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Abenomics and Energy Efficiency in Japan

Published online by Cambridge University Press:  07 May 2025

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A signal flaw in Japan's much-debated “Abenomics” package of economic policies is the failure to include ambitious goals and fiscal support for energy efficiency. Many question whether Japanese PM Abe Shinzo's YEN 10.3 trillion fiscal stimulus and other measures will lift Japan from recession and deflation. But as this article will show, only a program that combines aggressive energy efficiency with a renewable energy drive can put Japan's economy on a sound, sustainable footing that maximizes job creation, domestic demand, and the nation's competitive prowess in advanced technology.

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This is an Open Access article, distributed under the terms of the Creative Commons Attribution-NonCommercial-No Derivatives licence (http://creativecommons.org/licenses/by-nc-nd/4.0/), which permits non-commercial re-use, distribution, and reproduction in any medium, provided the original work is unaltered and is properly cited. The written permission of Cambridge University Press must be obtained for commercial re-use or in order to create a derivative work.
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References

1 Examples abound in the domestic and overseas press and academic literature. For example, the August 3, 2012 English Mainichi newspaper insists in a translated editorial that “Japan has become the world's most advanced country in terms of saving energy as a result of efforts that both the government and the private sector have made since the 1973 oil crisis”

2 More on this below, but see the press release at American Council For an Energy Efficient Economy, “United Kingdom Tops in Energy Efficiency, US Lags in 9th Place” (July 11, 2012).

3 The IEA's 2011 update of “Saving Electricity in a Hurry” summarizes the plight Japan has found itself in. See pp. 32 to 37.

4 On this, see Eric Martinot “REN21 Renewables Global Futures Report,” January 2013. Indicators of renewables’ disruptive revolution include rapid diffusion, rapidly falling prices, and the intense creative destruction of mass bankruptcies and mergers leading to consolidation. Critics of renewable energy routinely bring up these bankruptcies as “proof” that renewables are uneconomic. The history of industrial revolutions suggests otherwise. For example, the US car industry alone had 272 producers in 1909, with about 500 firms entering the industry in its first 20 years of existence. Nearly all of them disappeared in the 1920s, but surely few would deny there was (and continues to be) an automotive revolution. On this see, “Automobile Industry,” in the International Encyclopedia of the Social Sciences, 2008.

5 For example, McKinsey and Company, in their “Lighting the Way: Perspectives on the global lighting market (Second edition 2011),” report a “disruption” of the global lighting industry's structure due in particular to the rapid diffusion and continued innovation of highly efficient LED technologies.

6 The most recent assessment is the market research firm SBI Energy estimate that the global energy efficiency market in 2012 totaled USD 595.4 billion, but that by 2023 the overall market for efficiency products and services will reach USD 3.3 trillion. See SBI “Energy Efficiency Global Products and Services Markets” (December 3, 2012). The SBI Energy study's results are also broadly consistent with assessments done in a range of areas, and by such reputed agencies as Pike Research.

7 Keidanren is dominated by energy-intensive industries that appear to have a different mindset from the business leadership that cooperated with the state in overcoming the oil shocks a generation ago. Why this is the case is for another paper. But the evidence of the mentality is seen in, for example, Keidanren's July 27, 2012 (in Japanese) “Opinions Concerning the Energy-Environmental Choices.” Keidanren's hostility to even moderate efficiency goals is palpable in these and other documents.

8 The IEA and domestic Japanese interests certainly continue trying to initiate aggressive action and use Fukushima as a teachable moment. See the PR for their February 25, 2013 workshop on “Energy Use and Green Buildings after Great East Earthquake in Japan.”

9 See Toru Fujioka, “Japan Learned to Love Deflation in Wage Malaise Facing BOJ,” Bloomberg, January 18, 2013.

10 A concise summary of several of the risks of this financial aspect can be found in Teruhiko Mano “Inflation targeting easy to promote, but difficult to achieve without tools,” in Japan Times, January 28, 2013.

11 This lack of standards has been highlighted (in Japanese) in Ohmae Ken’ichi “The Abe Cabinet's Emergency Economic Measures are Election Measures Made by the Authorities,” ZakZak January 20, 2013. See also, again in Japanese, ““The Big Lie of the Abe Regime's Economic Growth Led by a Manufacturing Recovery,” in Shukan Gendai, February 2, 2013.

