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Health andwelfareRobotics takea giant stridefor mankindPage 3

Outlook forentrepreneursThe nation needsto embrace failureto create successPage 4

Smart citiesEvents of 2012focus attentionon renewablesPage 6

FT SPECIAL REPORT

Japan Technology & InnovationTuesday December 4 2012 www.ft.com/reports | twitter.com/ftreports

Nearly two years afterthe Fukushima nucleardisaster, the technologicalchallenges facing Japan arebecoming clearer and more

daunting. The country is embarkingon what could be a revolution inenergy production, even as it grappleswith the end of its decades-long domi-nance in consumer electronics.

This year has seen the emergence ofvocal public opposition to nuclearpower, seemingly absent in the shock-filled months after the March 2011earthquake, tsunami and meltdownsat Fukushima Daiichi power plant.

Over the summer, the small,scattered street protests of a year agomorphed into crowded weekly demon-strations outside the prime minister’sresidence. By September, the govern-ment of Yoshihiko Noda, prime minis-ter, had bowed to pressure anddeclared its intention to close downJapan’s nuclear industry by the end

of the 2030s – a radical shift for acountry that had produced 30 per centof its electricity from atomic plantsbefore Fukushima.

This policy contains big loopholesand might yet be undone – not leastbecause Mr Noda’s government,unpopular for its handling of post-tsunami reconstruction, taxes anddiplomacy, looks likely to be replacedin an election on December 16.

Still, no one thinks Japan’s energysector can go back to business asusual. A pre-Fukushima ambition toincrease the share of electricity gener-ated by nuclear power to 50 per centhas been buried like radioactive soil,and the politics of nuclear energyhave undergone a fundamental re-orientation. Only two of the 50 usablereactors are now in operation. Therest are idle because of public opposi-tion and legal wrangling betweenlocal governments and Tokyo.

Even the conservative Liberal

Democratic party, which oversawJapan’s atomic build-up and is likelyto replace Mr Noda’s Democraticparty in the election, has been forcedto disassociate itself from its pro-nuclear past, speaking of “cautious”downsizing rather than revival.

Whether Japan chooses “no nukes”or “few nukes”, the consequences forsociety and business will be signifi-cant. It remains an open questionwhether a country that imports virtu-ally all its fossil fuels can replace animportant carbon-free energy sourcewithout doing catastrophic damage toits economy or the environment.

With most reactors offline, utilitiesare paying billions of dollars more fornatural gas and oil and emitting 30per cent more greenhouse gases.

Japan’s industrial giants will haveto adapt too. Toshiba, Hitachi andMitsubishi Heavy Industries areamong the world’s largest suppliers ofnuclear equipment, but the prospects

for new business in Japan havenarrowed drastically. Executives hopeforeign buyers will take up the slack,but marketing reactors overseas couldbe made more difficult by a shrinkingdomestic base and fading supportfrom the government and utilities.

Their best hope may lie in theirdiversity. Toshiba, Hitachi and MHImake many of the technologies thatcould replace nuclear power, fromnatural-gas turbines to solar panelsand wind turbines which, under theshift in energy policy, would receivetrillions of yen in investment.

Some projects are already gettingstarted, under the direction of bothtraditional power equipment compa-nies and newcomers.

Masayoshi Son, the billionairefounder of SoftBank, the telecomsgroup that recently bought a 70 percent stake in Sprint of the US, is look-ing to build a network of commercial-scale solar energy stations, the first

of which opened in Kyoto in July.Novel ideas are also being pushed

for wind power and biomass. Plans tobuild the world’s largest floating windfarm off the coast of Fukushimaunderscore Japan’s sometimes sur-prising capacity to adapt under pres-sure – as well as the forces that toooften block necessary change.

After years on the drawing board,the wind project won quick approvalfor its initial test phase after Fuku-shima, yet construction could still beblocked by fishermen.

The transformation of the energysector is starting during a period ofdeep gloom for another, more globallyrecognised industry: the country’s con-sumer electronics sector. Sony, Pana-sonic and Sharp together lost Y1.6tnlast fiscal year, because of ever-declin-ing competitiveness in televisions andwrite-offs of past investments. Thisyear is expected to be almost as bad.

Continued on Page 2

Nation seeksnew normalin aftermathof tragedyJonathan Soble says the country’s sometimessurprising capacity to adapt under pressurewillbe essential as it faces daunting challenges Sunny side up: solar energy panels in Tokyo. Greater investment in solar is likely as nuclear power is phased out Bloomberg

Disaster recoveryHow companies ontsunami-hit coasthave rallied

On FT.com »

2 ★ FINANCIAL TIMES TUESDAY DECEMBER 4 2012

Japan Technology & Innovation

Since the financial crisisbegan, the three companieshave cut tens of thousandsof jobs, lost some 85 percent of market value andseen their debt downgradedto junk by some or all ofthe global rating agencies.

External shocks havebeen partly to blame: sincethe global economy crum-pled five years ago, theyhave faced falling demand,an export-wrecking surge inthe yen, an earthquake andenergy crisis at home andfloods at major supply hubsin Thailand.

Analysts also point tostrategic errors, such as atendency to throw goodmoney after bad by backingunprofitable products afterthey have had their day.

If the winners in today’stech world are software anddesign innovators such asApple and huge-scale, low-cost hardware giants – in-cluding Taiwan’s Hon Hai,which anonymously, butprofitably, assembles othercompanies’ products – thenJapanese groups seem stuckin the money-losing middle.

Beyond Japan’s famous

Continued from Page 1 consumer brands, not allthe news is grim. It hasbeen a bad year for semi-conductor makers – ElpidaMemory went bankrupt andRenesas Electronics is seek-ing a government bailout –but many component andmaterials suppliers remainworld leaders, with theirhigh-tech output often cru-cial to products assembledby foreign groups.

Competitive pressure onsuppliers leaves little roomfor complacency, and partsand materials groups arevigilant about finding newapplications and markets.

One example is NittoDenko, a 94-year-old com-pany that started out mak-ing electrical tape and istoday the biggest manufac-turer of optical films usedin liquid-crystal displays.Its next target is pharma-ceuticals: it is working witha university researcher on adrug-delivery system totreat fibrosis ailments suchas cirrhosis of the liver andCrohn’s disease, which areincurable today.

Japan can also be proudof its achievements in basicscience. Shinya Yamanakaof Kyoto University sharedthis year’s Nobel Prize in

medicine for figuring outhow to turn mature cellsinto immature stem cells –valued by researchers fortheir ability to develop intoany living tissue.

He was the 15th Japaneseperson to win a Nobel inscience or medicine, arecord that belies Japan’simage as a nation that isbetter at tweaking importeddiscoveries than conductingits own research.

And, of course, Japan willalways have robots. A pushto apply the technology ofassembly-line robotics tohealthcare is gaining pace,thanks to the country’sgreying population andshortage of young hospitaland nursing home workers.But financial and techno-logical obstacles to wide-spread adoption remain.

Researchers are alsoworking to improve the waymachines think, spurred onby advancements such asIBM’s Watson supercompu-ter, which trounced humanchampions on the US televi-sion quiz show Jeopardy!.

Japanese researchers planto build an artificial brainthat can pass the incrediblycompetitive entrance examof Tokyo University.

Nation seeks a new normal

This year, the musician andenvironmental activistRyuichi Sakamoto caused astir in Japan by appearingin advertisements for theNissan Leaf, a battery-pow-ered car introduced by theYokohama-based auto-maker in 2010.

