Japan

The CAT rates Japan’s policies and action against modelled domestic pathways as “Insufficient”. This rating indicates that Japan’s policies and actions in 2030 need substantial improvements to be consistent with limiting warming to 1.5°C. If all countries were to follow Japan’s approach, warming would reach over 2°C and up to 3°C.

Further information on how the CAT rates countries (against modelled domestic pathways and fair share) can be found here.

The CAT estimates that Japan’s implemented policies will lead to emission levels of 31% to 38% below 2013 levels in 2030, falling short of its latest NDC target of a 42% reduction below 2013 levels, both excluding LULUCF. Without additional measures, Japan will likely miss its NDC target, as well as the 60% reduction below 2013 levels target, the only one we estimate to be 1.5°C-compatible. In 2023, the government adopted the Green Transformation (GX) Basic Policy, a set of initiatives that aims to generate approximately JPY150 tn (approx. USD 1 tn) of public-private investment over the next 10 years (METI, 2023e). This new strategy seeks to ramp up decarbonisation efforts in key industrial sectors through the GX League, a voluntary group of industries who individually set their own decarbonisation targets to be in line with the national reduction targets and participate in an emissions trading scheme to achieve them (i.e. 46% emissions reduction in 2030 below 2013 levels and achieving carbon neutrality by 2050) (CAS, 2022; METI, 2022a).

As of March 2024, 747 companies which collectively account for 50% of CO₂ emissions (including indirect emissions from electricity use in households) have joined the group (METI, 2024a). In 2024, as part of the GX basic policy, the Japanese government issued the world’s first sovereign transition bonds called the Japan Climate Transition Bonds. The first tranche was auctioned in February 2024.

However, the GX Basic Policy places more emphasis on economic growth and energy security, than on prioritising ambitious decarbonisation efforts. In fact, the new strategy does not provide any emissions reduction targets for 2030 or 2050. While it finally lays out a blueprint for the introduction of a carbon pricing scheme, there are concerns that the system envisioned by the government will not be effective in reducing Japan’s emissions. It remains unclear whether the emissions trading scheme currently being considered for 2026 will still be based on voluntary participation (InfluenceMap, 2023; METI, 2023d). On top of that, the carbon levy, which will only be implemented in 2028, is expected to be set at a low level (Renewable Energy Institute, 2023d).

There are also concerns that the GX Basic Policy will keep Japan wedded to coal, as it puts a strong emphasis on the need to develop CCS technologies, and ammonia and hydrogen co-firing, as tools to curb emissions in coal fired power plants. These technologies are all distractions from the need for Japan to phase out coal-fired power by 2030 at the latest.

Studies show that Japan could achieve between 80-90% of clean electricity share by 2035, thereby reducing its dependence on fossil fuel and bolstering its energy security (Renewable Energy Institute, 2024; Shirashi et al, 2023).

In a significant policy shift, Japan unveiled plans to build new generation nuclear reactors, as part of the GX Basic Policy. Despite this policy reversal, the first turn toward nuclear power since the Fukushima disaster, many regulatory and political hurdles remain, and it is unlikely that the new reactors will be operational before 2035-2040.

One policy expected to contribute to significant additional reductions, though its effects would only take place in the long-term, is the revision of building standards by which all new houses and buildings will need to comply with upgraded energy efficiency standards from 2025 (MLIT, 2022). This is a significant step forward as the emissions from the buildings sector increased by 34% in 2020 above 1990 levels while Japan currently aims to achieve 28% emissions reduction in 2030 below 1990 levels. (GIO, 2022; Government of Japan, 2021b).

To also support decarbonising existing houses and buildings, several measures have been introduced including financial support for house renovations to improve energy efficiency as well as promoting the use of renewable energy in buildings (MLIT, 2022). Japan aims to achieve on stock average net-zero energy consumption for newly constructed buildings (ZEBs) and houses (ZEHs) by 2030 as well as all buildings and houses by 2050 (MLIT, 2022). Additionally, the Tokyo Metropolitan Government has mandated majority of new buildings and houses to install solar panels from 2025 (The Japan Times, 2022b)

The table below illustrates the fuel mix in the power sector in 2022, and the different assumptions for our projections, in comparison to the IEA World Energy Outlook (WEO) 2023 (IEA, 2023) (See Assumptions tab for details).