12 Mabuchi was DPJ Ministry of Lands, Infrastructure, Transport and Tourism Minister (September 17, 2010 to January 14, 2011). For his comments, see (in Japanese) Mabuchi Sumio, “Problems with the National Bolstering Draft Law's Return to the Era of Comprehensive National Planning,” Gendai Bijinesu, February 3, 2013.

13 The Economist's Banyan blog succinctly relates the details, in “A Pile of Pork,” November 1, 2012.

14 On this, see the worried January 9, 2013 Japan Times editorial “Wasteful spending must be avoided”

15 To make matters worse, the Weekly “Spa!” magazine also relates how the Yakuza crime syndicates are looking forward to a revival, after having suffered several lean years due to tighter controls and cuts in public works. The article cites a Yakuza member who describes how much public work subcontracting is done by firms run by the syndicates. They excel at the critical business of rounding up sufficient numbers of low-cost labourers, and got a boost from Tohoku reconstruction, but are positively salivating at ongoing fiscal policy changes. See (in Japanese) “A War Without Mercy Breaks Out Over the YEN 200 Trillion National Bolstering,” February 1, 2013.

16 See the January 30 edition of the Tokyo Newspaper (in Japanese), “The Abe Cabinet Signs Off on an FY 2013 Budget that Stresses Public Works and National Defence”

17 On the shift in grants, see the (in Japanese) January 31, 2013 editorial in Kahoku, “The FY 2013 Budget Proposal is a Big Shift of Responsibility to Future Generations.”

18 On Japan's ageing infrastructure, see Mayumi Otsuma and Kyoko Shimodoi in “Japan Tunnel Collapse Threatens to Add to Fiscal Burden: Economy,” Bloomberg, December 4, 2012.

19 The global community is only beginning to understand the costs of trying to adapt to the myriad challenges of climate change. A recent assessment can be found in the “Required infrastructure needs” of the World Economic Forum's “Green Investing 2013” report.

20 See for example Gavan McCormack's The Emptiness of Japanese Affluence, Armonk, New York: ME Sharpe, 1996.

21 This is not an argument that Japan's public finances are on the edge of collapse. But like Japan's mismanaged economy in general, they can hardly be described as healthy. On the fiscal and other implications of Japan's declining rate of household savings, see A Gary Shilling, “As Japan Stops Saving, A Crisis Looms,” Bloomberg, June 7, 2012.

22 However, Morgan Stanley's Robert Feldman stands out from the vast majority of his colleagues by noting (concerning Abenomics) that “if the money is spent well, on projects like energy-saving technologies, the rewards could be huge, bolstering efficiency and tax revenues,” Economist, January 13, 2013.

23 A brilliant, withering and concise critique of this dominance, in relation to the enormous threat of climate change, can be found in Naomi Oreskes and Erik M. Conway “The Collapse of Western Civilization: A View from the Future,” Daedalus, Winter 2013, Vol 142, No. 1: 40-58.

24 Sadly, we can include Paul Krugman in this group, as in his “Is Japan the Country of the Future Again?” Krugman is wise to the dangers of climate change and surely well-versed in LDP porkbarrel wastefulness. But in touting Abenomics as a model, he seems to be more interested in scoring points against the “Austerian orthodoxy” rather than paying attention to the potential for yet another Japanese policy failure. The latter eventuality would, among other things, not only risk giving the orthodoxy another weapon, but could potentially also cost all of us the chance to have a much more energy-efficient and greener Japan helping to enhance the visibility of sustainability's benefits.

25 See the ACEEE press release concerning the scorecard and its details at: ACEEE

26 The GEA is perhaps the world's most internationally collaborative and comprehensive treatment of energy to date. For details, see the description.

27 See International Energy Agency, “FAQs: Energy efficiency”

28 The WBCSD comprises roughly 200 multinationals from 36 countries and in about 22 major industrial sectors. Their report is available free and in several languages.

29 See page 43 of the WBCSD report.

30 Unlike Korea, the UK, Germany, and other locales, Japan's residential building standards have no legal binding authority, a problem that should be remedied in tandem with the ongoing programme of bolstering the political economy.

31 A short summary of emergent “smart glass” technology and market scale is available at ASDReports “Global Smart Glass & Smart Windows Market worth $3.83 Billion by 2017,” January 25, 2013: https://www.asdreports.com/news.asp?pr_id=1050.