The Leaf burns no petrol,releases no greenhouse gas-ses from its tailpipe and ismarketed to green-mindeddrivers, so the campaigningMr Sakamoto might haveseemed like a naturalspokesman for the car.

Yet in post-FukushimaJapan, his endorsement wascontroversial: most of thecountry’s nuclear reactorsremain closed since lastyear’s nuclear accident, sorecharging a Leaf meansdrawing electricity from apolluting gas or coal-firedpower station.

To put more electric carson the road without creat-ing more emissions wouldrequire switching idlednuclear plants back on –something environmental-ists, including MrSakamoto, have lobbiedhard to prevent. Soon afterthe advert aired, a formerenvironment minister ques-tioned whether electricvehicles (EVs) should keeptheir lavish governmentsubsidies.

The Fukushima disasteris just one of several recentsetbacks for EVs. Enthusi-asm for the technology wasnotably stronger five yearsago, when petrol priceswere skyrocketing and theworld had not yet fallen

into financial crisis andrecession. Early in his firstterm Barack Obama, USpresident, committed morethan $2bn in loans to thesector and vowed to have1m EVs and plug-in petrol-electric hybrids on the roadby 2015.

Now such goals look fan-ciful. Sales of the smallnumber of EVs that havebeen made commerciallyavailable so far have beenslow. Nissan, which with itsFrench partner Renault isthe global carmaker mostheavily invested in thetechnology, sold fewer than12,000 Leafs in the first halfof this fiscal year, below itsfull-year goal of 40,000.

In the US, General Motorssold just 8,817 of its “petrolassisted” Chevrolet VoltEVs in the first half of 2012,a fraction of the 45,000 itformerly hoped to sell thisyear. According to LMCAutomotive, the consul-tancy, just under 50,000plug-in vehicles, includingboth pure electric cars andrechargeable hybrids, weresold in the first half in the

US, Europe, China and theother major markets – ascant 0.18 per cent of globalvehicle sales.

Manufacturers blame theslack economy, concernsover EVs’ limited drivingrange and slow deploymentof infrastructure such aspublic recharging stations.

“The main hesitation inbuying the car is from [driv-ing] range anxiety,” AndyPalmer, Nissan executivevice-president, told the FTin October. “Maybe we wereover-optimistic with theramp-up as well.”

Among the other recentbad news for the sector:Toyota in Septemberscrapped plans to mass-produce its first battery-only vehicle, the eQ; Fisker,a niche California producer,has delayed the launch ofits Atlantic electric sportscar by up to two years, to2014 or 2015; and the US bat-tery maker A123 Systemswent bankrupt in October.

In Japan, the associationof electric cars with thenuclear industry hasbecome an added burden.

Tokyo Electric Power(Tepco), the Fukushimaplant’s widely reviledowner, backed developmentof the i-MiEv, an EV sold byMitsubishi Motors, and hasbeen a prominent promoterof recharging infrastructure.

Now nationalised andburdened with trillions ofyen in repair and compen-sation costs, Tepco lacksthe credibility andresources for a sustained

EV push. Instead, it isincreasing household elec-tricity rates by 8.5 per cent– increasing the runningcosts of EVs.

The near-total shutdownof Japanese nuclear sta-tions has also dimmed elec-tric cars’ environmentalappeal. Only two of thecountry’s 50 surviving reac-tors are currently in opera-tion. According to thePetroleum Association ofJapan, an oil industry lobbygroup, driving a NissanLeaf 100km before Fuku-shima resulted in 5.1kg ofcarbon dioxide emissions.

But without carbon-freenuclear power, the amountrises to 7.57kg – about thesame as that associatedwith a Toyota Prius hybrid.

Supporters of electricvehicles point out that,emissions-wise, drawingelectricity from thermalpower plants is still betterthan burning petrol in atraditional car engine. Andin the long term, electricitycan be generated by cli-mate-friendly non-nuclearsources such as solar panels

and wind turbines, areasthat have been tagged formajor public investment.

Years from now, as EVproduction costs comedown and infrastructureimproves, slow initial take-up may be remembered asthe natural teething prob-lems of an ultimately domi-nant technology.

Even in its currentmoment of disquiet, theelectric car has not lost allits friends. Germany’s BMWremains committed tobringing its battery-pow-ered i3 city car to marketnext year, and the newModel S luxury sedan fromTesla, the US EV specialist,was named car of the yearby Motor Trend magazinein November.

Component makers alsohave not given up. LithiumEnergy Japan, a joint ven-ture between GS Yuasa, acar-parts supplier, and thetrading house MitsubishiCorporation opened a bat-tery factory in Japan thisyear, at an investment costof Y37.5bn. It is puttinganother Y30bn into a sec-ond-stage expansion that isto be completed next year.

The resulting increase involume and automationshould bring productioncosts down to one-quarterof their 2009 levels, the com-pany says.

Japanese groups aremeanwhile exploring newways to market EVs.

In Okinawa, a subtropicalisland prefecture popularwith tourists, a consortiumof 26 transport and tourismcompanies is promotingEVs as rental cars. It hasbuilt 19 recharging stationson the narrow main island,roughly one every 30km,and hopes some of the 5mpeople who visit Okinawaeach year will try an EV –and maybe like it enough tobuy one when they returnhome.

Bumps ahead for electric vehiclesBattery-powered cars

Shutdown of nuclearstations dents theirgreen credentials,says Jonathan Soble

New Leaf: one of Nissan’s electric vehicles Getty

Recharging meansdrawing electricityfrom a pollutinggas or coal-firedpower station

The horrifying images ofTokyo Electric Power’sFukushima nuclear powerplant meltdown last yearconvinced many Japanesethat, in a country prone toearthquakes and tsunamis,it is just too dangerous torely on nuclear power fortheir energy needs.

A government survey inJuly found 47 per cent ofrespondents wanted tophase out nuclear powergeneration by 2030.

The ruling Democraticparty (DPJ) promptlyreversed Japan’s energypolicy. Before the massiveearthquake on March 112011 it had called for anincrease in nuclear powerfrom 26 per cent of electric-ity generation in 2010 to45 per cent by 2030.

The DPJ has pledged,instead, to do its best to endJapan’s reliance on nuclearpower by the 2030s, using acombination of energyconservation, a shift torenewable energy sourcesand greater use of cogenera-tion, which captures heatemitted as a byproduct ofelectricity generation.

The government hasdrawn up a plan to con-serve energy use by 10 percent compared with 2010.Steps include increasing theuse of smart meters andpromoting electric vehiclesand installing energy-saving products, such aslight-emitting diodes inhomes and public spaces.

The plan also calls for anear tripling of electricitygenerated by renewablesources, including hydro-electric power, to 300bnkWh by 2030, and increas-ing the use of cogenerationfrom 30bn kWh to 150bnkWh over the same period.

While the merits ofenergy conservation arewidely recognised, opinionis divided over the viability,from financial and practicalperspectives,of giving up nuclearpower altogether. TatsuoKobayashi, principaleconomist at the JapanCenter forEconomic

Research in Tokyo, calcu-lates that, given the need toguard against the risk ofaccidents, adopting newenergy sources and makingefforts to conserve energywould be cheaper than con-tinuing with nuclear power.

Mr Kobayashi points outthat, while the governmentputs the cost of nuclearpower generation at Y10/kWh, this would rise aboveY20/kWh if the costs ofmeasures to deal with therisk of accidents were fac-tored into the estimate.

