Japan energy efficiency report

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1 Japan energy efficiency report Latest update: February 212 Objectives: - 3% improvement in energy efficiency by 23 OVERVIEW - (%/year) Primary intensity (EU=1)¹ % - CO 2 intensity (EU=1) % -- CO 2 emissions per capita (in tco₂/cap) % - POWER GENERATION - (%/year) Efficiency of thermal power plants (in %) % - Rate of electricity T&D losses (in %) 5 +.8% -- CO 2 emissions per kwh generated (in gco₂/kwh) % -- INDUSTRY - (%/year) Energy intensity (EU=1) % -- Share of industrial CHP in industrial consumption (in %) Unit consumption of steel (in toe/t) % Among the best performing countries + Above the EU average 1 - Below the EU average 1 -- Among the worst performing countries 1 The European Union, as the best performing region, is used as the benchmark. 1

2 Mtoe 1. Overview 1.1. Policies: 3% energy efficiency improvement target for 23 The energy efficiency policy is governed by the Energy Conservation Law (Rational Use of Energy Act), voted in 1979, which obliges manufacturers and importers to enhance the energy efficiency of their products. The Government drafted the New National Energy Strategy to promote energy conservation measures in ; the strategy also presented the Energy Conservation Frontrunner Plan. The target set in the plan is to further improve energy efficiency by at least 3 percent by 23 compared with its level. Energy efficiency standards for many electrical appliances and vehicles were created under the Top-Runner Program in and reinforced in. It currently concerns 23 products. The first set of targets, fixed for the first period, has been achieved Energy consumption trends: consumption per capita slightly higher than in the EU Japan has a slightly higher level of energy consumption per capita than the European Union (nearly 15 percent higher). Total energy consumption has been decreasing since (-5 percent over the period -) and the economic crisis led to a fall in the total energy demand in (-1 percent). In, total energy consumption recovered its level. The share of industry (including non-energy uses) in total energy consumption has been stable at about 3 percent since, whereas the share of power generation increased slightly, from 25 percent in the s to nearly 3 percent. Figure 1: Energy consumption trends by sector 6 5 Other Industry Power generation Electricity consumption per capita reached 7,7 kwh in, ie identical to the OECD average but 3 percent higher than the EU average. The growth in electricity consumption has greatly slowed down compared with the s (2.3 percent/year between and and 1 percent/year between and ). Electricity demand decreased by about 4 percent in and due to the economic crisis. In, industry absorbed 32 percent of electricity consumption, down from 46 percent in. 2

3 %/year TWh Figure 2: Electricity consumption trends by sector 12 1 Industry Others Energy efficiency trends: consumption per GDP close to the EU average Primary energy intensity (total energy consumption per unit of GDP), measured at purchasing power parity, is close to the EU average. Between and primary energy intensity decreased at a slower pace than in the EU as a whole:.3 percent/year compared with 1.6 percent/year for the EU. However, since the reduction has been more than twice as fast as over the whole period, mainly thanks to an energy efficiency improvement in the transport and residential sectors. Industry contributed to about one third of the energy intensity reduction achieved since. Figure 3: Energy intensity trends.2% - -.% -.2% -.4% -.6% -.8% -1.% -1.2% Total Power generation Industry 3

4 GW 2. Power generation: slight increase thanks to gas The efficiency of the power sector has increased slightly since, reaching 42 percent in. That improvement is due to a switch in the power generation mix to natural gas and to the rise in gas combined cycles. The efficiency of thermal power plants has improved (+2 percentage points) and in stood at 44 percent, ie 6 percentage points higher than the EU average. In, gas combined cycles accounted for 19 percent of the country s total thermal capacity. Figure 4: Efficiency of power generation and thermal power plants Figure 5: Thermal electricity capacity, by technology % Total power generation Thermal power plants 2 Steam Gas turbines Combined cycles The Japanese grid shows a low, steady rate of transmission and distribution losses (T&D) of around 5 percent of the distributed volumes, which is below the average of OECD countries. Figure 6: Electric T&D losses %

