How should the transition to renewables and EVs be promoted for decarbonization?

The renewable energy generated is not fully utilized because the old regime is still in place

In 2022, power generation in Japan consisted of thermal power generation, which accounted for 70% or more, followed by solar power (9.2%), hydropower (7.6%), nuclear power (5.6%), biomass (3.7%), wind power (0.9%), and geothermal power (0.3%). Renewable energy accounted for about 22% in total, including five types, excluding thermal power and nuclear power.

Japan’s Strategic Energy Plan for 2030 aims to have 41% of thermal power, 20-22% of nuclear power, and 36-38% of renewable energy, while other countries such as Italy and Germany set renewable energy targets as high as 72% and 80%, respectively, for the same year. The G7 agreed to decarbonize most of the power sector by 2035, and Japan urgently needs to increase the share of renewable energy sources that can reduce CO₂ emissions from power generation. But why is Japan’s transition to renewable energy not progressing?

A major reason is the problem of power transmission: Japan has increased its solar power generation capacity to the third largest in the world, thanks in part to the feed-in tariff program that began in July 2012. However, this capacity is not being fully utilized.

Japan’s existing nine electric utilities, or ten if you count Okinawa, were regional monopolies until the full liberalization of electricity sales in April 2016, and even now there is not enough power grid capacity to accommodate large-scale interconnections across regions. As a result, while Kyushu and Okinawa are ideal locations for solar power generation, and Hokkaido and Tohoku are ideal for wind power generation, they are unable to transmit power fully to metropolitan areas with high electricity demand. Another obstacle is the difference in power frequency between eastern and western Japan.

In addition, it would be possible to store electricity if storage batteries are sufficiently developed and each power company has them, but such batteries have not yet been developed. Also, building wind, geothermal, and other power generation facilities requires an environmental impact assessment, which is another factor holding back the adoption of these technologies.

To accelerate the transition to renewable energy in Japan, it will be necessary not only to improve the technological environment, but also to establish a system that allows the technology to be fully utilized.

Improvement of HVs performance is also a reason to delay the production and spread of EVs

EVs are being promoted worldwide, albeit at a slower pace, to achieve carbon neutrality by 2050. What is the EV share of new car sales in Japan and other countries? Let’s compare the data for the year 2023.

According to the Tokyo Electric Power Company, which compiles data on the share of electric vehicles newly sold in major countries, EVs for standard passenger cars accounted for only about 1.66% of new car sales in Japan, or 44,000 units. EVs for ‘Kei’ or lighter and smaller vehicles accounted for about 47,000 units, or about 3.5%. The total was about 91,000 units, 1.5 times the previous year, but the share was low at about 2.28%.

In the U.S., the share was about 7.6% with about 1.19 million units, but in California, where CO₂ reduction regulations are stricter, it was about 21%, showing considerable difference from state to state. According to the European Automobile Manufacturers Association (ACEA), the total number in the EU was about 1.54 million, with the share of about 14.6%, surpassing the diesel share of about 13.6% for the first time. In China, according to the China Association of Automobile Manufacturers (CAAM), the number was about 6.69 million, with the share of about 22.2%.

Note that the share in Scandinavia is quite high, and although simple comparisons cannot be made because of the inclusion of PHVs (plug-in hybrid vehicles), it was already around 88% in Norway, 70% in Iceland and 54% in Sweden in 2022.

Looking at the history of EVs, U.S.-based Tesla launched the Roadster for the wealthy in 2008, but the world’s first mass-produced EV was the iMiEV, a four-seat ‘Kei’ car launched by Mitsubishi in 2009. In 2010, Nissan launched the Leaf, a five-seat standard passenger car, and in 2019 it became the first EV in history to reach cumulative sales of 400,000 units. However, it is China that is currently making great strides in the EV sector. With the global trend toward decarbonization on its side, the country is promoting EVs and dominating the new car market. Japan’s auto industry is in a critical situation.

How is it that Japan has lagged so far behind in terms of diffusion while originally leading the way?

In addition to the price of EVs, the lack of charging facilities is also holding people back. The inability to charge batteries at home in apartment complexes and the still short distance that can be traveled on a single charge have also contributed to the reluctance to buy EVs. There are also safety concerns, as there have been frequent reports of battery fires in China and other countries. Another factor that may keep buyers away from used cars is that rechargeable batteries deteriorate quickly, causing the price of used cars to drop dramatically.

Negative factors are similar in other countries, but there are significant aspects that are covered by subsidies and other systems. In addition, gasoline prices overseas are very different from those in Japan, which motivates the purchase of EVs. In Europe in particular, carbon taxes on CO₂ emissions are high, making it easier to choose a car that uses less gasoline.

On the other hand, in the case of Japan, several manufacturers are producing hybrid vehicles (HVs), and the improved performance and lower prices are probably the factors that have stopped the increase and spread of EVs. Starting in 2022, the government is also subsidizing the price of gasoline, which has become expensive due to Russia’s invasion of Ukraine, which is also a factor holding back EVs. Of course, HVs also help reduce CO₂ emissions, but the global argument is now that EVs are preferable, with California, the largest U.S. market, banning HVs after 2035.

The goal is decarbonization. Work hard to build institutions and vehicles to get there

The goal is decarbonization, and EVs may not be the only solution. In the future, fuel cell vehicles, hydrogen vehicles, or some other type of vehicle may take over. But for the time being, I believe that EVs are the key to curbing global warming.

Currently, demand for EVs has reversed, there is an oversupply, and EV sales are slowing. This may be due in part to the end of subsidies in Germany, and in part to the EU’s partial easing of restrictions on gasoline-powered vehicles. Tesla’s share price has also fallen significantly. Conversely, now is the time for Japan to turn the market around. I would like manufacturers to focus on further R&D and production of EVs. And in the long run, I hope they will seek new technologies and move toward the development of vehicles that do not emit CO₂.

Japan’s global position in the automobile industry is now under threat, and the entire country must take measures to address this issue, such as accelerating the development of all solid-state batteries, reducing highway tolls for EVs, creating special gates to give priority to EVs, and reducing various costs and taxes.

For Toyota’s MIRAI fuel cell vehicle, not only Japan as a whole subsidizes eco-cars, but also the Tokyo Metropolitan Government, and even Minato City, provides subsidies to residents who purchase such vehicles. It is important to actively take these measures. The government must also be involved in the development of charging spots, which are still few and far between.

Of course, there are challenges to such a drastic course: EVs require significantly fewer components than gasoline-powered vehicles, so the proliferation of EVs could be a blow to parts suppliers. But the global trend is already in a wait-and-see mode. If the automobile industry, one of Japan’s key industries, is left behind in the global market, it could have a serious impact not only on parts suppliers, but also on the Japanese economy as a whole.

It is not necessarily true that there is widespread recognition that curbing global warming is the biggest problem of the 21st century. It seems that the only way to solve this major problem is to change the mindset of the entire nation and achieve the goal, with both government and business working in tandem.

* The information contained herein is current as of May 2024.
* The contents of articles on Meiji.net are based on the personal ideas and opinions of the author and do not indicate the official opinion of Meiji University.
* I work to achieve SDGs related to the educational and research themes that I am currently engaged in.

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