Consequently, the cumu-lative cost of maintainingJapan’s dependence onnuclear power would cometo about Y120tn ($1.46tn)over 40 years to 2050, whilethat of phasing out nuclearpower would be about

Y90tn, Mr Kobayashi says.Masaru Kaneko, econom-

ics professor at Keio Uni-versity in Tokyo, alsoargues the governmentunderestimates the costs ofnuclear power generationby not including in its esti-mates the subsidies paid tocommunities where thenuclear power plants arebuilt.

On the other hand, someenergy experts say phasingout nuclear power alto-gether is unrealistic, giventhe high financial costs andthe lifestyle sacrifices thatsuch a move would entail.

For one thing, expectedelectricity rate increasescould threaten the existenceof small and medium-sizedcompanies that are up

against global competitors,says Keigo Akimoto, chiefresearcher at the ResearchInstitute of InnovativeTechnology for the Earth.

“It will be quite difficultfor small and medium-sizedcompanies to deal with [anexpected] rate rise of 30 percent, so some will go out ofbusiness and there will bejob losses,” he says.

“Most people say they canaccept a rate rise in orderto phase out nuclear power,but they don’t understandthe broader macroeconomicimpact such a move couldhave on jobs, for example.”

The rise in electricitycosts is not even the biggestproblem, some analysts say.

“Costs are not the issue –the logistics are the prob-lem,” says Paul Scalise,research fellow at the Uni-versity of Tokyo.

Even putting aside high“not-in-my-backyard” costs,trying to find sites for solarand wind farms is a chal-lenge in land-starved Japan.There is also strong resist-ance to geothermal powerproduction from hotel andbusiness owners in hot-spring resorts, who feartheir springs will dry up asa result of development.

Furthermore, since solarpower depends on sunshine,it takes eight solar powergenerators to generate thesame amount of electricityas one nuclear power plant,says Mr Akimoto.

Consequently, solar andwind power need far moreland than nuclear or ther-mal power plants to produce1kWh of electricity – a sig-nificant problem for a coun-try with a high populationdensity, says Mr Scalise.

“If you wanted 20 per centpower from just onshorewind farms by 2030, thatwould be equal to 91 percent of Japan’s current agri-cultural land,” he says.

“The public does not fullyunderstand what it willneed to give up in order tophase out nuclear power asa source of energy.”

Mr Kobayashi says:“Either way, it will beexpensive and electricityrates will rise.”

However, if Japan shiftsto fossil fuels, electricityrates might fall.

Mr Kobayashi believesthe debate needs to beginwith a consensus on howmuch Japan is willing tocommit to a reduction

in carbon dioxideemissions.

Country weighs greeneroptions after FukushimaTsunami aftermath

Nuclear shutdownraises financial andlogistical issues, saysMichiyo Nakamoto

Solar and windpower need farmore land thannuclear or thermalpower plants

Despite all the challenges,Japan could become thenext frontier in innovativeenergy efficiency andrenewable technologies.

The feed-in tariff (FIT) law, whichcame in on July 1, has kick-startedopportunities for public and privateinvestment in five areas: solar, wind,geothermal, mini-hydro, and biogas/biomass.

The tariff subsidy guarantees thatinvestors can make a profit over acertain period. And, because utilitiesare required to buy renewables, it alsomeans price stability. This, along withJapan’s move toward smart grid tran-sition, has also created a potentiallyvibrant market in new smart devicesand cutting-edge “demand response”energy management applications.

Until the disaster, Japan’s electric-ity generation was 30 per centnuclear. Now only two out of 50nuclear reactors are working, makingalternatives more attractive thanever. The ruling Democratic partysupported the change in September byrecommending renewable energymake up about 30 per cent of Japan’stotal by the early 2030s. Investment inclean energy could jump from $8.6bnin 2011 to $17.1bn this year, saysBloomberg New Energy Finance.

A total shift from nuclear will taketime and much depends on nextmonth’s elections. “Since electricitycompanies in Japan have a monopolythey’re reluctant to buy foreignrenewable technologies. They wouldrather develop it themselves,” saysTetsunari Iida, head of the Institutefor Sustainable Energy Policies, anon-profit company he began in 1998.

A former nuclear engineer, Mr Iidahas helped many businesses breakinto Japan’s clean energy market, andhelped launch large investments.“Solar is now the most profitable andquickest way to help fill the [nuclear]electricity gap,” he says. “It will beproducing over 3GW by March 2013 –equivalent to about three nuclearreactors. The Ministry of Environ-ment predicts solar generation couldreach 100-150GW. Projected value ofthe solar electricity market is $9.6bn.

Mr Iida thinks wind power the mostsecure investment for renewableslong term. Offshore wind capacity isestimated at 1,600GW, with onshorecapacity at 30GW. So far limited gridconnection and complaints aboutnoisy windmills have hampered devel-opment, but new technologies couldmake those numbers a reality.

Biomass energy, he says, can bedeveloped within two years, but it isunclear how the sector will secure along-term feed stock supply. Geother-mal, however, will take 10 years ofnegotiating with hot spring interestgroups, who fear drilling will depletespring reserves and ruin tourism.

Some of the biggest geothermalresources are in national parks,requiring a relaxing of restrictions.Japan’s estimated geothermal gener-ating capacity could reach 23.5GW,the equivalent of 20 nuclear plants.

Entrepreneurs have been involvingcommunities in smaller, nicheprojects. Takehisa Kanamori formedhis own company in 2002 to focus onnew energy and waste from energytechnologies. He has 30 years’ interna-tional experience and now promotesbiomass and geothermal projects viahis company Urban Rejuvenation.

“Our biomass programme is to buildup 2MW units connected to small elec-tricity transmission lines adjacent towood feed stock sources,” Mr Kan-amori says. “It’s the minimum size wecan make economical.” One unitcould service about 1,000 homes inrural communities.

Japan-based geothermal entrepre-neur Tom Giuffre has soothed localconcerns by using hot spring resort“throw away” heat to generate elec-tricity for the community. His com-pany, Hot Earth Enterprise, uses aUS-made, 50kW compact OrganicRankine Cycle heat capturing unitfrom ElectraTherm. It can bedeployed in three to four months andserve about 25 typical homes.Mr Giuffre calls this “light geother-mal”, a fraction of the cost and size ofborehole projects.

Hot Earth Enterprise has projects invarious stages of planning scheduledto go live over the next year. Mr

Giuffre says the learning curve hasbeen steep since he co-founded thebusiness with Mark Miles four yearsago. He says foreign companies mustunderstand the requirements beforeentering Japan’s renewables market.Partnering with an established com-pany, he says, is crucial.

Boston-based EnerNOC, the worldleader in the field of “demandresponse”, has partnered with Maru-beni Corp to bring its energy-savingtechnology to Japan through a pilotproject with Kansai Electric PowerCompany. The push to cut electricityconsumption by 10 per cent in comingdecades, and smart grid transition,are helping fuel interest in this cloud-based technology. David Brewster,EnerNOC’s president, says: “I thinkthis technology is going to be a near-term solution for Japan and a long-term solution to help make the sys-tem more efficient and cost effective.”

EnerNOC operates its energy savingplatforms from network operationscentres in Boston, San Francisco andMelbourne. The company has morethan 13,000 commercial and industrialbuildings in its network and morethan 8,000MW of demand responsecapacity. It says it has achieved 8mkW in power saving, equivalent toeight nuclear power plants.