Table 1: Electricity mix in Japan: 2022 historical data and 2030 projections

With its latest Basic Energy Plan, Japan currently aims to supply electricity from 36–38% renewable electricity, 20–22% nuclear, 20% gas and 19% coal in 2030 (METI, 2021a). While the indicated share of decarbonised electricity is roughly in line with our 1.5oC benchmark (though at the lowest end), keeping 19% of coal-fired power generation is completely inconsistent with the virtually full coal phase-out needed by 2030 (Climate Action Tracker, 2021; IEA, 2021). Additional measures are certainly necessary also to achieve a full or predominant decarbonisation of the electricity sector by 2035, a goal Japan committed as a member of G7 in April 2023(G7, 2023).

Nuclear Power

Nuclear power’s role in Japanese future energy mix remains uncertain, after all reactors were shut down in the wake of the 2011 Fukushima disaster. As of 14 March 2024, 25 reactors in 15 nuclear power plants have applied for a restart (plus two in construction applied for operation); 17 reactors with a total of 17 GW have passed the safety examination and have been approved for restart (under the condition that the plans for the construction work are approved by neighbouring local governments and the required safety measures are properly installed), of which 12 are currently in operation (JAIF, 2024).

In 2022, in a significant policy shift, Prime Minister Kishida announced that Japan will move to re-start the currently idled rectors, and build new generation reactors, as part of the GX Basic Policy (Asahi Shimbun, 2023a; METI, 2023d). A recent amendment has also allowed nuclear reactors to operate beyond their 60-year age limit. Under the new system, the time during which reactors are offline due to inspections, construction or legal actions, would be excluded from their total lifespan, therefore allowing them to be operated beyond the current limit (Nikkei Asia, 2023a). The new system will come into effect in June 2025 (Nikkei, 2024a).

Despite this reversal, many hurdles remain, and nuclear power will not help Japan meet its 2030 targets. Nuclear power plant operations will likely continue to be disrupted by unplanned inspections as well as legal action to stop them. There have already been several district court rulings to halt the operation of the restarted reactors (National network of legal teams for nuclear phase-out, 2023; Nikkei Asia, 2022a; The Japan Times, 2023).

While the Japanese public is increasingly in favour of expanding nuclear energy in the light of energy prices (Asahi Shimbun, 2023b), strong opposition remains, particularly among local governments hosting nuclear plants. To re-start a reactor or build a new plant, power companies must obtain the approval of local authorities, including all municipalities located within 30km2 of the facilities, which can take quite some time (Nikkei, 2022a). The construction of “next generation” reactors is also expected to face significant delays and cost overruns, like in other countries, making it unlikely that they’ll be operational before 2035-2040. The Japanese nuclear industry is also facing a shortage of engineers and manufacturers, which is straining the domestic supply chain (Renewable Energy Institute, 2023a).

We estimate, based on these developments, that the nuclear power share will range between 11% and 20% in 2030 (see Table 1, and also Assumptions tab). Our upper end estimate reaches the government target (20-22% in 2030).

Coal

Japan remains unambitious on coal. The 19% coal-fired power generation share in 2030, while a considerable step forward from the previous NDC target, is far from being 1.5oC-consistent.The Japanese government has no intention of fully phasing out coal and is instead focusing on promoting so-called “clean” coal technologies (METI, 2023f). The government plans to increase coal-fired power plant efficiency standards from 41% to 43% (METI, 2021d). It has also officially included thermal power with CCS as well as ammonia and hydrogen — most of which are currently produced from fossil fuels — as non-fossil energy sources to promote its use as decarbonised fuel (METI, 2022b).

The GX Basic Policy also puts a strong emphasis on the need to develop ammonia and hydrogen co-firing in thermal power plants (METI, 2023d). However, a recent report shows that ammonia-coal co-firing power would not be an economically viable option compared to renewable electricity (further description below, under Hydrogen and ammonia) (BloombergNEF, 2022; Kiko Network, 2021).

In April 2024, G7 countries committed to phase out unabated coal power generation by 2035 (G7, 2024). While this pledge has been hailed as a significant milestone, it leaves wiggle room for Japan by stating that countries could follow "a timeline consistent with keeping a limit of 1.5-degrees-Celsius temperature rise within reach, in line with countries' net zero pathways". The agreed 2035 timeline is also unambitious. According to the International Energy Agency’s net zero roadmap, developed countries like Japan should phase out coal by 2030 (IEA, 2021).

