By Camorah King

CEBA’s global policy team traveled to Tokyo this winter to meet with government officials, member companies, and partners about the implications of Japan’s new strategic energy plan on corporate clean energy procurement. The strategic energy plan is Japan’s major energy policy guidance document and is revised every three years.

Japan’s Ministry of Economy, Trade, and Industry released its updated draft strategic energy plan in December, targeting a 40-50% renewable energy and 20% nuclear energy mix by 2040. In the plan, the government makes a strategic shift to prioritizing and maximizing renewable energy resources for decarbonization. This is an encouraging development, because CEBA’s members view renewable energy resources as the most cost effective and scalable procurement option for Japan.

The plan also notes a clear dependency between economic growth, industrial competitiveness, and clean energy expansion. The plan references U.S. companies’ concern about the lack of clean energy supply to meet their growing needs in Japan and acknowledges that if sufficient clean electricity resources are not secured, opportunities for domestic investment and economic growth will be missed.

The Japanese government’s prioritization of industrial economic growth and decarbonization is highlighted in its draft green transformation (GX) 2040 Vision, a strategic framework integrated with Japan’s energy plan to drive toward carbon neutrality by 2050. The GX 2040 Vision seeks to drive public-private partnership in clean energy investment and supply-demand coordination.

The implementation of the GX initiative is directed through the GX Promotion Act, enacted in May 2023, which established economic transition bonds and a carbon pricing system anticipated to take full effect in March 2026. The draft strategic energy plan and GX 2040 Vision are set to be finalized by March 2025 and will guide the budget allocation process for FY2026 as well as proposed amendments to include further business decarbonization incentive measures of the GX Promotion Act.

Japan predicts that an increase in electricity production between 10-20% by 2040 will require grid buildout to integrate clean energy resources and curb curtailment at least cost. Electricity load growth from expanding data center and semiconductor industries offers an economic and clean energy opportunity for Japan. CEBA agrees with the ministry’s outlook that business cooperation with government and other related organizations to promote proactive clean energy grid planning and development is essential to meet this demand.

In a February workshop led by CEBA with clean energy stakeholders in Tokyo, it was clear Japan has an active and ambitious community seeking solutions to help Japan decarbonize its electricity grid. CEBA released an Issue Brief on Energy Customer Needs in Japan last November, offering ways Japan can lower costs and enable accelerated clean energy investment and procurement. To achieve Japan’s GX vision and the business communities’ accelerated clean energy targets, a clear and robust stakeholder process must be established to facilitate meaningful demand side participation in electricity grid policy and planning.

Creating a conducive market that provides certainty and support for clean energy deployment is challenging but necessary to enable companies to spur economic growth and a reliable clean energy transition in Japan. The further development and implementation of Japan’s GX policy will be key to this success.

Contact Camorah King for more information on CEBA’s engagement in Japan.