Japanese Industrial Energy Efficiency Best Practices

June 2018Takeru Ito

Ministry of Economy, Trade and Industry

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� Japan has excellent energy consumption efficiency and advanced energy efficiency measures. Improvement of consumption efficiency has been sluggish in recent years, so it is required to further advance energy efficiency measures.

� From 1970 to 1990, Japan largely improved energy consumption efficiency. With 2030 as a goal, Japan is aiming to achieve an energy consumption efficiency improvement of 35%, the same level after the oil crisis.

(Elapsed years)

�Energy consumption efficiency� The final energy consumption amount/Real GDP(Source)Japan's Energy 2017http://www.enecho.meti.go.jp/en/category/brochures/pdf/japan_energy_2017.pdf

How far have efforts for energy efficiency measures in Japan progressed?

2(Source) IEA “Energy Balances of OECD Countries 2014 Edition”, “Energy Balances of Non-OECD Countries 2014”, etc. http://www.enecho.meti.go.jp/about/special/tokushu/ondankashoene/shoenetaikoku.html

UK JPN GER FRA EU OECD AU US CA KOR Middle Indo Non- THI IND CHN ROS World( ) 1 / ) )/ (

) 1 1 ) )1 East nesia OECD

Comparison in Energy Efficiency (2013)

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The Change Ratio of Final Energy Consumption Amount of Japan (Comparison by Sector)

� Compared to during the oil crisis, while the real GDP was increasing by 2.6 times, the increase in energy consumption remained at 1.2 times, which indicates that energy efficiency were promoted. However, the energy consumption amounts of the office sector and the residential sector are increasing, so it is required to promote energy efficiency measures..

(Source)Japan's Energy 2017http://www.enecho.meti.go.jp/en/category/brochures/pdf/japan_energy_2017.pdf

1.2

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Law Concerning the Rational Use of Energy (Energy Conservation Law)

-Since 1979-7 times revision so far -average 1% annual energy consumption reduction in factory and office(efforts target)-The Top Runner Program(32 items)-Revised on June, 2018

�certify energy consumption efficiency activity by multiple industries, not single

�apply e-commerce retailer to react increase activities in transportation sector by increasing personal delivery

Target yearCurrent

WeightedAverage

Standard

Energy Efficiency(APF)

Accelerate business Innovationby setting level above the best machinery with the highest levelof energy efficiency across the market

Compared to FY 2013 level (compared to FY 2005 level)

Energy-originated CO2 �21.9% (�20.9%)

Other GHG �1.5% (�1.8%)

Carbon dioxide sink �2.6% (�2.6%)

Reduction of GHG �26.0% (�25.4%)

Estimated Emissions of each sector in FY 2030 FY 2013 (FY 2005)

Energy-originated CO2 927 1,235 (1,219)

Industry 401 429 (457)

Commercial and other 168 279 (239)

Residential 122 201 (180)

Transport 163 225 (240)

Energy conversion 73 101 (104)

Estimated Emissions of each gas in FY 2030 FY 2013 (FY 2005)

Non-energy-originated CO2 70.8 75.9 (85.4)

Methane (CH4) 31.6 36.0 (39.0)

Dinitrogen monoxide (N2O) 21.1 22.5 (25.5)

Estimated Emissions in 2030 2013 (2005)

4 Gasses, such as HFC 28.9 38.6 (27.7)

HFCs 21.6 31.8 (12.7)

PFCs 4.2 3.3 (8.6)

SF6 2.7 2.2 (5.1)

NF3 0.5 1.4 (1.2)

Japan’s Nationally Determined Contribution(approved by Global Warming Prevention HQ on July 17, 2015 and submitted to the UN)

Value: 1 million t-CO2 5

Energy demand and primary energy supply

2030(After energy

conservation measures)

2013(Actual result)

Energy demand

Final energy consumption

Heat, gasoline,

town gas, etc.75%

Electric power 25%

361 million kl

Thorough energy efficiency and conservation

50.3 million kL13% lower than before the

implementation of the energy conservation measures

Electric power28%

Heat, gasoline,

town gas, etc.72%

Economic growth1.7%/year

326 million kl

Primary energy supply

2030

Coal25%

Natural gas18%

Petroleum30%

Renewable energy13 to 14%

Nuclear power10 to 11%

489 million kL

LPG 3%

Self-sufficiency

rate24.3%

* Values are approxim ate. 6

Before the Great East Japan Earthquake

(FY 2010)

After the Great East Japan Earthquake

(FY2013)

Current(FY2016: estimation)

Goal of the policy(FY2030)

Progress

[i] Ratio of zero-emission power source

35 %Renewable energy: 10%

Nuclear power: 25%

12 %Renewable energy: 11%

Nuclear power: 1%

17 %Renewable energy: 15%

Nuclear power: 2%

44 %Renewable energy: 22 to 24%

Nuclear power: 22 to 20%

[ii] Energy conservation

(Final energy consum ption in

crude-oil equivalents)

380 million klIndustries and businesses: 2.4Households: 0.6Transport: 0.8

360 million klIndustries and businesses: 2.3Households: 0.5Transport: 0.8

350 million klIndustries and businesses: 2.2Households: 0.5Transport: 0.8

330 million klIndustries and businesses: 2.3Households: 0.4Transport: 0.6

[iii]CO2 emissions

amount (energy-oriented)

1.14 billion ton 1.24 billion ton 1.14 billion ton 0.93 billion ton

[iv] Power cost (fuel cost +

FIT purchase cost)

5 trillion yenFuel cost: 5 trillion yen

(Crude-oil price: $84/bbl)

