VZCZCXRO9293
RR RUEHFK RUEHKSO RUEHNAG RUEHNH
DE RUEHKO #2456/01 2982116
ZNR UUUUU ZZH
R 252116Z OCT 09
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC 7031
RHEHAAA/NSC WASHDC
INFO RUEHOK/AMCONSUL OSAKA KOBE 0887
RUEHNAG/AMCONSUL NAGOYA 4326
RUEHFK/AMCONSUL FUKUOKA 7069
RUEHNH/AMCONSUL NAHA 9425
RUEHKSO/AMCONSUL SAPPORO 7581
RUEHBJ/AMEMBASSY BEIJING 1544
RUEHJA/AMEMBASSY JAKARTA 4443
RUEHHI/AMEMBASSY HANOI 0008
UNCLAS SECTION 01 OF 02 TOKYO 002456
SENSITIVE
SIPDIS
EAP/J - HEATHER DRESSER
E.O. 12958: N/A
TAGS: ENRG ETRD SENV EAID PREL JA
SUBJECT: OVERVIEW OF JAPANESE EXPORTS OF CLEAN ENERGY TECHNOLOGY TO
ASIA
1. (SBU) SUMMARY: The export of clean energy technology to Asia is a
growing market at the nexus of Japan's industrial policy, overseas
development goals, and energy security posture. To date four
strategies have driven development and marketing of such technology,
including: (1) ongoing economic recovery and revitalization efforts;
(2) efforts to expand into emerging markets, notably in China,
Indonesia and Vietnam, in the face of a long-term decline in
domestic energy demand; (3) efforts to strengthen its global
leadership position on climate change and achieve ambitious carbon
reduction targets; and (4) efforts to reduce energy consumption,
particularly in China, in response of mounting competition for
natural resources. Ongoing GOJ efforts to promote exports of clean
energy technology to Asia will likely expand under the Democratic
Party of Japan (DPJ)-led government if the party follows through on
pledges in its manifesto and recent public remarks. END SUMMARY.
JAPANESE CLEAN ENERGY TECHNOLOGY EXPORTS BOOMING
--------------------------------------------- ---
2. (U) By most accounts, Asia is a growing market for Japanese clean
energy technology. Exports of wind turbines and solar cells alone
amounted to 107.8 billion yen (around $1.1 billion) in 2008, and
Japan's trade promotion agencies continue to see promise for
Japanese clean energy technology exports. According to a May 2009
Japan External Trade Organization survey of 813 companies, nearly 90
percent saw potential growth in the global environment business.
Out of these, almost 40 percent either already are or are
considering producing or selling environment-related products, and
about 30 percent are either already exporting or considering
exporting them. Japanese business strategists point to a
combination of (1) a long-term stagnant market in Japan, where
energy demand is expected to fall with population decline, (2) a
sharp rise in renewable energy demand overseas, particularly in
Asia, and (3) Japan's comparative advantage in advanced energy
technology.
3. (U) In coordination with the Ministry of Economy, Trade and
Industry (METI), Japanese industry has mobilized to promote such
technologies, including hybrid automobiles, solar technology,
heat-pump technology, clean-coal technology and other highly
efficient electricity generation technologies abroad. In October
2008, a group of leading Japanese businesses chaired by Fujio
Mitarai, President of the Japanese business Federation (Keidanren)
established the "Japanese Business Alliance for Smart Energy
Worldwide", an alliance to promote Japanese energy efficiency and
non-fossil Energies on a commercial basis worldwide. Japan is also
expected to showcase Japanese clean energy technology in a
"non-fossil town" demonstration project coinciding with the June
2010 APEC Energy Ministers' Summit in Fukui.
4. (U) The New Energy and Industrial Technology Development
Organization (NEDO) is the GOJ's primary agency for transfer of
clean energy technology abroad. With a focus on Asia, the
organization has funded more than one hundred projects in the region
since 1993 in the areas of energy efficiency, clean coal technology,
and photovoltaic energy generation.
