Energy Situation

1.	Japan's Energy Supply Structure
	Japan depends on imports for more than 80% of its energy needs, and its energy supply structure is particularly fragile among developed countries. For instance, the import dependence of Germany and the United States are only 61% and 26%, respectively (Table 1). Oil accounts for 52% of Japan's total energy supply, and at 99.8%, Japan's import dependence for oil is extreme. Besides, 86% of Japan's oil imports come from the Middle East. Amid growing energy demand worldwide, particularly in Asia, where it is expected to increase against a background of rapid economic growth, the world energy supply-demand situation is likely to tighten in the future, centering on oil.

2.	World Resource Reserves
	The reserves of main energy resources are not expected to go a long way even at current consumption rates (Fig. 1). The total available reserves of all energy resources in 2000 were estimated about 900 billion tons oil equivalent (toe). When the amount is divided by the total worldwide energy consumption in the same year (8.7 billion), it is as brief as 100 years, assuming current energy price and recovery cost levels. The reserves of oil is estimated about 1.4 trillion barrels, and is only sufficient to last about 40 years even if the current consumption rate is maintained. Given that worldwide motor vehicle ownership, which is estimated at 600 million, is expected to increase by 60% by 2010, it is not an exaggeration to say that the depletion of oil resources is just around the corner. The reserves-to-production ratio of coal will last about 230 years, and it may seem substantial, but about half of the reserves consist of low-quality coal. Besides, when any other energy sources dry up, the depletion of coal reserves will accelerate as an expected surge in coal use. It took 200 million years for coal reserves to build up by storing solar energy at an energy conversion efficiency of 0.02%. Consuming them within a time span of 100-200 years is equivalent to using them up in 15-30 seconds, if 200 million years are condensed to one year. The reserves-to-production ratio of natural gas is just under 70 years. If the current energy demand increases substantially, depletion of energy resources will accelerate at a geometric rate. Due consideration to the finite nature of energy resources will become essential for the future attempts to secure energy supplies.

3.	Global Environment
	The United Nations Framework Convention on Climate Change (UNFCCC), which was adopted at the Earth Summit held in Rio de Janeiro in 1992, took effect in March 1993. Japan ratified it in May 1993 to tackle domestic CO₂ and other greenhouse gas emissions as part of coordinated international efforts. The second report of the Intergovernmental Panel on Climate Change (IPCC) was compiled in 1994 at the request of the UNFCCC and it concluded that CO₂ and other greenhouse gases released into the atmosphere as a result of the combustion of fossil fuels and other activities would raise its temperature by 2¡C and push up the sea level by 50 cm in the next 100 years. According to the report, this would not only affect more than 50 million people worldwide, but also give rise to more frequent outbreaks of infectious diseases and adverse impacts on ecosystems, such as alterations to plant distributions. The report says that to keep the atmospheric concentration of CO₂ to 550 ppm, which is twice the level prevalent during the Industrial Revolution, it is necessary to cut CO₂ emissions by 50%. For this reason, future attempts to secure energy supplies must be accompanied by considerable efforts to reduce the share of fossil fuels. At the First Conference of the Parties to the UNFCCC (COP₁), held in March 1995 in Berlin, a decision aimed at establishing a process to introduce a protocol that would set a framework for appropriate action for the period beyond 2000 (Berlin Mandate), was adopted. This led to the adoption of a protocol specifying quantified greenhouse gas emissions reduction targets and related measures (Kyoto Protocol) at COP₃, which was held in December 1997 in Kyoto. As part of this process, Japan pledged to reduce CO₂ and other greenhouse gas emissions by 6% from 1990 levels by around 2010.

Table 1 : Comparison of Energy Supply Structures of
Major Developed Countries (1999)

Source: IEA / Energy Balances of OECD Countries

Fig. 1 : Recoverable Reserves and Reserves-Production Ratios
of Main Energy Sources

Japan's Long-term Energy Supply- Demand Outlook

In 1998, the Advisory Committee for Energy, a consultative body of the Minister of Economy, Trade and Industry, released its energy supply-demand outlook for FY 2010 based on the agreements reached at COP₃.
Assuming a 2% annual economic growth rate, the outlook envisages securing the country's energy supply by 2010 by cutting the use of oil and other fossil fuels to reduce CO₂ emissions. It plans to cover the energy supply shortfall resulting from the reduction in fossil fuel use, and a natural expansion in energy demand, with further efforts on energy conservation and greater use of nuclear and new/renewable energies. Due to the limit of natural resources, Japan cannot rely much on hydro-electric energy and geothermal energy. Progress in energy conservation and the introduction of nuclear and new/renewable energies therefore hold the key to a stable energy supply in the future.
In 2001, in order to cope with recent changes in circumstances the Advisory Committee for Natural Resources and Energy revised the energy supply-demand outlook for FY 2010, and set the numerical target of new and renewable energy introduction for 2010 as 19.1 billion liter oil equivalent (loe). Currently, the Japanese Government is implementing various supports and other policy measures aimed at expanding the use of new energy to achieve this target.
Japan's final energy consumption in FY 2010 targets at about 400 billion loe, which represents a -0.5% increase over the 1999 level.
Based on this assumption, Japan's measures to cut greenhouse gas emissions will center on a reduction in the consumption of oil and other fossil fuels as sources of CO₂ emissions.
A net reduction in energy consumption with a view to reducing greenhouse gas emissions by 20 million tons carbon equivalent (t-C) (gap between 307 million t-C of BAU case and 287 million t-C of new policy case in 2010) will be done with the following three measures: further energy conservation effort (6 million t-C), strenuous introduction of new/renewable energy sources (9 million t-C), and conversion of energy fuel (5 million t-C).

Main Points of Kyoto Protocol

Main Points of Kyoto Protocol
Quantification of Reducing Emission

Reduction target of greenhouse gases: Japan: -6%, US: -7% and EU: -8%
Target period: 2008-2012
Base year: 1990 (1995 can be chosen for HFC, PFC and SF6)
Object: Greenhouse gases - Six [carbon dioxide (CO₂), methane (CH₄), nitrous oxide (N₂O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs) and sulphu hexafluoride (SF6)]

Flexibility Mechanism

Emissions trading
Joint implementation
Clean development mechanism

Fig. 2 : World Primary Energy Supply Trends
(including future projections)

Long-term Outlook for Worldwide New and Renewable Energy Use

According to the ecology-first scenario presented at the World Energy Council held in 1998, the world energy supply in 2100 will be dominated by new and renewable energy sources, incorporating 40% photovoltaic, 30% hydro and 15% biomass. Major energy organizations also forecast greater dependence on new and renewable energy in the future (Fig. 2).
In this first year of the 21st century, it is necessary to renew our determination to actively introduce new and renewable energy to protect the global environment and ensure a stable energy supply.

Table 2 : Long-Term Demand & Supply Outlook of Energy (2001)

Final Energy Consumption Outlook

Primary Energy Supply Outlook

Outlook of Energy Related CO₂ Emission

Table 3 : Outlook of Japanese New Energy Supply for FY 2010

Supply Side New Energy Outlook

Demand-Side New Energy Outlook

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