Business: Japanese premier backs renewables

Clean energy prospects boosted.

Japan has turned a green new leaf under new Prime Minister Yukio Hatoyama, whose centrist Democratic Party of Japan (DPJ) has put an end to 55 years of virtually unbroken rule by the right-of-centre Liberal Democratic Party (LDP).

Wind power languished under the outgoing party, long criticised by environmentalists as insufficiently supportive of renewable energy. The new leadership, however, has boosted prospects for wind and other clean energy technologies in the world's second-largest economy with ambitious promises to reduce greenhouse gas emissions by 25% from 1990 levels by 2020. But the party will need to overcome considerable resistance from business groups, and likely from within the bureaucracy as well.

There are signs that the new administration's stance is more than just talk. The DPJ supports government-mandated purchase prices for all renewable energy and says it will look to the experience of other countries for guidance. The party also says the government should shoulder the cost of building a more robust, efficient electricity grid able to transmit more renewable power.

It says that the extra cost should in principle be borne by users - a stance that has drawn protests from Japanese business. Keidanren, Japan's biggest business lobby, has asked the DPJ to reconsider its emissions policy, pointing out that resource-poor Japan is already one of the most highly energy-efficient countries in the Organisation for Economic Co-operation and Development. It argues that aggressive policies to reduce emissions could undermine the economy.

Such protests may not have fallen on deaf ears: Hatoyama has carved out wiggle room, stressing that Japan's 25% target would depend on "all other major nations" joining in a "fair and effective" framework for regulating emissions.

Cosy relationship

While opposition from industry could hinder the DPJ's plans, government bureaucracy may be a yet more formidable barrier. Japanese public officials enjoy a cosy relationship with business, often retiring from public service to take up positions in the industries they administer in a practice that is known as "descent from heaven".

Although DPJ's victory marks a weakening of the "iron triangle" formed by the LDP, the bureaucracy and business, the influence of business is likely to remain strong. Tetsunari Iida, executive director of the Institute for Sustainable Energy Policies, believes the DPJ is more committed to clean energy than the outgoing LDP. But he warns that policy decisions are currently dominated by "conservative people with vested interests" and that a more visionary team will need to take control of policy if change is to be achieved.

Meantime, Komichi Ikeda, co-founder of the Environmental Research Institute of Tokyo, doubts that the DPJ can formulate effective energy policies on its own. Toru Nakao, assistant to the president of environmental consulting firm E&E Solutions, says that although the DPJ has taken on a greener image than its predecessors, it is difficult to guess how it will perform in practice as it has no record in government.

Just under half of all 300 DPJ members of parliament are new to the job and the party itself is only 12 years old. Nakao is encouraged, however, that the DPJ has entered into a coalition with the Social Democratic Party of Japan, which advocates a phased retreat from nuclear power in favour of renewables such as wind. Japan's installed wind power capacity has grown from less than 1 GW in 2004 to 1.95 GW in October.

All the same, the country is unlikely to achieve the government's target of 3 GW of installed wind power capacity by next year. According to the Ministry of Economy, Trade and Industry (Meti), wind contributes less than 0.3% of Japan's energy requirements, while all non-fossil fuels excluding hydroelectric (3.8%) or nuclear power (9.5%), account for only about 1.3% of its energy needs.

Wind of change

The DPJ's suggestion that the government should shoulder the cost of grid upgrades looks good for wind power. Because Japan's electric power grid is owned and operated by ten independent, publicly traded utilities as a patchwork of regional monopolies, they all claim it is difficult to accommodate wind power on their individual patches of the grid. The utilities have gradually increased the amount of wind power capacity on their networks, but have in many cases insisted on the right to refuse supply when electricity demand slips. They also frequently require that wind turbines use storage batteries as backup, driving up installation costs.

Bold new policies such as a government funded grid upgrade will require commitment from relevant government agencies - particularly Meti. But Meti officials have gone on record saying that grid upgrades would raise costs for industry in general. A Meti official has also suggested that any push for more wind power would benefit overseas turbine manufacturers more than domestic suppliers.

The true test of the DPJ will be whether it can wrestle the control of policy away from the public officials. Early indications are that it is at least trying. The new government has already cancelled two major dam projects viewed by the DPJ as wasteful, raising hopes that the party will pursue its own energy agenda - even in the face of bureaucratic hostility and inertia.