Japan will broadly align with the European Union on issues around the New Collective Quantified Goal (NCQG) for climate financing at the UN Climate Change Conference, and is also unlikely to oppose the EU's cross-border adjustment mechanism or CBAM, Toshiyuki Sakamoto, Board Member, Director for Climate Change and Energy Efficiency Unit, The Institute of Energy Economics, Japan or IEEJ, said in an interview.
The NCQG is among the most important topics being discussed at COP29 in Baku, Azerbaijan, replacing an annual commitment of $100 billion/year to be paid by developed countries to developing countries.
The main issues in the latest draft text include the exact amount of financing, ranging from $1 trillion to $2 trillion, and who is obligated to pay. At COP29, Chinese officials have already said the country will only agree to voluntary contributions and developed countries should be responsible for mandatory contributions under the draft NCQG.
"Japan will be taking a similar position to the European Union, in particular, on the issue of who would be contributing to NCQG. I believe that Japan is of the strong view that China should contribute because of its current economic development. I think that's the same view shared by the European Union," Sakamoto said.
On Japan's position on EU's CBAM, Sakamoto said his observation was that there was not strong opposition from the Japanese government, but it would like to see a level playing field or appropriate implementation of the cross-border carbon tax.
"Many arguments have been put forward by the Japanese government, but I would be very surprised if Japan would take the case of EU CBAM to the WTO as argued by some emerging economies," he added.
Sakamoto also said that, in his view, it was unlikely that stronger language on coal would get agreed upon at COP29.
"Japan needs coal-fired power generation for the foreseeable future. In the UNFCCC negotiations, India and China take very strong positions. So it appears that Japan is just looking at the negotiations between the EU and China and India," he added.
"Also in COP29, it is expected that another target proposed by the IEA could be agreed. That is making a 6x [six times] increase in energy storage capacities by 2030. I think that has been debated among parties so far," Sakamoto said.
Basic energy strategy
Japan is currently revising its basic energy strategy, partly because it needs to submit its next Nationally Determined Contribution (NDC) by February 2025, and how the result of the general election would affect future energy policy is somewhat uncertain at this moment, Sakamoto said.
"However, METI seems to intend to publish the outline of the draft 7th basic energy strategy by the end of this year as originally planned before the election," he added.
Meanwhile, amid the political upheaval, nuclear energy remains the most politically sensitive issue in the energy and climate debate in Japan.
Sakamoto said the government would like to take one step further on nuclear, from just replacement of the existing decommissioned reactor in the same site, and expanding possibilities so that a new nuclear power plant could be constructed, even without the existing reactor being decommissioned.
"That is probably what the government would like to include in the next basic energy strategy. But, the result of the general election may affect this debate. Some opposition parties are not comfortable with nuclear. So we have to wait and see what happens," he added.
Carbon market and renewables
A closely watched aspect of Japan's energy transition has been the development of its domestic carbon emission scheme called GX ETS. It started the first phase of the ETS in April 2023 with voluntary participation from companies accounting for more than 50% of the country's greenhouse gas emissions.
The government was expected to consider the basic frameworks of the ETS by around December for the second phase to be introduced from the fiscal year 2026-27 (April-March).
"After 2026, GX ETS will be implemented on a full-fledged basis. To that end, the government is now preparing the new legislation for GX ETS that will probably be submitted to the next ordinary session of parliament in 2025," Sakamoto said.
"That would not be delayed, I think, because the opposition parties are generally supportive of stronger climate policies," he added.
Following an agreement at COP28 last year to triple renewable energy capacity and double energy efficiency by 2030, countries have been looking to find ways to meet this goal.
"Tripling renewable is not Japan's target and doubling energy efficiency improvement is not either. Both are global targets," Sakamoto explained.
"But Japan needs to increase renewable as much as possible and improve energy efficiency further as much as possible. Otherwise, we cannot reach carbon neutrality by 2050," he added.
