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5.4 Recent status and development for energy conservation

(1) Background
At the Third Conference of the Parties to the UN Framework Convention on Climate Change (COP3), held in Kyoto in December 1997, an agreement was reached on greenhouse gas emissions reduction targets for developed countries. As part of this agreement, Japan pledged a 6% reduction in greenhouse gas emissions from the 1990 level (U.S.A. 7% reduction and EU 8% reduction), to be achieved in terms of the average annual value for the 2008-2012 period. Japan's target for energy-related carbon dioxide emissions, which account for about 80% of all greenhouse gas emissions, is the achievement of stabilization at the FY 1990 level by FY 2010.

On the heels of COP3, the current Long-term Energy Supply-Demand Outlook was revised in June 1998. The main points of this document are as follows:
Demand side: Cutting energy consumption by 56 million kL of crude oil
equivalent through energy conservation
(456 million kL -> 400 million kL)
Supply side: Oil Reduction of oil dependence to 47% from 52%
Nuclear Introduction of 16 - 20 more nuclear power plants
(current number 51)
New energy Expansion of use to the tune of a three-fold increase

(2) Recent status
Since the revision of the current Long-term Energy Supply-Demand Outlook, large changes have occurred on the energy supply-demand side as discussed below.

Demand side
Economic stagnation
Amid a deepening economic recession, annual energy consumption fell in FY 1998 for the first time in 16 years mostly due to a substantial fall in energy consumption in the industrial sector, with the previous negative growth traced back to the aftermath of the second oil crisis.

Energy Conservation

Despite the economic recession mentioned above, energy demand in the residential & commercial and transportation sectors kept growing rapidly. Besides, it is expected that energy conservation in the industrial sector will fall short of expectations in the future because of a slow down of capital investment in energy-conserving facilities.

Supply side
Nuclear power
At present, four nuclear power plants are under construction, and two more have submitted to the Electric Power Development Coordination Council for deliberation since last year. Despite progress with these projects, however, there have been a few setbacks, including last year's criticality accident at a nuclear fuel processing facility, which has deeply shaken public confidence in nuclear power. Although nuclear safety and disaster control measures have been tightened, delays in introduction of nuclear power plants seem unavoidable. (According to the Electricity Supply Plan released on March 31 this year, the plan for introducing nuclear power plants by FY 2010 was revised, with the number of nuclear power plants to be built by FY 2010 reduced from 20 to 13.)

New and renewable energy

There are growing expectations about the greater use of new and renewable energy sources against a background of rising public interest in environmental issues. Although some progress has been made, meeting the target set for FY 2010 will require substantial efforts due to constraints such as high costs and unsteady power output characteristics.

International energy situation centering on oil

The dependence of Japan's oil imports on the Middle East has risen (86% in FY 1998), giving rise to concern over energy security in the light of factors such as growth of oil demand in other parts of Asia, the recent rise in crude oil prices and the lapse of Arabian Oil Co., Ltd.'s oil concessions in Saudi Arabia.

(3) Direction of future policy
If Japan maintain these current policy frameworks of energy supply and demand, 20 million ton-c of carbon emission from energy origin expect to increase in 2010 FY compare with 1990FY level. The fundamental goal of energy policy - ensuring stable energy supply while meeting environmental conservation and economic efficiency - remains unchanged. Following three policies are applicable to achieve this goal;
- Further promotion of energy efficiency and conservation (7 million kL / 6 million ton -C)
- Further promotion of new and renewable energy (19.1 million kL / 9 million ton -C)
- Fuel switching (5 million ton - C)

Outline of energy efficiency and conservation measures and effects
Total Energy conservation effects: 57 million kL
of which : Existing measures: 50 million kL
: Additional measures: 7 million kL

Industrial sector
Energy conservation effect: 20.5 million kL
Share of existing measures: 20.1 million kL
- Voluntary action program for environment of Keidanren, Japan Federation of
Economic Organization
- Regulatory control under Energy Conservation Law
Share of new additional measures: 0.4 million kL
- Introduction of high-performance industrial furnaces for small and medium
companies

Residential and commercial sector
Energy conservation effect : 18.6 million kL
Share of existing measures: 14 million kL
- Improvement of equipment efficiency through Top-Runner Program: 5.4 million kL
- Improvement of energy conservation performance of houses and buildings:
8.6 million kL
Share of new additional measures: 4.6 million kL
- Widening of equipment subject to Top-Runner Program: 1.2 million kL
- Accelerated introduction of high efficiency equipment: 0.5 million kL
- Reduction of standby power consumption: 0.4 million kL
- Introduction of residential energy management systems : 0.9 million kL
- Introduction of commercial energy management systems: 1.6 million kL
Note: Of this, 1 million kL is to be achieved through utilization of ESCOs.

Transportation sector
Energy conservation effects : 16.9 million kL
Share of existing measures : 15.9 million kL
- Improving of equipment efficiency through Top-Runner Program : 5.4 million kL
- Wider use of clean energy motor vehicles : 0.8 million kL
- Energy conservation measures involving transportation systems : 9.7 million kL
Share of new additional measures : 1 million kL
- Accelerated introduction of vehicles meeting Top-Runner Program criteria :
0.5 million kL
- Promotion of widening of lineup of hybrid and other alternative vehicles and like :
0.5 million kL

Cross-sector measures
Energy conservation effects of technological development : 1.0 million kL
High performance boiler
High performance lasers
High efficiency lights
Performance improvement of clean energy vehicles


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