What Is Japan Doing About Climate Change?

This summer in Japan broke heat records all across the country – much like many other parts of the world. In Japan, extreme heat (higher then 35 degrees Celsius) began earlier in the year and lasted for longer than any period since record-keeping began in 1875. In late June, more than 14,000 people were hospitalized with heat-related medical issues, which has led to a boom in the sales of a novel type of insurance – heat stroke insurance.

In addition to the hotter temperatures and heat-related deaths and heat-caused health issues, climate change is also affecting Japan and Japanese lives by increasing the severity of storms. A warmer atmosphere can hold more moisture and increase the rainfall of typhoons. In a study published in Climate Change, scientists at the University of Oxford and Imperial College London estimated that the effects of climate change increased the likelihood of extreme rainfall by about 67 percent the day that Typhoon Hagibis struck Japan in October 2019. Hagibis killed about 100 people, cut electricity for more than 400,000 power customers, and was one of the costliest Western Pacific typhoons recorded. The effects of climate change were responsible for roughly $4 billion of the $10 billion in insured losses resulting from Hagibis.

Hagibis also caused a 70 percent loss in production of wasabi from Okutama, a town west of Tokyo. The farms took three years to recover from the storm. Wasabi is imperiled by extreme weather events, as well as by rising temperatures as the wasabi plants require water temperatures of 10-15 degrees Celsius year-round.

Wasabi is not the only aspect of traditional Japanese cuisine under threat.

While fattier katsuo (skipjack tuna) means more money for fishermen now, the same fishermen who benefit today are worried about what this means for katsuo production tomorrow. The katsuo may be fatter today because the warmer seas mean more abundant prey; the temperature in a bay in southwest Japan had increased by 2 degrees Celsius from 1975 to 2015. However, warmer seas also stifle mineral-rich water from rising to the surface. In the long run, the resulting drop in plankton and smaller fish could mean fewer katsuo.

While climate change’s impact on wasabi and fish production will impact Japanese consumers the most in the sense of losing part of their cultural identity, the business impact will be global. In the United States alone, sushi restaurants were a $22.25 billion market in 2019. The global sushi restaurants market is predicted to grow by $2.49 billion by 2025 – if production can keep up.

Facing this threat to Japanese lives and culture, Japanese Prime Minister Kishida Fumio unveiled a plan in May 2022 to spend $1.1 trillion over the next decade to reduce greenhouse gas emissions by 46 percent (from 2013 levels) by 2030 and to achieve net-zero carbon emissions by 2050. Although the sum is impressive, experts and analysts have questioned how the decarbonization initiative will be funded. One possibility is new debt, through the “green economy transformation bond,” which has been discussed but not issued yet.

Experts and analysts also remain unsure of how to evaluate Kishida’s plan, as much of the technology the plan depends on is still under development. The plan also is ambiguous about when new technologies need to be deployed. In the long run, adopting new technologies earlier may pay off handsomely, but in the short run, using existing technology to reduce the carbon footprint will be more appealing to many companies.

Current events, notably the war in Ukraine and inflation, may help accelerate the shift toward decarbonization. As the costs of imported coal and oil increase, the opportunity cost of switching to renewable energy sources decreases. Currently, Japan’s energy mix uses 32 percent coal, 37 percent liquefied natural gas (LNG), 7 percent oil, 6 percent nuclear, and 18 percent renewable. The goal is to change this to 19 percent coal, 20 percent LNG, 2 percent oil, 20-22 percent nuclear, and 36-38 percent renewable by 2030.

One of the most dramatic changes would be the increase in nuclear energy. In 2010, before the Fukushima nuclear accident of 2011, nuclear energy had accounted for more than 11 percent of Japan’s total energy and one-third of its electricity needs. Again, the war in Ukraine and inflation could spur the conversation over nuclear energy in a climate-friendly direction.

According to the Climate Action Tracker (CAT)’s February 2022 review (before Kishida’s new plan but after the new Basic Energy Plan of October 2021 was announced), Japan’s overall rating was “insufficient.” In other words, Japan will have to do a lot more to be consistent with the Paris Agreement’s ambition to limit temperature rise to 1.5 C.

The CAT report analyzes the Japanese government’s targets as follows:

While the indicated share of decarbonized electricity is roughly in line with our 1.5C benchmark, keeping 19 percent of coal-fired power generation is completely inconsistent with the virtually full coal phase-out needed by 2030. The reported 22 percent share of nuclear power also appears unrealistic, given the strength of local opposition to the re-opening of plants, and accompanying legal challenges: our estimate is that it would be in the range of 5-17 percent with the gap needing to be taken up by renewable energy and storage.

While across most categories of assessment Japan rates as “insufficient” or “almost sufficient,” when it comes to climate finance, Japan is rated “critically insufficient.” CAT exhorts Japan to stop funding fossil fuels overseas and accelerate commitments to increase climate finance. To name just a couple of examples of Japan’s overseas projects that are in the news right now, as of August 8, Sakhalin Oil and Gas Development, a Japanese consortium, still intends to keep its 30 percent stake in the Sakhalin-1 oil project. Mitsui & Co and Mitsubishi Corp also intend to keep their stakes in the Sakhalin-2 LNG project.

No country will be spared the effects of climate change unless governments devise the right mix of incentives and state support to get companies to invest in developing and deploying new technologies to decarbonize all aspects of the economy. Kishida and his bureaucrats have a ticking clock on figuring out how to finance the $1.1 trillion package and to get companies to behave in their own best long-term interest.