Major Policy Shift: Japan Commits to Radical Energy Transformation by 2040

Japan has unveiled plans to transform its energy landscape by 2040, targeting 73% emissions reduction with renewable energy reaching 50% and nuclear power 20%.

*Editor’s note: This article was originally published on 2/19/2025 on Linkedin.

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Welcome! I'm Hiroyasu Ichikawa, ichi, and this is issue 141 of the "Japan Climate Curation" newsletter📬, which has been curating hand-picked Japan-related climate news content every week since spring 2022, with over 420 subscribers [ more than 2,710 on Linedin]. You can subscribe by clicking on the Linkedin page or the form below.

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*Disclaimer: Generative AI tools such as Claude Sonet 3.5 has been used for summary and translation assistance 🙂

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【Digest of this week's topics】

• Japan is charting an ambitious course to transform its industrial and energy landscape through 2040, targeting a 73% emissions reduction alongside plans to boost renewable energy to 50% and nuclear power to 20% of electricity generation. The government's $1.5 billion investment in ultra-thin solar cell technology signals its intention to challenge China's renewable energy dominance. Meanwhile, Japanese corporations are adapting to this green transition, though challenges persist in the automotive sector, where manufacturers face fierce competition from Chinese EV makers. The upcoming TECHNIUM Global Conference in May 2025 will showcase Japan's commitment to deep-tech innovation.

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[🇯🇵📰👀Japan Climate News Headlines]

【1】Japan approves new climate, energy and industry policies through 2040 [2/19 Reuters]

• The Japanese government has approved new climate change, energy, and industrial policies through 2040. The greenhouse gas reduction targets aim for a 60% reduction from 2013 levels by 2035 and 73% by 2040.

• The energy policy sets goals to increase renewable energy to 50% of the electricity mix by fiscal 2040, with nuclear power accounting for 20%. This represents a significant increase from the current nuclear power share of 8.5%.

• The plan also aims to develop industrial clusters in areas rich in low-carbon power sources. However, the goals remained unchanged despite over 80% of public comments calling for more ambitious targets. Additionally, offshore wind power, a key driver for renewable energy expansion, faces challenges from inflation and high costs, with Mitsubishi Corporation announcing a review of three domestic projects, raising uncertainties about policy implementation.

【2】Japan backs nuclear power in climate plan criticized as insufficient [2/18 The Japan Times]

• Japan has announced plans to reduce fossil fuel dependency to 30-40% by 2040 while increasing renewable and nuclear energy. However, environmental groups are calling for more ambitious targets.

• Greenpeace Japan suggests a 78% emissions reduction by 2035 to meet the 1.5°C goal. The Japan Climate Leaders' Partnership, representing the business sector, advocates for a 75% reduction by 2035, indicating broad support for more aggressive climate action.

【3】Japan submits to UN new target to cut emissions by 60% in FY2035 [2/18 NHK World]

• The Environment Ministry has submitted new greenhouse gas emission reduction targets to the UN, aiming for a 60% reduction by fiscal 2035 compared to fiscal 2013.

• As part of efforts to achieve net-zero emissions by 2050, the plan also includes a 73% reduction target by fiscal 2040. Public comments revealed mixed reactions, with some calling for higher targets while others expressed concerns about economic impacts.

【4】Japan companies cut CO2 emissions while expanding businesses, study shows - Increased renewable energy usage reduces the environmental cost of sales growth [2/13 Nikkei Asia]

• Major Japanese companies reduced CO2 emissions per unit of sales by 31% from 2021 to 2024 while maintaining business growth.

• The Adoption of renewable energy led to significant reductions in indirect emissions (scope 2)

• Direct emissions (scope 1) reduction requires additional capital investment, presenting challenges for capital efficiency.

【5】Japan’s $1.5bn bet on ultra-thin solar cells in challenge to China - Tokyo aims to disrupt Beijing’s dominance of renewables and reduce fossil fuel dependence [2/16 Financial Times]

• Japanese government invests $1.5 billion in ultra-thin solar cell development

• Cells are 20 times thinner than conventional panels, enabling flexible installation

• Aims to generate power equivalent to 20 nuclear plants by 2040

• Sekisui Chemical leads development with ¥157 billion government subsidy

• Initial costs three times higher than conventional panels, targeting urban markets

image credit: Financial Times

【6】Sky not the only limit for JAL and ANA’s climate goals [2/14 The Japan Times]

• Japanese airlines are pursuing net-zero emissions by 2050 but face significant challenges in achieving this goal. While various approaches, including Sustainable Aviation Fuel (SAF), new aircraft deployment, and Direct Air Capture (DAC) technology, are being considered, high costs and technical limitations pose major obstacles. Additionally, balancing increasing tourism demand with environmental targets presents a significant challenge.

【7】Can Japan’s Carmakers Survive China’s EV Threat? - Honda and Nissan are losing market share at an alarming rate. The collapse of their merger talks may make things worse. [2/14 Bloomberg Original]

• Japanese automakers, once dominant in the global market in the 1970s, are now facing a severe decline in market share, particularly in Southeast Asia.

• As Chinese EV makers like BYD grow rapidly by offering electric vehicles across various price points, Japanese manufacturers struggle with their EV market entry timing and strategy.

• The collapse of Honda-Nissan merger talks may further complicate this challenging situation.

【8】Honda open to re-entering Nissan talks if Japanese rival’s chief Makoto Uchida leaves - Relations between bosses soured as Honda grew frustrated with Nissan’s restructuring [2/18 Financial Times]

• Honda is reportedly willing to resume merger talks to create the world's fourth-largest automaker, conditional on Nissan CEO Makoto Uchida's resignation.

• As Nissan faces declining sales and debt repayments, potential investors, including Foxconn and U.S. companies, have emerged. Mizuho Financial Group is exploring funding options, including involvement from private equity firms.

【9】Shareholder capitalism, the Japanese way - An obsession with the UN’s SDGs allows companies to create a smokescreen [2/13 Financial Times]

• The wearing of SDG badges by Japanese corporate executives has become symbolic of the balance between shareholder interests and social responsibility.

• A decade after implementing the Corporate Governance Code, while the government promotes market consolidation, many Japanese companies struggle with optimal capital allocation, caught between traditional Japanese management and shareholder capitalism.

• The failed Honda-Nissan integration talks exemplify a serious disconnect in corporate value perception.

【10】TECHNIUM Global Conference 2025 Announced: Japan's Largest Deep Tech Conference Set to Position Japanese Innovation at the Global Forefront [2/14 TECHNIUM Global Conference]

• The "TECHNIUM Global Conference," scheduled for May 2025 at the Imperial Hotel Tokyo, is set to be Japan's largest deep tech conference, expecting 2,000 researchers, entrepreneurs, and investors.

• The event aims to promote the global expansion of Japanese deep tech through strengthened industry-academia-government collaboration and ecosystem building.

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📬That's all for this week! Thank you for reading(or skimming) 🙇. I hope you will have a wonderful week ahead!

Found this week's news insights valuable? Please give it a quick "like" or "share" on LinkedIn – you never know who else in your network might benefit from staying in the loop on Japan's climate scene🙂🙇

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ichi (Hiroyasu Ichikawa)