With such potential in renewableelectricity generation, the forecast forJapan could be for blue skies aheadfor innovative and niche technologies.

Disaster spursmoves to findfresh sourcesof energyGenerationThe power station catastrophemay eventually bring positive long-termoutcomes, reportsLucy Birmingham

Green power: a windturbine in Fukushimaprefecture Bloomberg

‘Solar is now themost profitableand quickest way tohelp fill the nuclearelectricity gap’

Price warning:Keigo Akimoto

FINANCIAL TIMES TUESDAY DECEMBER 4 2012 ★ 3

Japan Technology & Innovation

When Shinya Yamanakashared this year’s NobelPrize in medicine with Brit-ain’s John Gurdon for theirwork on turning back thebiological clock in livingcells, he became Japan’s11th laureate since 2000.

That seems a remarkabletestimony to the health ofJapanese research in mod-ern times, especially giventhe country had won justfive Nobel Prizes in scienceand medicine in the previ-ous 90 years.

Certainly the 50-year-oldProfessor Yamanaka ofKyoto University is aninternational scientificsuperstar, as well as a heroin his own country. His dis-covery in 2006 that skincells from adult mice couldbe reprogrammed tobecome immature stemcells, almost identical tothose extracted from earlystage embryos, may well godown as biology’s most sig-nificant advance of the dec-ade. Just by introducing afew genes, he turned themature cells into “inducedpluripotent stem cells” oriPSCs, which in principlecould be converted into anytype of specialised cell ortissue, from brain to bone.

In 2007 Prof Yamanakaand others applied the tech-nique to produce humaniPSCs with enormous poten-tial for use in regenerative

medicine to replace dis-eased or injured tissues,from brain cells for Parkin-son’s patients to insulin-making cells for diabetics.

If all goes well, and fur-ther research confirms thatiPSCs do not have anyunexpected safety problemsand are functionally equiva-lent to embryonic stem cells,then they might be able tosubstitute for the latter –with two advantages.

They avoid the ethicalproblem of using cells fromhuman embryos, and theycan be made from thepatient’s own cells, avoid-ing the medical risk of thepatient’s immune systemrejecting embryonic stemcells from someone else.

Laboratories around theworld are using iPSCs togrow cells from people withspecific disorders to studythe disease process ordevelop treatments. Forinstance a culture of neu-

rons from a Parkinson’spatient can be a test bed foranalysing the molecularbiology of the disease or forscreening drugs that mightchange it for the better.

The Japanese governmentmoved fast after ProfYamanaka’s Nobel award,which received enormousmedia coverage, to increasepublic funding for regenera-tive medicine. The scienceministry has launched aplan for stem cell research,including a clinical trial bythe state-funded Rikeninstitute of retinal cellsderived from iPSCs inpatients who face blindnessbecause of macular degen-eration. This would be thefirst clinical trial of iPSCtechnology in the world. Atthe same time Japan willcreate a bank of iPSC linesthat could be used for dif-ferent clinical purposes.

But Prof Yamanaka isalso using his newly rein-

forced influence to urge bet-ter support from Japan forscience across the board.“Japan is a small country,”he said at the University ofCalifornia San Francisco,where he is also a professor.“We have a small amountof natural resources, so wereally rely on science forour future. I really hope thegovernment will investmore for sciences, and notjust for iPS cells.”

On November 2 he put hiscase for more investmentand better organisation ofJapanese research to ameeting of the Council forScience and TechnologyPolicy at the official resi-dent of Yoshihiko Noda, theprime minister.

Evidence that Japanis underperforming inresearch as a whole, despitehaving a technology-basedeconomy and reachingsome pinnacles of scientificachievement, emerged in anin-depth study published in2010 by Thomson Reuters.

It showed the country’sshare of global researchoutput had slipped from9.45 per cent to 6.75 per centover the previous decade.The average citation rate ofits scientists’ papers inresearch journals – howoften other scientists referto them in their own work –was also below other G7nations and 2 percentagepoints below the worldaverage.

One solution, accordingto Thomson Reuters, is forJapan to open up its rela-tively closed research sys-tem by more collaborativeworking with scientistselsewhere in the world, asProf Yamanaka has done.

Award for stem cell work showsbenefit of collaborative researchScience

Nobel winner callsfor more supportfrom government,writes Clive Cookson

Shinya Yamanaka: ‘We rely on science for our future’ Reuters

Jonathan SobleTokyo Correspondent

Mure DickieTokyo Bureau Chief

Michiyo NakamotoDeputy Tokyo Bureau Chief

Ben McLannahanTokyo Correspondent

Clive CooksonScience Editor

Lucy BirminghamGavin BlairSarah MurrayFT Contributors

Elizabeth DurnoRichard GibsonPhilip Parrish

David ScholefieldSub-editors

Adam JezardCommissioning Editor

Steve BirdDesign

Andy MearsPicture Editor

For advertising details,contact:Michiko HayashiPhone +813 3581 2097Email: michiko.hayashi@ft.comor your usual representative.

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Contributors »

Afew years ago, when a Japa-

nese rehabilitation doctorwas fitting some partiallyparalysed patients with legbraces, he noticed a big

problem. While the braces helped thepatients to walk, they had awkwardlyplaced hinges that made it uncomfort-able to sit down.

The doctor, Eiichi Saitoh, is alsodisabled as the result of a childhoodpolio infection that destroyed themotor nerves in his right leg. “Handi-capped people want to walk, but theyhave to sit too, just like everyoneelse,” he recalls.

Eventually Dr Saitoh came up witha better design – which used a singlehinge joining two braces at the innerthigh rather than separate ones onthe hips – and filed a patent. Today,he is a leader in the movement tobring even more advanced technologyto Japanese hospitals. This embraceseverything from robots that can liftimmobilised patients out of their bedsto gyroscopic balance boards that helpstroke victims regain control overtheir limbs.

Until now, robots have mostlyworked in factories, repetitively weld-ing car frames together or carryingdelicate liquid-crystal displaysbetween stations on a televisionassembly line. More recently, how-ever, there has been a push to applythe technology of robotics to medi-cine, especially in fields such asrehabilitation and gerontology, work-ing with the elderly.

The demand is especially acute inJapan, where the population is grey-ing fast, labour is in short supply androbot technology is already highlyadvanced. Restrictive immigrationpolicies mean the newcomers thatconstitute a big percentage of hospitalorderlies and nursing home workersin many western countries are scarce.

Manufacturing companies, mean-while, are looking for new businessopportunities in the face of shrinkingJapanese consumption and tougherforeign competition.

The government’s latest long-termgrowth strategy, a touchstone fornational budgets and regulation, callsfor faster development of medicalrobots and other “innovative health-care technologies”.

Few devices have been approved

for widespread use so far, but atthe Fujita Health University Hospitalin suburban Nagoya, where Dr Saitohruns the rehabilitation department,patients are trying out several newtechnologies as part of clinical trials.

One is a rolling platform that looksand works like a combination of aSegway scooter and a Nintendo Wiibalance board. It is being developedby Toyota, the carmaker, in co-ordina-tion with Dr Saitoh, to help thevictims of strokes and other debilitat-ing brain disorders to regain theirsense of balance and muscle control.

Gyroscopes and other sensors allowthe machine to respond to patients’movements, while rehabilitationexercises take the form of simplevideo games, such as tennis – anotherNintendo-esque touch. After eight 20-minute sessions, spaced over fourweeks, many patients show “dramati-cally” improved motor control, DrSaitoh says.

