt hour in 2019, has brought a drastic drop in profits for solar energy companies, triggering a wave of bankruptcies, which have reportedly risen year-on-year for five consecutive years since 2013.

Conclusion

Globally, subsidies and financing for fossil fuels continue to remain stubbornly high. According to reports, 2018 actually saw an increase in money going into new upstream oil and gas projects, while investment in renewable power of all kinds dipped 2 percent. The World Bank still funds the fossil fuel industry at least three times greater than renewable energy.

This is despite G-20 finance ministers’ commitment to working together in redirecting public investments to renewable energies through fiscal policy and the use of public finance. Despite the International Renewable Energy Agency reporting that the cost of solar electricity has tumbled 80 percent in recent years and with three-quarters of coal production now more expensive than solar energy, the fossil fuel industry still receives benefits from governments.

In the latest G-20 meeting in Osaka, Japan reiterated its dedication to the Paris climate agreement and to phasing out fossil fuel financing and subsidies in order to tackle climate change. Enhancing zero-carbon energy is an urgent task for the Japanese government, which is aiming to derive 44 percent of power from renewable (7 percent from solar energy) and nuclear power by 2030 to fuel its burgeoning digital economy. Fossil fuel subsidies significantly reduce the use of renewables, according to an OECD report.

According to scientific reports, earthquakes, volcanic eruptions, giant landslides and tsunamis become more frequent as global warming changes the Earth’s crust, swells sea levels, and triggers a repetitive cycle of severe natural disasters that cause extensive environmental and economic damage (e.g., it cost $315 billion to $728 billion to clean up the Fukushima nuclear reactor site alone).

On August 12, Australian energy technology company Power Ledger and Japanese Kansai Electric Power Co. announced they completed a joint trial of a blockchain-based peer-to-peer trading system for post-feed-in tariff surplus solar power in Osaka. Their announcement came on the heels of a report that highlights multiple ways blockchain technology could disrupt the peer-to-peer solar energy trading sector. According to the report:

“Blockchain technology could alter the manner in which electricity customers and producers interact. Traditionally electric utilities are vertically integrated. Blockchain could disrupt this convention by unbundling energy services along a distributed energy system. For instance, a customer could directly purchase excess electricity produced from their neighbour’s solar panels instead of purchasing electricity from the utility.”

Japan intends to replace FIT’s fixed price system with a competitive bidding/blockchain-based peer-to-peer trading system for post-feed-in tariff surplus solar power system as soon as 2020. This would thereby reduce inequality and provide cheaper, cleaner energy that reduces CO2 emissions and would help promote digital development in Japan as well as across the world.

https://cointelegraph.com/news/japan-to-solarise-its-burgeoning-digital-economy-expert-take

 


Category: Japan

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