It is also important to note that power plants with ammonia co-firing power and “high efficiency” coal power cannot be considered "abated" coal. These technologies are inconsistent with pathways required to limit global warming to below 1.5°C.

Japan has also been a major funder of coal-fired power plants overseas, alongside China and South Korea (EndCoal, 2020). Japan has been the G20’s largest supporter of international fossil fuel projects through export credit agencies (DeAngelis & Tucker, 2020). Faced with mounting international pressure, Japan agreed at the 2021 G7 summit to end new public financing for unabated coal projects overseas by the end of 2021 (G7, 2021), and, at the 2022 Summit, further committed to end such financing also for other fossil projects overseas by the end of 2022 (G7, 2022; The Japan Times, 2022a). However, despite these commitments, Japan continues financing fossil gas projects overseas (Fossil Free Japan, 2023; Oil Change International, 2023).

While the private sector also shows signs of change, the actual divestment speed remains very slow (Reuter, 2023; Trencher et al., 2020). For example, despite the announcement of gradual divestments, Japan’s largest banks — Mizuho, MUFG and SMBC Group — still remain the top three lenders for global coal projects, financing a total of USD 61bn between January 2019 and November 2021 (Urgewald, 2022). These same banks are among the world’s top five banks supporting metallurgical coal expansion (Reclaim Finance, 2023).

CCS

CCS technologies are playing an increasing role in Japan’s decarbonisation strategy. Under a long-term roadmap for CCS, Japan currently aims to store 120-240 million tonnes of CO₂ a year in 2050. To achieve this target, METI unveiled plans to raise its annual CO₂ storage capacity by 6-12 million tonnes every year from 2030 (Reuters, 2023a).

The ministry has identified 11 potential storage sites in Japan with an estimated total capacity of 16 billion tones (METI, 2023c). The government expects CCS to play a large role in achieving carbon neutrality by 2050. However, CCS technologies are yet to become commercially viable and are not yet proven at scale despite large public subsidies for research and development. On top of that, there is no suitable location for CO₂ storage in Japan nor oil fields for CO₂ enhanced oil recovery, thus forcing the government to consider exporting large amount of CO₂ to other countries (Renewable Energy Institute, 2022a). At a time where an increasing number of governments are committing to net zero emissions, Japan’s strategy risk drawing international criticism, while further deepening its energy reliance on other countries.

These polices are widely seen as a strategy to prolong the life of fossil-based electricity, in particular coal (JBC, 2022; Obayashi, 2022). The Japanese government indeed relies on CCS both to decarbonise thermal power generation and to supply hydrogen from fossil fuel sources (Renewable Energy Institute, 2022a).

Fossil gas

Japan is the world’s second largest importer of fossil gas behind China. Gas makes up 34% of Japan’s electricity mix in 2022, a share that significantly increased following the 2011 Great East Japan Earthquake and the subsequent closure of all nuclear plants (IEA, 2023). Japan imports over 90% of its gas through 37 LNG terminals and boasts the world’s largest storage capacity (IEA, 2022).

The government is pushing for continued investment in upstream fossil gas and LNG, claiming it can be a transitional fossil fuel. However, domestic gas demand has been declining in recent years, with LNG imports at their lowest in over a decade (Reuters, 2024). Gas is not a transitional fuel, as confirmed by the IEA in its latest scenarios.

Japanese power utilities, unable to absorb the large volumes of imports, are actively promoting demand for fossil gas in other countries with a view to resell their surplus (IEEFA, 2024). The government has been encouraging Japanese companies to continue trading large LNG volumes and offload them in emerging markets, notably through the Asian Zero emission Community initiative (AZEC) (METI, 2023a, 2023g). Such a strategy further contributes to locking-in carbon-intensive developments: fossil gas needs to be phased out, globally, to keep warming to 1.5˚C.

Renewables

Renewable electricity generation has grown steadily in recent years. The share of renewable energy in total electricity generation in Japan has increased from 10% in 2010 to 21% in 2022, with 10% coming from solar PV and 1% from wind energy (IEA, 2023). While there are other supplementary measures (such as subsidies for installing renewables in buildings described below, under Buildings), the 2012 Renewable Energy Act remains the main policy to achieve Japan’s renewable electricity share target of 36-38% by 2030 under its latest NDC. It institutes a feed-in tariff (FIT), which was partially shifted to a Feed in Premium (FIP) for large-scale projects in April 2022, and general funding for distribution networks.