Toyota and other Japanese car-makers have been working for yearsto apply the robot technologies theyuse in their factories to other fields.At a trade show in Nagoya, Toyota

showed other healthcare machines itis working on, including a motorisedleg brace – also developed with DrSaitoh’s help – and a washingmachine-sized robot controlled by atablet computer that can pick upobjects and perform other simpletasks for bed-ridden patients.

Another of its machines can helpone nurse lift a patient out of bed andcarry him to the toilet, a back-strain-ing and surprisingly complex taskthat typically requires at leasttwo human workers.

Aside from factory equipment, Japa-

nese manufacturers are perhaps bestknown for making humanoid robotsthat perform tricks on stage.

Toyota has robots that can play thetrumpet and the violin. Honda’sAsimo can run and kick a football andthe carmaker also plans to sell arobotic lawnmower next year. Mean-while Sony has produced a robot thatcan dance, as well as a robotic dog.

But designing more practicalmachines for medical use meansovercoming difficult challenges, engi-neers say. “We are developing robotsthat come into direct contact withpeople. That requires a different kindof technology from autonomousrobots, for example, in the gentlenessof their controls and touch surfaces,”says Hitoshi Konosu of Toyota’srobotics division.

Making devices light and compactenough to be usable raises costs, cre-ating a “difficult” barrier to mass pro-duction, Mr Konosu acknowledges.Regulation and insurance schemesmust also adapt. Robotic helpersare not covered by public nursinginsurance, for example, althoughJapan’s government plans to changethat, starting in 2015.

Many advanced medical devicesblur the line between robots andother motorised equipment, such aselectric wheelchairs, and some, like awearable exoskeleton developed byYoshiyuki Sankai of Tsukuba Univer-sity, are more like extensions of thehuman body.

Mr Sankai’s “HAL” suits – which heemphasises stands for Hybrid Assis-tive Limb, not the homicidal space-ship computer in Stanley Kubrick’sscience fiction fantasy 2001: A SpaceOdyssey – work by detecting brainsignals, even faint ones, from peoplewith paralysed limbs.

They can help immobile people getaround and, he says, they can evenhelp people to retrain their brains sothey might eventually walk again ontheir own. “It’s a combination ofhuman and robot, like a cyborg,” MrSankai said at the Nagoya trade show.“Using the robot creates an interac-tive loop inside the human body. Therobot does some of the work, but thehuman must work too.”

FT video: see wearable exoskeletonsin action at ft.com/japan-2012

Robotics take giant strides for mankindHealthMachines are being devised to help rehabilitate people who have lost the use of limbs and to assist the elderly, writes Jonathan Soble

Best foot forward: HAL suits, robotic exoskeletons that work by detecting even faint brain signals from people with paralysed limbs, on display in Tokyo Getty

4 ★ FINANCIAL TIMES TUESDAY DECEMBER 4 2012

Japan Technology & Innovation

William H. Saito began hiscareer by writing programsfor Merrill Lynch at thetender age of 10 and hefounded his first company,I/O Software, while still inhigh school in California.

Along with a partner, MrSaito took the venturefrom being a manufacturerof customised PCs to alocaliser of software formajor Japanesecorporations, to a globalleader in biometrics andinformation security.

Selling the company in2004, he moved to Japan,determined to share hisentrepreneurial experiencesand help revitalise the landof his parents’ birth.

Mr Saito believes that forJapan to rediscover itsentrepreneurship, it must“embrace weakness andfailure”. He also thinkswomen will be the savioursof the nation and that thenext Sony will be bornfrom the destruction of theMarch 2011 tsunami.

Born to Japaneseimmigrants in the US,some of his early teachersmistook his lack of Englishfluency for intellectualimpairment, apparentlyignoring the fact that hismathematical abilities werefar ahead of his years.Developing an “addiction”to computers, he was soondismantling, rebuilding andreprogramming them.

He graduated from highschool early and wasstudying for a degree inbiomedical science whilerunning a successfulcomputer business fromhis university dormitory.

After its first big break –figuring out how to displayJapanese characters onsoftware written in English– his company was soonworking with corporationssuch as Fujitsu, NEC, andToshiba. He says he learntfrom many mistakes,including one that left thecompany with a milliondollars worth of unwantedprinters, before devising afingerprint-recognitioncamera system for Sony.

“I make a point of tellingpeople we failed four orfive times before we madeour first hit product,” hesays. “The opposite ofsuccess isn’t failure, it’snot doing anything.”

Fear of failure is stiflingentrepreneurship in Japan,he believes. “The two,going on three, decades ofeconomic decline, havenaturally made peopleconservative. Andfailure andweakness areshunned,somethingexacerbated byJapaneseculture.

“MostJapanesepeople believethat becausethey basically alllearnt the samethings on thesame day, across a

certain age group, theyshould all be fairly equallygood at them. So whenpeople do have weaknesses,they try to hide it. Whathappens is that you losethe diversity, becausepeople who have thoseweaknesses also havecertain strengths, whichdon’t get brought out.”

To leverage the diversityin people, “you need toembrace weakness andfailure”, says Mr Saito, 41.“This is at the crux of thelack of entrepreneurship inJapan. One needs . . . anenvironment where showingfailure is not a bad thing.

“Another problem withJapan is that it’s one ofthe least diverse nations. Itfurther whittles down whatdiversity it has by excludingthe youth and women.”

Despite, or perhapspartly because of, the factthat sexism is still strongin Japan – it was ranked101 out of 135 countriesin the World EconomicForum’s 2012 GlobalGender Gap Survey,released in October – it isthe young women whoare more dynamic andentrepreneurial than men,according to Mr Saito.

Of students he provideswith scholarships to studyabroad, funded by profitsfrom his venture capitalbusiness in Japan, he says:“I choose about half adozen students from theclasses at the universities Iteach at. The womenusually say thanks andstart making plans, andthe guys usually say theyhave to ask their parents.”

They worry that if theyfail to enter Japan’s rigidcompany recruitmentsystem at the same timetheir careers will be ruined.The women, facing theprospect of being treatedas second-class workers inJapan’s corporations, haveless to lose, he says.

“For the past seven yearsI’ve been investing in start-up companies in Japan,most of them run bywomen, and they’re doingvery well. Given resources,support and skills, the nextgeneration in this countrycan succeed. It will be thewomen that change Japan.”

Another problem withentrepreneurship is “thatthey’re defined as almostblind risk-takers. Japanneeds to change definitionsof entrepreneurship, risk-taking and failure.”

He points out that thereis a lot of entrepreneurshipin Japan’s history and thatcompanies such as Sony,Toyota and Honda were allonce new ventures.

Almost all progress isborn out of failure andhardship, he says, pointingout that many of the giantJapanese corporationssprung from the ashes ofpostwar destruction.

“Entrepreneurshipand innovation

often come afterdisasters, andthat is why Itell peoplethat the nextSony willcome out ofthe Tohokuregion [hitby the 2011

tsunami]. Andit will be thewomen who

build it.”

Embrace failureto nurtureentrepreneursInterviewWilliam H. SaitoVenture capitalist

Gavin Blair learnswhy it is women whowill save the nation

When Takeshi Ishihara wasplying his trade at ShimizuCorp, he saw high winds asa menace.

As a civil engineer at theblue-chip construction com-pany, his job was to ensuretall buildings could with-stand the worst nature andthe elements could throw atthem.

