Japan’s 26% emissions target: as ambitious as the US and EU?

08 June 2015

Japan’s Prime Minister Abe announced their emissions target last week commenting that it was as ambitious as other national targets. Jonathan Grant and George Gale compared their target with the EU and US. 

Japan will reduce emissions by 26% on 2013 levels by 2030 [1].  Nuclear power is an important element in Japan’s climate strategy. Before the Fukushima disaster and shutdown of nuclear generation in 2011, carbon intensity in Japan was falling by 0.9% on average each year (2000-2010).  Since then it has been rising by 1.0% annually.  Re-activating its nuclear power plants will quickly close some of the gap between Japan’s business as usual and target pathway.  But the role of nuclear power is still controversial and uncertain in Japan and this is having knock-on impacts on renewables and other low carbon investment.  

Using PwC’s Low Carbon Economy Index model, we calculate the difference between a country’s historical decarbonisation rate – or business as usual pathway – and what is required to achieve its target.  Japan’s annual average decarbonisation rate this century is 0.5%.  This needs to average 3.1% to meet its target (assuming Japan achieves our economic growth forecast of 1.4% each year to 2030).  This implies a significant shift in policy for carbon or energy intensive businesses in Japan.

Japan's target

 

For comparison, carbon intensity in the US has been falling at 2.3% each year on average since 2000; in the EU the figure is 2.0%.  Achieving their emissions targets will require the US and EU to decarbonise at 4.1% and 3.9% respectively.   Carbon intensity in America is 326 tonnes CO2 per million dollars of GDP, in the EU it’s 209, and in Japan it is 285 tCO2/$m (all 2013 figures).

Our measure of ambition looks at the difference between what the country is doing today and what it needs to do to meet its target.  We focus on carbon intensity which puts the challenge in the context of the country’s expected economic growth from our World in 2050 report.  This is not about their absolute emissions or actual carbon intensity but rather what change is required to achieve their target.  In other words, if countries are runners in a marathon, we focus on the change in speed they are committing to, not where they are on the course or how fast they are running currently. 

This approach has prompted much discussion internally and externally.  Some argue that it’s hard to start sprinting when you are closer to the finish line (i.e., countries with a lower carbon economy have fewer low cost mitigation options to implement).  Others say the actual running speed (or decarbonisation rate) is more important than the change in pace.  But the change in pace implies a change in regulation to achieve the target – and for business this is probably more important in the short term than the actual national emissions total or carbon intensity.

By our approach, Japan’s target requires a slightly greater change in pace of decarbonisation than is needed in the EU or US to achieve theirs.  So Japan’s target does seem to be slightly more ambitious.  Perhaps we should say ‘less unambitious’ as none of them come close to what’s needed to reach two degrees (roughly 6% decarbonisation every year).  Overall, Japan’s current and target decarbonisation rate is still significantly lower than the US or EU’s.  This slow decarbonisation rate (even before Fukushima) suggests there may be plenty of opportunities for low carbon investment in Japan.

[1] The US committed to a 26-28% reduction on 2005 levels by 2025.  The EU’s target is a 40% reduction on 1990 levels by 2030.