Saturday, December 22, 2007

IEA's Nobuo Tanaka on Japanese Energy Policy

For a book chapter I am writing, I was able to get an interview with my former boss and the current head of the International Energy Agency Nobuo Tanaka. I was reading over the interview today and decided it was so insightful that it should appear in full on FG. Mr. Tanaka responded by email from the climate change talks in Bali last week.

How might Japan serve as a model for developing and developed countries in terms of energy policy and efficiency?

I want to suggest two points. The first point is consistency. Japan has been making efforts to improve its energy efficiency and use oil alternatives consistently after the 1970s oil shocks. This effort has created Japan's leading energy efficiency.

The second point is innovation. Japan has created and incorporated a mechanism to encourage innovation within its energy efficiency policy or regulation (top runner regulation, for example). This mechanism has helped Japan to achieve two goals at the same time: improve energy efficiency and industrial competency. Consistency in the application of the policy has also helped create a stable business environment to accelerate energy related innovation on the consumer side.

What is the role of Japanese public opinion in Japan's formulation of energy policy, especially nuclear energy policy?

Japanese people tend to be keen for energy security because Japan is an isolated island country with very few domestic energy resources.

This basic recognition among the people helps Japan to improve energy efficiency and increase oil alternative use (including nuclear energy use) constantly, regardless the level of oil prices.

Currently, the environment--or sustainable growth--is also on the top of the agenda for Japanese people. This is also helping Japan to make nuclear energy play a very important role.

How can Japanese energy policy help with regional cooperation?

Having realized rapid economic growth and energy demand growth as a result, Asian countries have understood their vulnerability to energy related crises, including high oil prices. And they are now very keen to learn how to improve their energy efficiency, increase the use of oil alternatives, and develop emergency preparedness measures.

Because of deep interdependence of Asian countries' economies, improving regional energy security is now a common target for all Asian countries and Asia as a whole.

Japan can support regional cooperation to solve this problem with its experience and technologies.

Furthermore, I personally expect Japanese energy industries to play a more important role in the more integrated Asian energy market if Japan adopts appropriate policies. However, there may not be much time for Japanese industries. Chinese industries, which are now fully occupied with their domestic energy demand, also will become interested in this integrated Asian energy market.

How has Japanese energy policy been affected by the international environment, such as oil prices, wars, and climate change?

First, I believe that the experience of World War II clearly has had substantial effects on Japanese energy policies, especially the focus on energy security.

Having said that, concerning consumer side energy policies such as energy efficiency and diversification of energy resources, Japan has been making efforts very constantly to ensure both, regardless of oil prices.

On the other hand, supply side energy policies (such as supporting domestic companies’ development and maintenance of oil and gas fields) have sometimes been influenced by oil prices. The restructuring of JNOC [Japan National Oil Corporation] is one example.

Finally, since the 1990s, climate change issues have been affecting energy policies. In particular, the Kyoto Protocol has had a big impact.

What is the best way for Japan to achieve energy security?

I want to suggest two points. First, Japan should reconstruct its energy policies or energy strategies by widening its range from the domestic market to the Asian region. Like the European energy market, the Asian market will be integrated as Asian economies experience deepening interdependence. Japan should reconsider how it can enhance its energy security and energy sustainability with other countries and further develop an integrated energy market in Asia.

Second, 30 years after the oil shocks, it might be a good time to review Japan’s energy policy, especially its mechanisms to accelerate innovation. There are good examples emerging in Europe and other Asian-Pacific countries, which have been developing more market-oriented measures. Japan can improve or refine its innovation mechanism by studying the experiences of others. 

But it is sometimes difficult to adopt new policies if previous ones have proved successful.

(Photo from IEA.)

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