Now, having left theprivate sector for academiamore than a decade ago, heis aiming to harness thoseforces for good.

If all goes to plan by 2020,the Tokyo University pro-fessor will have overseenthe creation of a huge off-shore wind farm, producingup to 1GW of power from aflotilla of turbines, each 200metres tall, off the coast ofFukushima prefecture.

“I used to think of windas the enemy,” smiles ProfIshihara. “Now, ratherthan resisting it, I want touse it.”

On paper, it seems Japanwould be a good location foroffshore wind energy. Thecountry’s territorial watersrank sixth in the world bysize.

The nation has an effi-cient and adaptable powergrid, especially in centralareas of the archipelago,and a range of very goodports to assist in turbineconstruction.

Japanese companies –from steelmakers to ship-builders – are already adeptin supplying machinery andequipment. Yet until thenuclear accident lastMarch, authorities hadhummed and hawed aboutwind power.

Prof Ishihara had been aregular visitor at the Minis-try of Economy, Trade andIndustry (Meti) since 2002,updating bureaucrats onwind-speed data gathered inexperiments off the coast ofChiba, an hour from Tokyo.

However, it took thecountry’s biggest earth-

quake, and the subsequentshutdown of almost allof its nuclear capacity,to force a commitment fromMeti.

After that, things movedquickly. By July, Prof Ishi-hara had a new proposal.By December, he hadapproval from the govern-ment.

By March this year, anall-Japanese project groupled by Marubeni Corp, thetrading house, was up andrunning, making inroadsinto a Y12.5bn ($150m) grantallocated from the govern-ment’s Y19tn budget forreconstructing tsunami-hitareas of Tohoku.

By 2015, according to theplan, the group will haveinstalled one 2MW turbineand two 7MW turbines,each feeding into a sub-station about 16km fromthe coast.

Yet plenty of challengesremain. For example, unliketraditional offshore tur-bines, which are built ontop of steel tubes driveninto the sea floor, theFukushima turbines will sitmuch further out in deeperwater, on buoyant steel

cylinders, kept upright withballast and tethered to theseabed via mooring lines.However, that makes themcostly to build and main-tain.

“Without subsidies, wecouldn’t justify invest-ment,” says a senior execu-tive at one of the companiesin the project group.

Under the government’sfeed-in tariff system, whichwas introduced in July thisyear, utilities may berequired to buy the electric-ity generated by offshore

wind turbines at up to Y42per kilowatt hour – aboutdouble the rates of onshoreturbines, and among thehighest rates in the world.

The sheer pace of expan-sion is also a risk.

Where it took Denmark,for example, 20 years todevelop 1GW of offshorewind energy: “Japan is aim-ing for the same in lessthan half the time,” notesJatin Sharma, London-based head of offshore atrenewable energy under-writer, GCube.

For now, though, the big-gest obstacle is the 1,300fishermen who regularlytrawl the region’s waters,and who have baulked atthe proposed intrusion.

In an ideal world,says Marubeni’s TomofumiFukuda, deputy generalmanager at the domesticpower project, the sponsorswould have consulted withlocals more, as they did inNagasaki prefecture.

There an EnvironmentMinistry-led project toinstall a single 2MWturbine, was preceded by“three or four years” ofnegotiations before opera-

tions began in August.Since March, Mr Fukuda

has been making twotrips a week to talk tofishing union leaders, inefforts to convince them theproject poses no risk totheir livelihoods.

If no agreement isreached by the end ofFebruary next year, hesays, then initial installa-tions planned for the calmermonths of May to July mayhave to be scrapped, whichwould mean the entireproject would be scuppered.

Mr Fukuda puts thechances of such an outcomeat “30 per cent”.

Prof Ishihara, however,remains undaunted.

Japan’s annual offshorewindpower inventory couldultimately amount to asmuch as 1,570GW – abouteight times the currentcapacity of Japan’s powercompanies. And, in time, hesays, the country’s deepwa-ter wind-farm technologycould be in demand aroundthe world.

“This has always been mydream,” he says. “Energyhas to change – and sustain-able energy is the future.”

Hopes high for offshore turbines despite hurdles

The news seems guaranteed toadd to the nervousness ofalready stressed high-schoolstudents: researchers aredeveloping an artificial brain

intended to pass the fiendishly com-petitive entrance exam of Japan’smost celebrated university.

Luckily, the current crop of teenag-ers should not have to worry toomuch about competition from theproject by the National Institute ofInformatics – organisers have setthemselves a 2021 target date for theircreation to crack what is easilyJapan’s most famous academic test.

Nor should the smart youngscholars who win entry to the Univer-sity of Tokyo expect to see an androidpropping up a student bar even then.The name given to the NII’s project –“Can a Robot Pass the University ofTokyo Entrance Exam?” – is actuallyrather misleading.

The “Todai Robot” project – as it isknown in short, using the standardcontraction of the university’s name –aims to develop the software neededto grapple with the entrance exam,rather than building an automatonthat can slouch around campus withhuman peers.

But the project, led by Noriko Arai,director of the NII’s Research Centrefor Community Knowledge, is anintriguing example of the efforts todevelop computers that operate effec-tively in the human world.

Progress in the field was high-lighted last year when IBM’s Watsonsupercomputer trounced two humanchampions on the US television quizshow Jeopardy! Watson’s developers

are now trying to train Watson todiagnose cancer.

Yet enabling a computer to engagewith intellectual tasks designed forhumans remains extremely difficult.Even with the application of massiveprocessing power and increasinglysophisticated tools for statistical anal-ysis, a computer can still fail tounderstand concepts that are merecommon sense for a human.

Prof Arai says that the Todai Robotproject is not being supported byTokyo University, but does it appearto be troubling the occupants of itsivory towers.

“The University of Tokyo is confi-dent that a machine won’t be able togain entry, so they are not objectingto the effort but just watching sympa-thetically,” she says.

Still, the entrance exam is an excel-lent focus for the efforts of research-ers from a range of fields, since suc-cess will require answering questionson topics including Japanese, English,history, maths and science.

The exam comprises two stages:first, a national test on which theproject organisers hope to achieve ahigh score by 2016 and, second, a testparticular to Tokyo University andone they hope their artificial brainwill eventually pass.

Helpfully, both stages are carefullyprepared to avoid error and ambiguityin their phrasing, and there is a largenumber of past examples on which topractise.

Yet even the most precisely phrasedquestion contains many challenges.The first is to translate the “naturallanguage” or formula in which it is

written into a form the computer canwork with. Even with maths problems– an area where a number-crunchingcomputer might be expected to excel –this can be difficult, says Fujitsu Lab-oratories, an arm of Fujitsu, the Japa-nese computer company that this yearjoined the Todai Robot maths team.

The problem text must go throughsemantic analysis to reveal its mean-ing, before it is converted into a formthat can be processed, and only thencan an answer be calculated. Atpresent, only 50-60 per cent of theproblems in the Todai exam can beresolved, Fujitsu says.

But maths problems are still easycompared with more complex scienceproblems, which are often presentedas a combination of text and diagrams– never mind questions requiringsophisticated comprehension of Japa-nese texts.

If the project can overcome suchhurdles, it will surely raise questionsabout the degree to which computerscan take over roles that humans per-form. Prof Arai insists, however, thatTodai Robot is not about trying to

supplant humanity or match humanintelligence, but is merely an effort tospeed the generation of tools that willbe useful to humans.

