Japan 2021

Japan's Energy Policy Review 2021

Foreword

Dr. Fatih Birol, Executive Director of the International Energy Agency (IEA), highlights Japan's role as a founding member of the IEA since 1974 and its ongoing commitment to energy policy development. Japan has diversified its energy mix through the expansion of renewable energy and the restart of nuclear power plants, contributing to a five-year decline in greenhouse gas (GHG) emissions. However, significant challenges remain, particularly in reducing fossil fuel dependency and achieving carbon neutrality by 2050.

Executive Summary

Overview

• Japan aims to achieve a decarbonized society by 2050.
• The country has made strides in reforming its electricity and natural gas markets, but further reforms are needed.
• Japan has phased out inefficient coal power plants by 2030, marking a key milestone in its clean energy transition.

Main Energy Goals to 2030

• Japan plans to reduce GHG emissions and increase the share of renewable energy.
• The country aims to achieve a carbon-neutral society by 2050.

Electricity and Gas Market Reform

• Increasing competition in the electricity and gas sectors is encouraged.
• Regulatory reforms are needed to promote zero-emission investments and improve power system flexibility.

Strengthening the Resilience of the Energy Sector

• Japan has taken steps to strengthen the resilience of its electricity system.

Key Recommendations

• Accelerate the energy transition in sectors where low-carbon alternatives are available.
• Ensure market regulators have sufficient powers and independence.
• Promote innovation and green finance.

General Energy Policy

Country Overview

• Japan is a key member of the IEA, with a diverse range of energy sources.
• The country aims to balance energy security, affordability, and sustainability.

Supply and Demand

• Primary Energy Supply: Diverse sources including oil, gas, coal, and renewable energy.
• Energy Production and Import Dependency: High reliance on imports, with efforts to diversify sources.
• Energy Consumption: Increasing demand driven by industrial and residential sectors.

Japan’s General Energy Policy Strategy

• Focus on reducing GHG emissions and promoting renewable energy.
• Diversification of energy sources to enhance security.

Japan’s Envisioned Energy Mix to 2030

• Increased share of renewable energy, including wind and geothermal power.
• Phased-out inefficient coal power plants by 2030.

Transition to a Carbon-Neutral Society by 2050

• Continued efforts to reduce fossil fuel dependency.
• Development of low-carbon hydrogen and carbon-recycling technologies.

Liberalizing Electricity and Gas Markets

• Increasing competition to promote efficiency and innovation.
• Regulatory reforms to support zero-emission investments and improve power system flexibility.

Energy Security

• Continued diversification of energy sources.
• Steps to strengthen the resilience of the electricity system.

Taxation and Subsidies

• Fossil fuel subsidies are being phased out.
• Taxation policies aimed at promoting cleaner energy sources.

Energy System Transformation

Energy and Climate Change

• Japan’s energy-related CO2 emissions have declined.
• The carbon intensity of the economy is decreasing.
• Climate change governance and mitigation policies are in place.
• Emissions reduction targets and policies are outlined.
• Main mitigation policies include carbon pricing and other cross-cutting measures.
• Innovation and green finance are emphasized to support the transition to a zero-carbon, resilient energy sector.

Key Recommendations

• Accelerate the energy transition in sectors with available low-carbon alternatives.
• Ensure market regulators have sufficient powers and independence.
• Promote innovation and green finance to support the transition.