Solar power

The FIT/FIP has provided very favourable rates, particularly for solar PV, which led to a large increase in PV installations; by April 2022, 64 GW of solar PV was installed and operational as a result of the FIT scheme (another 13 GW was installed but not yet operational) producing 8% of electricity, against the targeted deployment of 104–118 GW (14–16% of electricity) by 2030 (METI, 2022e). It should be noted that 64 GW of solar PV was Japan’s previous target for solar power. Among the large emitters, Japan has one of the highest installed solar PV capacity per capita (Renewable Energy Institute, 2022c).

Wind power

Despite its large potential, Japan lags behind other large emitters in terms of wind power, which only produced 1% of electricity in 2022 (IEA, 2023). As a measure to accelerate its development, a new law entered into force to facilitate the use of maritime areas for offshore wind power generation (METI, 2019a).

The government has an aspirational target to develop 10GW of offshore wind by 2030 and 30-45 GW by 2040. While we do not consider this target in our emissions projections as it is not included in Japan’s NDC, we estimate it could lead to an additional renewable electricity generation of 26 TWh/year or 2.5% of total electricity generation in 2030, assuming a 30% capacity factor. However, it should be noted that 10 GW for 2030 target is for approved projects under development rather than operational capacity. The government is targeting 5.7 GW of offshore wind operational capacity by 2030 and will likely meet this target (Renewable Energy Institute, 2023b).

Two rounds of auctions for large-scale offshore wind projects (3.5 GW in total) have taken place since 2022. A third was launched in early 2024 for two projects off the coast of northern Japan, totalling 1.05 GW (Nikkei, 2024d).

To accelerate the development of offshore wind power, particularly floating wind turbines, the Japanese Cabinet recently amended the Act on Sea Area Utilisation for Renewable energy. This will allow developers to build offshore wind farms in Japan’s exclusive economic zone (EEZ), specifically in “promotion zones” designated by METI (METI, 2024b). Currently, offshore wind development is limited to Japan’s territorial waters, which are managed by prefectural governments, whereas the EEZ is controlled by the national government.

Hydrogen and ammonia

Japan shows a strong commitment to develop hydrogen as a major decarbonised fuel. In 2017, it was the first country to formulate a Basic Hydrogen Strategy, which was revised in June 2023. Japan currently aims toboost its annual supply of hydrogen to 12 million tonnes by 2040 (METI, 2023h). The government plans to set up a JPY 15tn investment plan over the next 15 years and is also seeking to develop a hydrogen value chain via Australia, the Middle East and Asia (METI, 2023i).

Two of the world’s largest low-carbon hydrogen production facilities are located in Japan in Fukushima (10 MW) and Yamanashi (16MW) (METI, 2022d). Australia’s national hydrogen strategy also identifies Japan as a potential major importer of Australian hydrogen (COAG Energy Council, 2019). An Australian-Japanese coal-to-hydrogen pilot project transported liquefied hydrogen for the first time in the world on February 2022 and aims for commercialisation by 2029 (METI, 2022d).

Through its new strategy, METI hopes to position Japan as a leader in “clean hydrogen”. However, that term is misleading as it seems to refer to blue, grey and green hydrogen (METI, 2023i).

METI has been relatively colour blind in its investments, prioritising grey and blue hydrogen over green hydrogen development (METI, 2017, 2019b; Renewable Energy Institute, 2022b). It is important to note that without the successful development of CCS, which is not yet available at scale and is expected to remain costly in the future, blue hydrogen produced with fossil fuels will not contribute to reducing emissions.

The Green Growth Strategy highlights the potential role of ammonia in reducing GHG emissions (METI, 2021b). The document indicates, for example, the possibility of using a 20% ammonia blend with coal to reduce emissions in thermal power plants. JERA, Japan’s largest power generation company, has already set up a plan to create a pilot programme with the intention of using this blended fuel by 2035 (JERA, 2020).

The GX Basic Policy also promotes the development of ammonia and hydrogen co-firing in thermal power plants (METI, 2023d). However, hydrogen and ammonia technologies are less developed, potentially more costly, and their emissions reduction potential is questionable (Gunia, 2022; Stocks et al., 2022), compared to commercially available low-carbon technologies that could be deployed at scale before 2030 and help Japan get on the right trajectory to achieve its 2050 net zero goal.

