Japan Betting On Climate Change Profits

fromKQED

There are many players involved in climate talks at Copenhagen, but one country has a vested economic interest in the outcome. For the last three decades, much of Japan's economy has been geared toward inventing energy-saving appliances and machinery — technology that Japan is hoping the rest of the world will want to buy if a deal is reached in Copenhagen.

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LIANE HANSEN, host:

As we just heard, there are many players involved in the Copenhagen climate talks, but one country, Japan, has a vested economic interest in the outcome. Reporter Rob Schmitz of member station KQED has this report.

ROB SCHMITZ: Shinya Ocata(ph) compares his factory's commitment to reducing greenhouse gases to the way Seattle Mariners' slugger Ichiro Suzuki plays baseball. Ocata says his blue jumpsuited workers at this plant outside Kyoto rarely hit home runs. Instead, they focus on singles, doubles, individual hits that will make a difference at the end of the game.

Mr. SHINYA OCATA: (Through translator) Each person who works in this factory has made small improvements to our products and manufacturing process. Little tweaks here and there. When you put it all together, it's meant huge savings in energy.

SCHMITZ: Daikin runs this factory. It's one of Japan's largest air conditioner makers. For decades, Japanese companies like Daikin have awarded raises and bonuses to employees who come up with new ways to save energy. By law, each factory in Japan must become at least one percent more energy efficient each year. And they must devote at least one staff member to this endeavor.

This is just one of a laundry list of government regulations designed to place Japan as the most energy-efficient country on the planet. It's not that Japan cares more about the planet than other countries, it saves energy out of economic necessity. Japan has to import nearly all its fossil fuels.

Professor LLEWELLYN HUGHES (George Washington University): That's meant that in Japan you've had a fear of energy insecurity. It's kind of, the, you know, the energy independence idea on steroids, really.

SCHMITZ: George Washington University Japan expert Llewellyn Hughes explains that Japan changed course after the oil shocks of the 1970s nearly collapsed its economy. The government held emergency sessions, passing strict regulations on industry aimed to improve energy efficiency. Since World War II, Japan has spent twice the amount on developing its energy sector than the U.S. has, says Hughes.

Prof. HUGHES: You know, you can see them run, really, the whole gamut from, you know, from fuel cells and hydrogen technologies through to photovoltaics and wind and biomass. You've got programs which are subsidizing research into grid interconnection for wind power and subsidies provided for the development of high-efficiency conversion of biomass.

SCHMITZ: And that positions Japan to make money in a global economy focused on reducing greenhouse gases. A recent survey by the Center of Industrial Economics showed that Japan owns the largest share - 40 percent - of the world's patents for green technology. The U.S. came in second at just 12 percent.

(Soundbite of assembly line)

SCHMITZ: At an assembly line owned by Panasonic outside Kyoto, computers bark instructions to a row of 16 workers putting together hydrogen fuel cells. This is one of the country's first assembly lines for residential fuel cells - units that separate hydrogen from a home's natural gas line to generate electricity and then take the byproduct, heat, to heat the home and the home's water.

The Japanese government plans to have a fuel cell in a quarter of all homes by mid-century. Nikatoshi Matsamura(ph) is in charge of the government's subsidy that's developing the market.

Mr. NIKATOSHI MATSAMURA: (Through translator) I foresee a hydrogen society. In the future, we'll take carbon dioxide out of natural gas, store it under the ground and use the hydrogen to have the end users generate electricity.

SCHMITZ: Though the U.S. has made strides in developing fuel cells for the industrial sector, Japan holds a decade lead in the residential market. Again, Nikatoshi Matsamura.

Mr. MATSAMURA: (Through translator) U.S. companies, especially the major oil companies, could catch up with us. But I think that'll depend on whether or not the U.S. government chooses to offer incentives to build a market there.

SCHMITZ: And that's the problem, says Japan expert Llewellyn Hughes. U.S. subsidy programs for the energy sector tend to fizzle after a few years. Whereas in Japan, those incentives often stay in place for more than a decade. This long-term commitment gives investors more confidence in contributing to the growth of the sector, says Hughes.

Prof. HUGHES: If you look at spending, let's say, during the Carter administration on energy innovation, the U.S. spending dwarfed all of the other countries. But the point is that in the early 1980s, that really fell away. And in the case of Japan you've seen fairly some reduction from the spending in the late 1970s, but it has remained relatively stable and increasing over time when you adjust it for inflation.

SCHMITZ: Hughes recalls that in the 1980s the Reagan administration attempted to abolish the Department of Energy. In the end, it significantly reduced the department's functions. Since then, Japan's Department of Energy equivalent, the Ministry of Economy, Trade and Industry, has risen to become the country's most powerful government agency, attaining Pentagon-like influence over government spending.

For NPR News, I'm Rob Schmitz.

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