32 See p 12-13 of McKinsey and Company “Lighting the Way: Perspectives on the global lighting market (Second edition 2011)”

33 The curtains, for example, insulate the room via “creating a cushion of air between layers of material.” On this see Yusuke Hinata, “New curtains, advanced windows offer creative solutions,” The Nikkei Weekly, November 26, 2012

34 See the brief explanation at the Tokyo Green Space blog.

35 One reason is that a lot of Japanese urban residents live in “manshon” condominiums where the balcony space is used for hanging out laundry to dry. A planted green curtain, as opposed to advanced blinds and window panes, would mean choosing to use the generally narrow balcony space for drying laundry or for shading the window.

36 For example, see Kansai Power's (in Japanese) page on green curtains as a means of cutting power demand.

37 Many of these projects are outlined in a May 26, 2012 presentation titled “Smart Community Demonstration” by Japanese New Energy and Industrial Technology Development Organization (NEDO) official Morozumi Satoshi.

38 A national grid would especially bolster efficiency and security by allowing for more power-sharing among the regions.

39 See (in Japanese) Tanaka Nobuo's comments in “Now is a Good Time to Rethink Policy,” Nikkei Bujinesu, July 11, 2011, p. 40.

40 The FY 2013 request is for YEN 25 billion. On this, see (in Japanese), “Hokkaido-Tohoku Region YEN 3.1 Trillion Power Grid Expansion: METI,” in Kensetsu Nyuusu, January 23, 2013.

41 A very good and brief animation of DHC is available on youtube. Note the number of pipes.

42 A very readable and concise overview of DHC, from its origins in the Roman era to the present revolutionary developments can be found in “Geothermal District Heating,” European Geothermal Energy Council, September 2007.

43 The White Paper is only available as yet in Japanese. See chart 223-3-1 in this short excerpt.

44 Most waste heat anywhere comes from the firing of fossil fuels to generate electricity or for other purposes. Since only about 40% of coal and nuclear power stations’ heat is used in generating electricity, the rest is generally disposed of as waste heat. One area of the ongoing efficiency revolution is in using this waste heat, as well as the waste heat in sewerage systems and the like. That Japan is behind in this area has caught the attention of some observers, as we see in this online Japanese summary of an April 24, 2012 NHK broadcast on “Let's Use the Sleeping Energy”

45 Some of these items are discussed in Euroheat and Power's “District heating and cooling.” See also the IEA discussion of DHC technology and agreements at “District Heating and Cooling, including the Integration of Combined Heat and Power”. The signatory countries unfortunately (and tellingly) do not include Japan.

46 A brief English-language overview is available here. A more recent Japanese PDF from METI, with visuals, is available here.

47 Note that the US military is acting as a spearhead, guaranteeing a short-term market for sustainable biofuel produers so they can ramp down prices and then become competitive in the enormous global markets for fueling aviation, shipping, and the like. See Amanda Peterka “Airlines piggyback on DOD's test flights, push for expanded production,” E&E News, January 22, 2013.

48 One outstanding example of this is seen in Stockholm's Arlanda Airport. The airport is probably the world's greenest, in large part thanks to the use of the world's largest aquifer- based energy storage unit.

49 About 70% of the Russian system needs replacing, but a variety of financial and institutional problems hinder movement. See especially pp. 3 and 4 of V Roshchanka and M Evans “Playing Hot and Cold: How Can Russian Heat Policy Find its Way Toward Energy Efficiency?” Report Prepared for US Department of Energy, October 2012.

50 On this, see Paul Waide and Conrad U Brunner, “Energy Efficiency Policy Opportunities for Electric Motor-Driven Systems,” IEA Working Paper, 2011.

51 A note on the standards (mandatory in the EU since June 16, 2011) is available at NORD Drivesystems “Energy-Saving Motors IE2/IE3: New standards and legal requirements”

52 See p. 744 of Chun Chun Ni, “Potential energy savings and reduction of CO2 emissions through higher efficiency standards for polyphase electric motors in Japan,” Energy Policy, Volume 52, January 2013, pp. 737-747.

53 On this, see “NEMA Petitions for Energy- Efficiency Standards for Electric Motors,” August 21, 2012.

54 An excellent overview of these crises can be found in Coral Davenport “The Scary Truth About How Much Climate Change is Costing You,” in National Journal, February 7, 2013.

55 See “Fatih Birol: Energy Efficiency is one of the last options after Kyoto,” in Eurativ, December 17, 2012.