CO₂ emissions from the industry sector (including indirect emissions from electricity use as well as emissions from industrial processes) accounted for 34% of Japan’s total energy-related CO₂ emissions in 2022 (GIO, 2024).

Within the industry sector, the iron and steel, chemical and cement industries are the three largest emitters, respectively emitting 39%, 15% and 8% of industrial emissions in 2021. Emissions in the sector have reduced by 20% below 2013 levels (GIO, 2023). A 2023 progress report shows that the industry CO₂ emissions from the member companies of Keidanren, the most influential business association in Japan, including indirect emissions from electricity use in FY2022, was 20.8% lower than in 2013, and 3.7% lower than the previous year (Keidanren, 2024). The overall reduction since 2019 is primarily due the changes in industrial activity levels induced by the COVID-19 pandemic. Following Japan’s economic recovery, emissions from electric use rebounded slightly in FY2021 but remained lower than in FY2019, as the effects of the pandemic continued to linger in key industrial sectors. CO₂ emissions from the industry sector decreased again slightly in 2022 compared to the previous year mainly due to a decrease in iron and steel production (MOE, 2024).

The main GHG emissions reduction effort in the industry is Keidanren’s Commitment to a Low-Carbon Society (Keidanren, 2013), a voluntary action plan which has monitoring obligations under the Plan for Global Warming Countermeasures (MOEJ, 2016b). Keidanren has since launched its Challenge Zero Initiative, in collaboration with the Japanese government, inviting companies to submit strategies to decarbonise their activities; a number of actors have already disclosed measures to be implemented, including in the steel and chemical industries (Keidanren, 2020).

Over 370 companies from the GX league have publicly announced their 2030 emission reduction targets. Combined, these aim for 40% reduction in 2030 compared to 2013 levels, falling short of the government 46% target (Nikkei, 2024b).

Among the industrial sectors that pledged to 2050 net zero goal is the iron and steel sector. The Japanese Iron and Steel Federation (JISF) announced in 2021 that it would aim to reach net zero CO₂ emissions by 2050 (JISF, 2021). JISF aims to cut emissions in the iron and steel industry, which is Japan’s largest CO₂ emitter, by 30% by 2030 compared to 2013 levels. Its stance on climate change seemed to have changed considerably since 2018, when it published a long-term decarbonisation vision that drew global emissions pathways reaching zero in 2100 to achieve the 2°C temperature goal (JISF, 2018). In 2021, CO₂ emissions from JISF members were 16% below 2013 levels. However the majority of this reduction can be attributed to “production fluctuations”, namely decrease in production, rather than the adoption of sector specific mitigation measures (JISF, 2023).

Nippon steel, the largest steel-producing company in Japan and the fourth largest in the world, also released a decarbonisation road map in 2021. The company aims to develop and commercialise large electric arc furnaces by 2030 and expand the use of hydrogen in the sector (Argus Media, 2021; Nikkei, 2021). JFE Steel, Japan’s second largest steelmaker, has also announced plans to replace its blast furnace located in Okayama Prefecture with an electric arc furnace by 2027 (Nikkei, 2022c). However, the deployment of electric furnaces remain slow in Japan (Global Energy Monitor, 2023).

Other key industry associations have also unveiled new decarbonisation strategies. In 2022, the Japan Cement Association announced that it will aim to cut emissions in the sector by 15% by 2030 compared to 2013 levels (METI, 2022c).

The GX Basic Policy set roadmaps covering key sectors of the Japanese economy including the chemical, the iron and steel and the cement industries. These roadmaps introduced several targets, although many were already announced by industry associations in 2022 (METI, 2023d). One new target includes the increase of green steel supply to 10 million tonnes by 2030, although the exact definition of green steel remains unclear. It should however be noted that 10 million tonnes only represented around 1% of Japan annual steel production in 2021 (World Steel Association, 2022).

Carbon pricing

In December 2022, the Japanese government unveiled a blueprint for the introduction of a carbon pricing scheme, as part of the GX Basic Policy (METI, 2023e). This system will be based on two pillars:

• A carbon levy targeting power, gas, and oil companies, which will be introduced in 2028 and reviewed upward annually.
• An emissions trading scheme (ETS), which is being implemented in phases.

The ETS was first launched in April 2023 but only among the GX league companies. The scheme was set up on a voluntary basis with GX League companies allowed to set their own emissions caps. Based on the results of this trial, the government aims to expand the scheme to cover more companies in 2026. The scope of the target companies and the exact features of the ETS remain to be determined (MoEJ, 2023).