CLEAN COAL AND CARBON CAPTURE AND SEQUESTRATION
--------------------------------------------- --
5. (U) In particular, NEDO has supported numerous clean coal
projects in the region since 1993. Among the more recent projects
is a three-year model project to introduce a high-efficiency coal
mine methane gas power generation system in Liaoning Province,
China. The Japan Coal Energy Center (JCoal), a consortium of 103
companies in energy-related lines of business that cooperates with
METI to promote clean coal technology, has also supported several
projects in Asia, including a carbon capture and sequestration with
enhanced oil recovery project in China. The Japan Bank for
International Cooperation also joined the Australian Government's
Global Carbon Capture and Storage Institute in April 2009 as a
founding member, pledging unspecified support for global CCS
projects.
ODA EFFORTS - THE COOL EARTH PARTNERSHIP
----------------------------------------
6. (U) Japan's current ODA priorities/policies and the Japan
International Cooperation Agency (JICA)'s portfolio prioritize
global climate change aid for the developing world, including a $10
TOKYO 00002456 002 OF 002
billion/5 year Cool Earth Partnership program. Launched in 2008,
the Cool Earth Partnership has signed on over 90 countries which are
now eligible to receive assistance. Recipient countries include the
Asian nations of Bangladesh, Pakistan, Philippines, Laos, Maldives,
Mongolia, Cambodia, Nepal, Sri Lanka, Thailand, East Timor, and the
priority countries of Indonesia and Vietnam, which are perhaps the
furthest along in developing with Japan's help national emissions
reduction strategies.
CHINA
-----
7. (SBU) Nobuaki Kojima, the Chief Operating Officer of Mitsubishi
Corporation's New Energy Development Division singled out the
Chinese market as a particular growth area at a JETRO-organized
seminar in July 2009, citing a combination of rising development,
demographic conditions that favor increased energy demand, and
government support for clean energy investments. As noted above,
the GOJ has supported several clean coal projects in the region,
typically in partnership with Japanese utilities. Japanese firms
also identify market opportunities in China's wind power sector.
For example, Mitsubishi Heavy Industries (MHI), Japan's largest
manufacturer of wind turbines, entered a licensing agreement with a
group company of Ningxia Electric Power Group Co., Ltd. to produce
its best-selling MWT 62/1.0 model one-megawatt turbine, citing a
desire to gain a foothold in China's growing wind energy market.
However, officials from MHI and JCoal have also told emboffs their
firms have concerns about intellectual property rights and quality
control in China that limit Japanese companies' interest in selling
advanced clean energy technology into that market.
INDONESIA
----------
8. (U) Indonesia has also received attention as a destination for
Japanese clean energy technology exports. The GOJ pledged Indonesia
a Climate Change Program Loan of $300 million in August 2008, the
first loan of its kind under the Cool Earth Partnership. The Japan
International Cooperation Agency (JICA) has also provided technical
assistance for geothermal power projects in Indonesia.
EARLY SIGNALS FROM THE DPJ - THE HATOYAMA INITIATIVE
--------------------------------------------- -------
9. (SBU) Prime Minister Yukio Hatoyama reaffirmed Japan's commitment
to an ambitious goal of cutting its greenhouse gas emissions by 25
percent from 1990 levels by 2020 (about 30 percent from 2005
levels), in a September 22 address at a UN climate meeting in New
York. This figure will include reductions from land use and
purchases of carbon offsets from other countries. As part of the
Initiative, Japan will significantly increase its public and private
financial assistance and technological support to developing and
island nations to both reduce emission and adapt to the effects of
climate change. It will seek to establish rules that ensure
developing countries' emissions reductions are measurable,
reportable and verifiable.
10. (U) The Japanese commitments are contingent on agreement on
"ambitious targets" by all major economies. Hatoyama called on
developing countries, especially those with large emissions, to
reduce their greenhouse gas emissions.
11. (SBU) Most climate experts agree that Japan will not be able to
achieve these very ambitious greenhouse gas reduction goals through
domestic action alone. A significant portion of the reductions
(perhaps up to half) will have to come in the form of carbon credits
from other countries
ROOS