5 Mtoe 3. Industry 3.1. Policies: market-based instruments combined with voluntary agreements Since the mid-197s, various financial and fiscal incentives have been put in place to encourage energy conservation and efficiency in industry. Furthermore, a tax incentive scheme (Tax Scheme for Promoting Investment in the Reform of the Energy Demand-Supply Structure) was introduced for businesses investing in specified energy conservation and efficient equipment, providing a special depreciation rate of 3 percent of the acquisition cost. For small businesses, the special depreciation rate is coupled with a 7 percent tax deduction off the acquisition cost. Large industrial companies are obliged to name an energy manager who is in charge of implementing an energy plan in the company. In the Revised Energy Conservation Act (), sectoral approaches have for the first time been introduced as a domestic regulatory measure. Sectoral benchmarks are being established for certain sub-sectors, initially in energy-intensive industries. Indicators are established for companies to benchmark their energy efficiency level against others within the same sub-sector, and medium- and long-term targets are set (to be achieved around ). Low interest loans are available for the installation of cogeneration systems. This applies to equipment that generates over 5 kw of output and with over 6 percent efficiency in primary energy use. Voluntary agreements concerned more than 11 industrial companies, with different targets among subsectors Energy consumption trends: back to pre-crisis levels Industrial energy consumption decreased slightly between and (-4 percent), while the country s total energy consumption increased by 17 percent. In and, the global economic downturn caused a dramatic fall in the sector s energy consumption: in it was 17 percent lower than in. However, in it nearly recovered its level. Figure 7: Trends in industrial energy consumption

6 Electricity consumption increased slightly until (+4 percent), and then dropped by 23 percent between and. As a result, the share of electricity in industrial energy consumption decreased from 27 percent of the total in to 24 percent in (compared with 25 percent in ). The use of coal and lignite in industry remained stable until (just above 4 percent of total energy consumption) but has recently increased (45 percent in ). Natural gas consumption in industry is low (only 8 percent of the total). The share of energy-intensive industries in overall industrial energy consumption has increased since. The steel industry s share of energy consumption in particular has increased steadily and now stands at 4 percent. The share of the chemical industry is steady (around 11 percent), as are the shares of the non-metallic minerals (cement, ceramics, etc.) and paper industries, which each account for 8 percent of total energy consumption. 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% % Figure 8: Energy consumption of industry, by source Biomass Heat Electricity Gas Oil Coal/Lignite 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% % Figure 9: Energy consumption of industry, by branch Other Paper Non metallic minerals Chemical Steel 3.3. Energy intensity trends: rapid decrease until the crisis, due to structural changes Over the period -, the reduction in energy intensity (consumption per unit of industrial value added) was quite high (1.2 percent/year). It accelerated after (-2.7 percent/year on average). Energy intensity increased in since the different branches were not affected in the same way by the recession and there were strong structural changes. Energy efficiency improvements for the four energy-intensive industries were lower over the period -, which means that most of the reduction in the sector s energy intensity was due to structural changes in industrial activity, with a shift to less intensive industries: the share of machinery and other equipment in the total value added of manufacturing has doubled and is now over 5 percent. 6

7 %/year %/year Figure 1: Trends in the energy intensity of industrial branches.% -.5% % -1.5% -2.% -2.5% -3.% *Including construction and mining Total* Steel Chemical Cement Paper data are not shown on the graph due to a scale-related problem The impact is clearly illustrated on the figure below. Over the period - the energy intensity of manufacturing industries decreased by around 3.5 percent/year but, when calculated at constant structure, the decrease is much slower, at less than 1 percent/year; the difference (about 2.5 percent/year) is due to changes in the industrial structure. That structural effect explains about 7 percent of the total variation. Over the period - the structural effect was very similar. Figure 11: Evolution of the energy intensity of manufacturing and structural effect.% -.5% % -1.5% -2.% -2.5% -3.% -3.5% -4.% Real variation Change at constant structure Structural effect 7