As for the final phase, the government plans to introduce the ETS “fully” in 2033, with a shift to a mandatory scheme that will include trading based on allowances auction. However, it will exclusively target the power sector (Nikkei, 2023), and no other sectors of the Japanese economy. The government plans to use the revenues generated by the carbon pricing scheme to issue more ”Japan Climate Transition Bonds”, the world’s first sovereign transition bonds, through which it hopes to raise JPY 20 tn (METI, 2023d). The first tranche of these bonds was auctioned in February 2024 (MoF, 2024).

Details on the overall system have yet to be announced, but the carbon levy is expected to be set at around JPY 1,500 /t-CO₂, which is seen as too low to be effective (Climate Integrate, 2023). Research shows that with a carbon price set at JPY 3,300/t-CO₂, new solar PV energy and onshore wind power generation would outcompete coal-fired power generation (Carbon Tracker, 2022).

This blueprint constitutes a step in the right direction, as discussions on carbon pricing in Japan have stalled for many years. However, it remains unclear whether the emissions trading scheme being considered for 2026 will still be based on voluntary participation (InfluenceMap, 2023). Additionally, the timeline and the carbon levy currently being considered by the government means the scheme will not help Japan meet its 2030 target. On top of that, the government is considering investing the revenues generated from the “GX Transition bonds” partly in the development of grey hydrogen and grey ammonia, rather than renewable energy (Renewable Energy Institute, 2023c).

CO₂ emissions from the transport sector accounted for 18.5% of Japan’s total energy-related CO₂ emissions in 2022 (GIO, 2024). Regarding vehicle decarbonisation, the government currently aims for 100% of “electrified vehicles” – a category that includes non-plug-in hybrids (HVs) and plug-in hybrid vehicles (PHV) – in the sale of passenger vehicles by, latest, 2035 (METI, 2020), replacing the previous target of reaching 50-70% of ‘new generation’ vehicles (including hybrids, plug-in hybrids, battery electric vehicles, fuel cell electric vehicles, as well as ‘clean diesel’ vehicles and gas-powered vehicles) in the share of sales by 2030 (METI, 2018b). This policy, which still allows for non-plug-in HVs to be sold in 2035, could be further strengthened to become consistent with the 1.5°C-compatible benchmark to phase out all fossil-fuel passenger (ICE) cars from new sales by 2035 (Kuramochi et al., 2018). Japan’s commitment to transition away from ICE vehicles could further impact the global car manufacturing sector. Given the importance of the industry at both the national and international level, it could define a globally ambitious and innovative strategy favouring the development and deployment of zero-emission vehicles.

Additional pressure from investors has also started to impact car manufacturers’ strategies; Toyota for example, aims to launch 10 new EV models by 2026 and recently unveiled plans to build a battery plant in Fukuoka (Nikkei, 2024c; Nikkei Asia, 2023b). Honda aims to release 30 EV models by 2030 (Nikkei, 2022b). Nissan has also announced the launch of 16 EV models by 2026 and aims to achieve EV and ICE vehicle cost parity by 2030 (Nissan Motor Corporation, 2024).

However, despite these announcements, Japanese car manufacturers are still falling behind in the global race towards EVs. In 2020, Japanese cars only accounted for less than 5% of EVs sold worldwide (The New York Times, 2021). While EV sales in Japan increased by 50% in 2023 compared to the previous year, they only accounted for 2% of all new passenger car sales (Nikkei Asia, 2024).

Despite the mounting pressure to speed up electrification of the transport industry, Japanese carmakers are moving cautiously compared to their counterparts. Many in the industry remain wary about making the shift to electric vehicles and would rather keep investing in internal combustion engine manufacture.

For example, Toyota has recently announced that, while it will continue to ramp up its EV production capacity, hybrid vehicles will remain an important pillar of the company’s strategy (Reuters, 2023b). More recently, Toyota’s chairman, who retains significant power within the company, has renewed his scepticism towards EVs. He has openly doubted that the car industry would fully shift to EV, predicting they would capture 30% of the market at most (Bloomberg, 2024).

The GX Basic Policy did not set a more ambitious target for EVs. However, as part of the strategy, Japan plans to install 150,000 EV charging stations and 1000 hydrogen stations by 2030 (METI, 2023d), a positive development considering Japan is also lagging behind on EV infrastructure.

