Japan's net-zero by 2050 announcement a step forward, but 2030 target revision now crucial

On 26 October, Prime Minister (PM) Yoshihide Suga declared that Japan will aim for net zero greenhouse gas (GHG) emissions by 2050.^[1]

PM Suga laid out specific plans to:

• fundamentally revise Japan’s policy on coal-fired power plants,
• promote R&D on second-generation solar photovoltaic technology and carbon recycling technologies (including negative emission technologies such as bioenergy with carbon capture and storage, or BECCS), and
• set up a platform for national and subnational governments to discuss ways toward decarbonisation.

Overall, this is a welcome development from the world’s fifth largest emitter. This clear commitment to net-zero greenhouse gas emissions is possibly triggered by China’s 2060 carbon neutrality target announcement, the rise in Japan of environmental, social and governance (ESG) investment and the increasing sense of urgency on climate risks in the business sector and the government's recent realisation that coal is no longer an economic option.

Also notable is that the Japanese government has always argued that climate policy was too expensive, but now PM Suga is talking about growth.

What is most important is that Japan implements the measures necessary to actually achieve a transition towards 2050 net zero. To enable this, a major revision of the current "highly insufficient" 2030 target (the nationally determined contribution, or NDC) is imperative. The revision of Japan’s Basic Energy Plan, which underlies the NDC and determines the NDC ambition, began earlier this month.

While net zero by 2050 requires tremendous additional effort in all sectors, here are three key areas that must be addressed in the NDC revision process (for policy details, see also our latest Japan analysis):

1) Coal power phase-out

Japan needs to go further on coal than the announcement it made in July - that it will phase out old and inefficient coal-fired power plants to meet its 2030 target.

Coal is expected to generate 26% of Japan’s electricity in 2030 under the current NDC. While closing the plants is an important first step, it is far from sufficient if Japan is serious about pursuing net zero by 2050, because its power sector needs to be decarbonised much earlier than the economy-wide net zero timeline. For example, the International Energy Agency’s “Sustainable Development Scenario”, which is roughly consistent with the Paris climate goals, indicates that Japan would have to reduce its reliance on electricity from coal to about 4% in 2030.

Equally important is that Japan will completely stop financing of coal-fired power plants overseas. In July 2020, the Japanese government stated that it will - in principle - not finance coal-fired power plants in countries that do not have a decarbonisation strategy in place, but this did not completely ban new coal finance overseas and does not apply to projects already underway.

2) Decarbonisation in “hard-to-abate” sectors

Another area that requires major effort is the industry sector. The ambition under the current NDC is low, exemplified by the steel sector target reduction of less than 5% below a BAU, which would assume less than usual technological improvements. The industries would need to urgently ramp up their research, development and deployment of various zero carbon production technologies (e.g. steel production using hydrogen from renewable sources).

The buildings sector also requires particular attention. There are ambitious 2030 targets for Zero Energy Buildings (ZEB) and Houses (ZEH) in place but implementation is lagging. Existing residential and commercial buildings would also have to eliminate all use of gas and other fossil fuels to achieve net zero by 2050.

3) Embrace and encourage action by cities, regions and businesses

Being one of the key drivers behind the 2050 net zero announcement, the Japanese government can further embrace and encourage actions by cities, regions and businesses. Net zero commitments by local governments have already covered 58% of total population of Japan and USD 3.3 trillion GDP. The Japanese government is one of the few national governments explicitly supporting companies signing up to Science Based Targets, RE100 and other major business initiatives that aim for decarbonisation.

[1] PM Suga mentioned both “net zero GHG emissions by 2050” and “carbon neutrality by 2050” in his speech, but our personal communication with a domestic expert suggests that the government’s intention is net zero GHG emissions.