Todai Robot will no more renderhumans obsolete than a tractor does,she suggests, adding: “Tractors arenot made to be like humans, but suchmachines have had a great impact onhumanity.”

Yet the prospect of a computer pass-ing the Tokyo University entranceexam could fuel debate about themethods Japan uses to filter its youthacademically. The exams that are setat the moment have been criticisedfor focusing too much on rote learn-ing, rather than testing for creativity,initiative and social skills.

The Nikkei Shimbun daily hasreported that government officialswere considering reforms that wouldplace “greater importance on studentmotivation and potential”.

Such changes would surely createnew challenges for a computer. TheTodai Robot project had better hurry– the task it has set itself is likely toget harder.

Machine goesthrough worksto take Tokyo’stoughest test

ComputingMureDickie reports on anartificial brain being prepared to sit exams

TV star: IBM’sWatson computerbeat humancontestants onthe US quizshow Jeopardy! AP

Hopes for sustainable future:Professor Takeshi Ishihara

In a university science labo-ratory on the island ofHokkaido, two researchersspent an evening last monthstaring at the lung tissue ofsick rats. The rats had beeninfected with an agent thatcauses fibrosis, an excess ofscar-like connective tissuethat clogs the organs of anestimated 40m humans.

Fibrosis is incurable –doctors can only try to

suppress its advancementat a cost of tens of thou-sands of dollars a year perpatient. But the Hokkaidorats were to be treated withan experimental drug thathad shown promise in mak-ing fibrosis diseases recede,in many cases dramatically.

“Every animal we havetreated has responded, withshrinkage of up to 80 percent and very few side-effects,” says YoshiroNiitsu, a professor emeritusat Sapporo Medical Univer-sity whose discoveries areat the core of the project.The tissues his researcherswere examining would forma baseline for his nextbatch of test subjects.

Dr Niitsu’s work is nota-ble for several reasons, animportant one being that it

is focused not on the drug’sactive ingredient, but onthe means used to deliver itto damaged parts of thebody – an increasinglyimportant area of research.

Scientists have known forsome time that fibrosisailments, which includecirrhosis and Crohn’s dis-ease, might be treated witha class of biological mole-cules known as small inter-fering RNA, or siRNA.

These molecules carryencoded genetic informa-tion that can stop organsfrom producing excess col-lagen, the basic buildingblock for fibrosis. In theory,once collagen stops form-ing, the body can breakdown older fibrous massesand rid itself of the disease.

The problem until now,

however, has been that deli-cate siRNA molecules cansurvive only a few secondsin the bloodstream, not longenough to reach and satu-rate a fibrosis-infected organ.

Dr Niitsu’s solution hasbeen to encase siRNA in atiny capsule, about 100 nan-ometres across, infusedwith an extract of vitaminA. The vitamin, he discov-ered, is attracted to the pro-teins that produce fibre-forming collagen, makingthe capsule both a protec-tive sheath and a homingdevice for the drug’s mainingredient.

“Vitamin A is attracted tothe right cells and is cheapto produce,” Dr Niitsu says.“Using it as a deliveryagent allows for very nar-row targeting.”

A second surprisingaspect of the work is theinvolvement of a corporatesponsor from outside thepharmaceutical industry.Nitto Denko, which hasinvested several tens ofbillions of yen in theproject, is better known asa producer of sticky tapeand electrical insulation. Itsmove into medicine pro-vides a window into Japa-nese companies’ approachto innovation.

At a time when many ofJapan’s well-known con-sumer electronics brandsare struggling, its morehumble parts and materialsmakers are faring muchbetter. Open an AppleiPhone or Samsung tele-vision – devices that arebeating offerings from Sony

and Panasonic – and manyof the sensors, capacitorsand other components arelikely to have been suppliedby Japanese groups. NittoDenko is the world’s topsupplier of optical films forliquid crystal displays.

The company’s partner-ship with Dr Niitsu is lessout-of-the-blue than itmight seem. It follows along-held view of research

and development: takethings you know how tomake and relentlessly seeknew and more sophisticatedapplications for them. Aslong ago as the 1970s, NittoDenko was turning its tapeexpertise to drug-deliveringskin patches, such as thenicotine patches smokersuse to help them quit.

Today, the company’schemists are among theworld’s best at creatingsynthetic polymers andother compounds. They arehelping to design the cap-sule that carries thefibrosis-fighting siRNA.

“These days, if we want todevelop world-class technol-ogies, we have to co-operatewith universities and inde-pendent research institu-tions,” says Kageshi Maru-

yama, Nitto Denko’s direc-tor of business development.

This year Nitto Denkoand Dr Niitsu received awide-ranging US patent cov-ering the experimentaldrug-delivery technology,and clinical trials onhumans are scheduled tobegin next year. The firstdrug they hope to producewould target liver cirrhosis,which affects millions glo-bally. If the trials go well, itcould be available in 2018.

Mr Maruyama says NittoDenko might sell the drugitself, but is more likely tojoin forces with a largepharmaceutical company totake advantage of betternetworks for marketing anddistribution. “Several drugcompanies have already puttheir hands up,” he says.

Industrial partnerships prove a successful formula for research

Companies takethings they makeand seek moresophisticatedapplications

Wind power

The nation could bea good location foroffshore powergeneration, writesBen McLannahan

Pharmaceuticals

Tape maker’s role indrug project typifiescompanies’ approachto innovation, saysJonathan Soble

William H.Saito: callfor diversity

FINANCIAL TIMES TUESDAY DECEMBER 4 2012 ★ 5

6 ★ FINANCIAL TIMES TUESDAY DECEMBER 4 2012

Japan Technology & Innovation

In 2011, IBM sent a team ofconsultants to spend threeweeks helping Sapporo, thecapital of the northernisland of Hokkaido, toreduce its environmentalimpact and contributionsto global warming.

However, betweenSapporo’s selection for theprogramme and theconsultants’ arrival, theearthquake and tsunami ofMarch 2011 caused thecity’s environmental goalsto be expandeddramatically.

IBM’s involvement withSapporo came as part of itsSmarter Cities Challenge, acompetitive grantprogramme giving citiesaround the world access toIBM technology andexpertise. As part of theprogramme – one of thecompany’s biggestphilanthropic initiatives –IBM sends six consultantsto work on a pro-bonobasis to cities to help themadvance their goals.

Teams work on a rangeof challenges with citiesthe company selects, fromcombating crime todelivering basic servicesmore efficiently.

In Japan, IBM hasselected five cities as grantrecipients during theprogramme’s three-yearlifespan, including Date inHokkaido prefecture,Kyoto, in central Honshu,the former imperial capitaland host of the conferencethat resulted in the Kyotoprotocol on greenhouse gasemissions, and the coastalcity of Ishinomaki inMiyagi prefecture, one ofthe areas that sufferedmost from the 2011tsunami and earthquake.

Sapporo, the country’s

fifth-largest city, had setambitious environmentalgoals before it wasselected for IBM’s grantprogramme.

These included setting atarget of reducing itsgreenhouse gas emissionsby 25 per cent by 2020.

In June 2008, the cityhad given itself the title“Sapporo, EnvironmentalCity” and had made acommitment, led by FumioUeda, its mayor, to gaingreater control over itsenergy consumption, inpart by encouraging itscitizens to become moreenergy efficient.

As part of thiscommitment, the cityestablished a code ofconduct for citizens, whichwas translated intoEnglish, Chinese andKorean.