CO₂ emissions (including indirect emissions from electricity use) from the commercial and residential building sectors together accounted for 32% of Japan’s total energy-related CO₂ emissions in 2021 (GIO, 2023).

Compared to 1990, the emissions in these two sectors have increased by 42% and 19%, respectively (GIO, 2023). Although these significant increases are partially attributable to the increased electricity CO₂-intensity post-Fukushima, there’s an urgent need for strengthened action on the demand side in the buildings sector.

An important recent development is the revised Building Energy Conservation Act, which entered into force in June 2022 mandating all new houses and buildings from 2025 to comply with upgraded energy efficiency standards. This is a significant step forward from the current regulation which is only applicable to buildings larger than 300 m2.

To also support decarbonising existing houses and buildings, several measures have been introduced, including financial support for household renovations to improve energy efficiency, as well as promoting the use of renewable energy in buildings.

Japan aims to achieve on stock average net-zero energy consumption for newly constructed buildings (ZEBs) and houses (ZEHs) by 2030 as well as all buildings and houses by 2050 (MLIT, 2022). This is a step change as in 2020, only 0.42% of newly built buildings was ZEBs, and 24% of newly built houses was ZEHs (METI, 2022f; METI & MOEJ, 2022). For comparison: the EU requires all new buildings to be near zero energy as of 2022.

The GX Basic Policy sets the objective to invest at least JPY 14 tn in the building sector over the next ten years (METI, 2023d).

In December 2022, the Tokyo Metropolitan Government also adopted the “Renewable Energy Installation Standards”, a regulation requiring construction companies to install rooftop solar panels on new buildings (including residential properties) of up to 2,000 m2, from 2025 (The Japan Times, 2022c). This new policy exclusively targets companies whose building projects total at least 20,000 m2 or more per year, so around 50 companies.

The Tokyo Metropolitan Government will set up thresholds per district, ranging from 30%, to 70 -85% of new buildings. The city will also provide subsidies to encourage the installation of solar panels on existing buildings, which are currently excluded from the regulation (Tokyo Metropolitan Government, 2022). The “Renewable Energy Installation Standards“ is expected to be impactful, as half of existing buildings will be replaced with new ones before 2050.

CO₂ emissions (including indirect emissions from electricity use) from the commercial and residential building sectors together accounted for 33% of Japan’s total energy-related CO₂ emissions in 2022(GIO, 2024).

Compared to 1990, the emissions in these two sectors have increased by 42% and 19%, respectively (GIO, 2023). Although these significant increases are partially attributable to the increased electricity CO₂-intensity post-Fukushima, there’s an urgent need for strengthened action on the demand side in the buildings sector.

An important recent development is the revised Building Energy Conservation Act, which entered into force in June 2022 mandating all new houses and buildings from 2025 to comply with upgraded energy efficiency standards. This is a significant step forward from the current regulation which is only applicable to buildings larger than 300 m2.

To also support decarbonising existing houses and buildings, several measures have been introduced, including financial support for household renovations to improve energy efficiency, as well as promoting the use of renewable energy in buildings.

Japan aims to achieve on stock average net-zero energy consumption for newly constructed buildings (ZEBs) and houses (ZEHs) by 2030 as well as all buildings and houses by 2050 (MLIT, 2022). This is a step change as in 2020, only 0.42% of newly built buildings was ZEBs, and 24% of newly built houses was ZEHs (METI, 2022f; METI & MOEJ, 2022). For comparison: the EU requires all new buildings to be near zero energy as of 2022.

The GX Basic Policy sets the objective to invest at least JPY 14 tn in the building sector over the next ten years (METI, 2023d).

In December 2022, the Tokyo Metropolitan Government also adopted the “Renewable Energy Installation Standards”, a regulation requiring construction companies to install rooftop solar panels on new buildings (including residential properties) of up to 2,000 m2, from 2025 (The Japan Times, 2022c). This new policy exclusively targets companies whose building projects total at least 20,000 m2 or more per year, so around 50 companies.

The Tokyo Metropolitan Government will set up thresholds per district, ranging from 30%, to 70 -85% of new buildings. The city will also provide subsidies to encourage the installation of solar panels on existing buildings, which are currently excluded from the regulation (Tokyo Metropolitan Government, 2022). The “Renewable Energy Installation Standards“ is expected to be impactful, as half of existing buildings will be replaced with new ones before 2050.