The Climate Group July 23, 2018
RE100 is gaining momentum in Japan, going from zero to 10 members in just over a year and gaining significant political support. As temperatures hit new record highs in Japan, The Climate Group’s Head of RE100, Sam Kimmins, writes about his recent visit and the growing interest in renewables in a country long reliant on fossil fuels.
When The Climate Group first travelled to Japan back in March 2017, it was hard to see how we might encourage Japanese companies join RE100, our corporate leadership initiative on renewables with CDP. Certificates – known as ‘J-Credits’ – were expensive and Japan was considered an extremely difficult market for companies to source renewables.
Japan is the only G7 nation adding to its domestic coal power generation capacity, with roughly 45 new coal plants now in the pipeline. For a country leading the world in technology and innovation, this is remarkable – the commercial equivalent of commissioning 45 new kodak film factories in the age of the digital camera. By the time the new plants are completed, coal will be the expensive and cumbersome technology of yesterday, and the investments likely to end up as stranded assets.
Leading Japanese companies, however, are looking to the future, not to the past, and demanding an electricity system that does the same. They’re taking direct action through their own purchasing decisions, and in just over a year, 10 Japanese companies have committed to 100% renewable electricity through RE100.
Convened by our regional delivery partner Japan-CLP, these leaders – counting companies such as Ricoh (electronics), AEON Group (retail), Daiwa House (construction) and Fujitsu (I.T.) – have not only raised eyebrows with their 100% renewable electricity goals, but have gained the respect of their government and peers. And momentum is strong – we anticipate reaching 50 Japanese RE100 members by 2020.
Businesses of the future
During my recent visit to Japan, the growing interest in RE100 was palpable. Organized through Japan-CLP and CDP, the trip was a whirlwind of activity enabling me to meet members and policymakers.
So, why are Japanese multinationals committing to 100% renewable goals? What has driven this sudden interest?
Internationally, the business case for renewables is strong – the costs of solar and wind have dropped dramatically over the past few years and are predicted to be cheaper than coal everywhere in the world by 2023.Japanese companies see investment opportunities and the promise of increased competitiveness globally.
But they also know low-cost renewables are not yet readily available in Japan, putting their businesses at a global disadvantage. By joining RE100, they are demanding faster market change.
One has to wonder – why is power from Japanese solar installations, using Japanese-made solar panels, three to five times more expensive than those in Europe – in similar climates – using the same Japanese-made solar panels? There is a myth in Japan that low prices are not possible because the cost of labour is too high. This is not the case, as the wages of solar installers in Germany, the United Kingdom and other countries with low cost installation are equivalent to those of Japanese workers.
The answer, instead, is market design, inappropriate levies, and system inefficiency. Changing these barriers will unleash a wave of corporate investment as it has in Scandinavia, Mexico, the US and India.
Through ambitious 100% renewable electricity commitments and active engagement with government, Japanese RE100 members are sending a clear message to policymakers: remove barriers to corporate sourcing of renewables and enable businesses to access clean power. Their commitments have significant impact– when the world’s largest financial newspaper The Nikkei reported that 10 Japanese companies had joined RE100, share prices for renewables in Japan spiked.
These companies are not alone. As RE100 members commit to source 100% renewable power globally, businesses from overseas are demanding access to renewables for their operations in Japan as well. At our inaugural members’ meeting in Tokyo, we were joined by Apple and Ikea who, together with other global RE100 members such as Unilever and Starbucks, are a proving to be a local driving force for change.
CORPORATE ACTION AND POLICY GO HAND-IN-HAND
Excitingly, it is not only businesses in Japan that have shown their support for renewables. During my visit, I had the honour of meeting Environment Minister Nakagawa, of the Japanese Ministry of Environment, as well as representatives from the Ministry of Foreign Affairs and Ministry of Economy, Trade and Industry.
Both MOE and MOFA have committed their departments – including all their global embassies – to 100% renewable electricity in support of Japan’s RE100 members, and we have gladly accepted their generous offer to act as ambassadors for the initiative.
The Ministries are providing real and tangible support, not only through their own purchasing commitments but also through the powerful market signal they are sending. They will be experiencing first-hand the same challenges and opportunities as companies working to source clean power, showing that banking on renewables is a risk is worth taking.
The hope is that, when its departments are taking this journey themselves, Government will realise the need for impactful policy change to match the leadership of ambitious companies. Only with a supportive policy framework can renewable energy markets in Japan reach their full potential and challenge the out-dated, fossil-fuel based systems of yesterday.
The faster Japanese companies transition to renewable energy, the faster we bring down emissions and deliver a sustainable economy. The Climate Group looks forward to working with our member companies, our committed partners Japan-CLP and CDP, and supportive Japanese ministers, to help accelerate this market change.