Jennifer Crozier, vice-president of globalcitizenship initiatives atIBM says: “Sapporo wasvery articulate. They’dalready come up with theirown action plan followingthe Kyoto protocol onthings they were keen todo.”

In the wake of thenuclear disaster resultingafter the 2011 earthquakeand tsunami, however, themayor strengthened thecity’s goals, with the aimof reducing dependencyon nuclear power and

turning to renewableenergy wherever possible.

What the city wantedIBM’s help with was indeveloping a commonrepository for data toenable it to gain a clearerpicture of the energy usedby a variety of citydepartments.

At the same time, itwanted to help citizensunderstand their energyuse, enabling them to playa bigger role in cutting the

city’s carbon emissions.Ms Crozier says: “Now

we’re seeing a lot of citiesidentifying that as a need.But the city of Sapporo hasbeen a leader in this.”

Sapporo’s sharp focus onthe issue of climatechange, which includedsetting out 10 “actionitems”, as well as theprominence given to therole of citizens were factorsthat helped it win a placeas one of the 100 citiesselected to receive aSmarter Cities Challengegrant from IBM.

“Three weeks is a verylong time for IBMers to beaway from their families –but three weeks isn’t verylong to come up withsolutions to these complexmultiyear challenges,” saysMs Crozier. “So when weselect the cities, part ofwhat we’re looking for aretightly scoped projects.”

At the end of the threeweeks with city officials,the IBM team came upwith a series ofrecommendations.

These ranged from thetracking of emissionsgenerated by a range oflocal governmentorganisations to theintroduction of IT-baseddata gathering to allow thecollection and analysis ofenergy use.

Given Sapporo’s focus onengaging its citizens inreducing energy use,increasing education andcommunication aboutsustainability – includingto the city’s 13m annualvisitors – were alsoamong the team’srecommendations.

For IBM, the SmarterCities Challenge is part ofa global citizenshipstrategy. Ms Crozier says:“The grants are awardedindependently and we’revery clear that there’sno expectation of quidpro quo.”

However, it is aphilanthropic strategy thatcan benefit the business.She says that, afterworking with the IBMSmart Cities Challengeteams, city authoritiesbecome familiar with abroader range of IBMservices than they mighthave otherwise been awareof. “So it reintroduces thecompany to an audience,”says Ms Crozier.

As IBM competes to winbusiness from the manymunicipal authorities thatare lining up to developsmart technologies andinfrastructure, this will nodoubt give the company anadvantage.

Philanthropic assistance offersa cleaner future for metropolisCase studySapporo

Partnership profitsboth sides, saysSarah Murray

While municipal adminis-trations around theworld have raced aheadwith smart city projects,these had a lower profile

in Japan – until March 2011. That waswhen the massive earthquake andtsunami hit the country, precipitatingmeltdowns at the Fukushima nuclearpower plant.

Now, as its appetite grows forsustainable energy sources, Japan ispushing ahead with ambitious smartcity plans.

“Before Fukushima, the drivetowards smart cities and towns was tocatch up on the innovations in coun-tries outside Japan and to strengthencore Japanese industries and theirglobal market potential,” says NobukoAsakai, who leads the sustainabilitypractice in Japan for Accenture, theconsultancy. The firm is working onprojects in cities such as Yokohama,Fujisawa and Fukushima.

“The earthquake changed theagenda,” says Lluís Gomez, director ofinternational business at the SmartCity Expo World Congress and co-ordinator of the November 2012

event’s Japanese delegation. “Theyhave to change the model.”

Globally, smart city initiativescover a range of technologies andinfrastructures, many of which pro-mote environmental sustainability.These include energy efficient build-ings, use of clean energy, informationtechnology-enabled transport systemsand water supplies, and digital controlof everything from traffic manage-ment to street lighting.

The 2011 earthquake raised aware-ness in Japan of the need for thesetechnologies in securing sustainableurban power supplies. “Smart city pro-grammes in Japan are very focused onenergy security,” says Mr Gomez.

As a result, Japan has launched its“Smart Communities” projects, todevelop smart grids and promoteclean, renewable energy generationand energy efficiency in cities.

Japan has certain advantages inpushing the smart city agenda. “It hasvery strong communications andhigh-tech manufacturing,” says MsAsakai. “These companies are verystrong in research and development.”

Added to this is strong government

support in the form of co-financingand efforts to connect Japanese smartcommunities with similar projectsoutside the country.

Meanwhile, a Japanese stateagency, the New Energy and Indus-trial Technology Development Organi-zation, promotes energy saving andrenewable energy technologies.

In developing smart communitypilot projects, Japanese policy makershave chosen different areas of focus –and IT and engineering companies,and consultancies are lining up tobenefit. In Kitakyushu, for example,real-time energy management is beingdeveloped in homes and businessesthrough partnerships with FujiElectric, General Electric, IBM andNippon Steel.

Another pilot is in Yokohama, whereAccenture, electrical appliance makersToshiba, Panasonic and Meidensha,and carmaker Nissan are developingplans for multi-town integration ofenergy systems, heat and energy reuseand the retrofitting of 4,000 smarthouses and office buildings.

The challenge, says Ms Asakai, is totake innovative projects such as these

and scale them up. She cites theexample of Yokohama, where thesmart community initiative includesthe rollout of 2,000 electric vehicles.

“That is a fairly sizeable number,”she says. “But there are 3.6m peoplein Yokohama, so 2,000 electric vehi-cles is not for everybody.”

While developing smart city energysystems is a priority, Japan facesanother challenge: a shrinking popu-lation. With the country’s slowingbirth rate and the highest proportionof older adults in the world, policymakers are preparing for a time whenelderly people will be the largestgroup of residents in many cities.

For smaller cities, this is com-pounded by the fall in population asyoung people move to bigger citiessuch as Tokyo and Yokohama.

Smart communities initiatives arealso a way to revitalise declining cit-ies and build industries to attractyounger people, as well as to redesigncities with old age-friendly infrastruc-ture and activities.

In addition to improved publictransport, technology is seen as acritical part of helping older people

remain connected to society and theeconomy, and for assisting them tomaintain healthy, safe lifestyles.

Telemedicine, for example, couldpermit remote healthcare for olderpeople, cutting costs and enablingmedical conditions to be monitoredfrom mobile devices, while roboticaids could help people remain in theirown homes for longer.

Smart homes, with appliances con-trolled online or via mobile phones ortelevisions, are being discussed asways to enhance life for elderly people.

However, Japanese policy makershave an additional agenda in develop-ing smart cities: the promotion of Jap-anese industry in global markets.

Japanese companies stand to benefitfrom a potentially lucrative market –Pike Research estimates global invest-ment in smart city technology infra-structure will reach $108bn by 2020.

“With such big companies offering alot of innovation in mobility and tech-nology for energy, Japan wants to beone of the leaders,” says Mr Gomez.“So in some ways, smart cities are away for Japan to show it is ready toexport this technology to the world.”

Tsunami brings rethink on sustainabilitySmart citiesThe 2011 disaster has promptedmore focused development of renewable and secure urban energy systems, writes SarahMurray

Pilot project: Yokohama, where companies including Accenture and Nissan are developing plans for multi-town integration of energy systems, heat and energy reuse, and the retrofitting of 4,000 smart houses and office buildings Dreamstime

Policy makers prepare fora time when elderly peoplewill be the largest group ofresidents in many cities

Blue print: Sapporo has a clear plan for the future Dreamstime

What the citywanted help withwas a clearerpicture of theenergy it used