Major Achievements and Challenges
The national energy policy in Japan is focused on securing energy supply, increasing energy efficiency measures and developing non-conventional energy resources.

Japan is going ahead with the liberalization and deregulation of the energy industry with the aim of reducing electricity and gas prices, which have remained high compared to international standards. Japan is implementing systemic reform to increase the efficiency of its electricity supply. A revision of the Electricity Utility Industry Law was passed in 2003 and implemented in 2005. These revisions were to:

• “Ensure the fairness and transparency of the electricity companies' network sector based on a uniform transmission system and establish adjustment functions for diverse electric power providers
• Prepare the environment necessary to revitalize the trade and distribution of electricity throughout Japan.
• To maintain a uniform system for electric power companies and prepare the environment to promote the development of stable electric power sources, including nuclear power generation, as well as the establishment of a wholesale electric power exchange.

In addition to provision for the above measures, a decision was made to promote a wider scope of retail deregulation within the limits of a stable supply and a system appropriate for the environment.” (24)

The major challenges to Japan’s electric power industry are energy security and environmental management. Japan relies on imported fuel to meet a considerable amount of the electricity needs. Prior to the historical oil crises, 80 per cent of Japan’s energy needs were met by oil. Presently Japan is still 50 per cent dependent on oil. Around half of the primary energy resources in the country are converted to electricity. The other fuels used for electric power generation, namely natural gas and uranium, are imported from overseas, leading to a low level of self-sufficiency for energy. (25)

It is hoped that reforms, actions to improve energy efficiency, obtaining a stable supply of imported fuel, particularly oil, and diversification of power sources will mitigate some of these major challenges to Japan’s electric power sector.

Environmental Impact
Pollutant emissions from the electric power sector in 2004 included 264,800 tonnes of oxides of nitrogen and 176,500 tonnes of sulphur dioxide. Most power companies in Japan have clear environmental policies and undertake environmental management activities that are publicly reported. Measures include the installation of pollution control devices on utilities, reducing and reusing waste products when possible, and implementing environmental management systems, such as ISO 14000, with the aim of continuous improvement.

To support energy security and environmental protection efforts, actions to mitigate climate change and reduce the emissions of greenhouse gases to the atmosphere have been a high priority of the Government, along with energy efficiency activities.

Climate change
In April 2005, the Cabinet adopted the “Plan to Achieve Kyoto Protocol Targets,” which sets the goal of holding CO2 gas emissions from energy consumption to just over one billion tonnes by 2010. In 2004, Japan’s estimated CO2 emissions were around 292 million tonnes. Clean coal technologies are being developed to reduce the environmental impact of coal power, which accounts for 20 per cent of Japan’s energy needs.

Energy efficiency
In an effort to promote energy efficiency measures, Japan has launched the “Targets for Citizen Action” program, which formulates and displays energy reduction rates for individual households. “Top runner” standards have been adopted to raise the energy efficiency of household appliances, office equipment and automobiles. A concerted effort is being made to promote the use of insulation in residential and other building construction. In April 2006, a revision of the Energy Conservation Law was implemented, which aims restrict energy consumption in targeted fields.

Renewable Energy
By the end of 2004, Japan had generated 1,130 MW of solar electric power, making the country the number one producer of solar power in the world. However, solar power is expensive and output is affected by climatic conditions, making it an unstable source of electricity.

Wind power generated 927 MW in 2004, representing an eleven fold increase from five years previously. Large-scale wind generating facilities continue to be built, and storage batteries and other methods are being promoted to achieve stability and mitigate the problems to using wind energy.

New renewable energy resources account for only 1.7 per cent of the primary energy supply, but the Government plans to increase this figure to 3 per cent by 2010.

Affordability of electricity
Figure 29 indicates the percentage of household income spent and the average amount spent on electricity each month by various income groups. The electricity tariff for households varies between 13 and 19 US cents per kWh depending on the amount of electricity used. With the introduction of partial deregulation of the power sector, these electricity rates have been reduced in 2000 and 2002 (26). It’s clear that despite the fact that the lowest income group spend the least on electricity, this amount is still a much higher portion of their income than other income groups. However, the actual percent of income spent is much more even than many other countries, varying between 1 and 3.5 per cent only across these 5 income categories.

Stakeholders
Agency for Natural Resources and Energy
Ministry of Economy, Trade and Industry
Ministry of the Environment
Federation of Electric Power Companies in Japan
Hokkaido Electric Power Co., Inc.
Tohoku Electric Power Co., Inc.
Tokyo Electric Power Co., Inc.
Chubu Electric Power Co., Inc.
Hokuriku Electric Power Co., Inc.
The Kansai Electric Power Co., Inc.
The Chugoku Electric Power Co., Inc.
Shikoku Electric Power Co., Inc.
Kyushu Electric Power Co., Inc.
The Okinawa Electric Power Co., Inc.

(24)Agency for Natural Resources and Energy, http://www.enecho.meti.go.jp/english/policy/electricity_gas/electricity.html, accessed in September 2007.
(25) Agency for Natural Resources and Energy, Energy in Japan 2006 (2006)
(26)Agency for Natural Resources and Energy, http://www.enecho.meti.go.jp/english/policy/electricity_gas/electricity.html, accessed in September 2007.