FIT purchase: 0 trillion yen

9.8 trillion yenFuel cost: 9 .2 trillion yen

(Crude-oil price: $110/bbl)Quantum factor + 1.6 trillion yen

Price factor + 2.7 trillion yenFIT purchase: 0 .6 trillion yen

6.3 trillion yenFuel cost: 4 .2 trillion yen

(Crude-oil price: $48/bbl)Quantum factor - 0.9 trillion yen

Price factor - 4.1 trillion yenFIT purchase: 2 .0 trillion yen

9.2 to 9.5 trillion yenFuel cost: 5 .3 trillion yen

(Crude-oil price: $128/bbl)

FIT purchase: 3 .7-4.0 trillion yen

[v] Energy self-sufficiency rate

(overall prim ary energy)20 % 6 % 8 % 24 %

Progress in the Energy Mix Policy by FY2030 - Steady advancement seen while half way through -

0%

25%

50%

3

2

3

4

5

10

15

0

5

10

15

0%

15%

30%FY2030

FY2016

FY2010

* Figures in FY2016 are the results estimated based on the data in the Energy Supply-Demand Outlook in Japan by FY2018 (prepared by the Institute of Energy Economics, Japan).* The power cost in FY2030 includes 0.1 trillion yen as a cost for stable power grids. Source: Prepared by ANRE based on the data in the Comprehensive Energy Statistics, etc.

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FY2010

FY2016

FY2030FY2016

Thorough energy conservation

FY2013(at the time of formulating the policy)

Economic growth rate: 1.7% / yearFY2010

FY2010

FY2016

FY2030

FY2030

FY2016FY2010

<Major energy efficiency measures in each sector>Industrial Sector <approx. -10.42 million kL> Commercial Sector <approx. -12.26 million kL>

Residential Sector <approx. -11.60 million kL>

Transportation Sector <approx. -16.07 million kL>

Ø Major 4 industries (steel, chemical, cement, and paper/pulp)ÞPromotion of commitment to a low-carbon society

Ø Strengthened energy management in factoriesÞ Improvement of energy efficiency by making production lines

observableØ Development and introduction of innovative technology

Þ Introduction of environment-conscious iron manufacturing process (COURSE50)(CO2 reduction by approx. 30% by hydrogen reduction of iron ore and CO2 separation from blast furnace gas)Introduction of technologies to use CO2 as raw material etc.(CO2 and water are used with solar energy to produce major chemicals.)

Ø Introduction of highly efficient facilities across several types of industriesÞ Low-carbon industrial furnace, high-performance boiler,

cogeneration, etc.

Ø Diffusion of next-generation automobiles and improvement of fuel efficiency.Þ One out of two cars are to be next-generation cars.Þ Fuel cell vehicle

Ø Traffic flow control

Ø Energy efficiency in buildingsÞMandating energy efficiency standards for newly constructed

buildingsÞRealization and Promotion of ZEB (Net Zero Energy Building)

Ø Introduction of High-efficiency EquipmentÞPromotion of efficient light including LED etc.

Ø Making energy consumption visible by BEMS; Energy managementÞ Introduction to about half of the buildings

Ø Promotion of national movement

Ø Energy efficiency in housesÞMandating energy efficiency standards for newly constructed

housesÞPromotion of ZEH (Net Zero Energy House)

Ø Introduction of High-efficiency EquipmentÞPromotion of efficient light including LED etc.

Ø Making energy consumption visible by HEMS; Energy managementÞ Introduction to all houses

Ø Promotion of national movement

� With all the energy efficiency measures in each sector, approx. 50.3 million kL of energy would be saved.

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Energy Efficiency Measures

n Under the assumption of a variety of typical forms of energy use, carried out the development/demonstration of advanced electricity demand-supply forecast, optimal control of equipment ( of solar panels, energy/thermal storage and energy conservation), and measures for demand response etc.

For households sector For commercial sector For industrial sector

� Energy management system at hotels• Carry out energy management for the

guest rooms of hotels.• Promote the reduction

of energy consumption by visualizing electricityusage and hot water usage at each guest room.

�Source� Fuji Electric Co., Ltd.

� Energy management system at hospitals• Achieve energy-saving through the

introduction of BEMS which controls air-conditioning units automatically, and visualization of data of energy amount and temperature/humidity.

�Source� NIPPON STEEL & SUMIKIN TEXENG. Co., Ltd, Fuji Electric Co., Ltd.

� Shared use of Ene-Farm at apartments• Achieve high energy-saving effect and high

energy self-sufficiency by means of the shared use of fuel-cell cogeneration systems for households.

�Source� Tokyo Gas, JX

� Shared use of batteries by detached houses• Utilization rate of solar PV power was

increased through solar power interchange by such means as the shared use ofstorage batteriesamong houses within each town.

�Source� Sekisui Chemical Co., Ltd.

�Source� TOYODA GOSEI Co., Ltd, Toyota Industries Corp.

�Source� Yasukawa Electric Corp.

� Energy management system through change in production plans• Verify how much

adjustment can be made to actual production plans by means of shifting the production process itself and rearranging the production process etc. in response to the request for demand response.

• Verify the peak shifting/peak cutting effectand CO2 reducing effect through the change in production plans.

A Model for efficient Use of Energy

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� After the announcement of the Keidanren Voluntary Action Plan on the Environment (VAP) in 1997, industrial organizations voluntarily set up emission reduction targets, prior to the Government’s target setting, and promoted efforts for their achievement.

� Under the VAP, 96 industries set up emission reduction targets for 2030, covering about 80%industries Energy conversion section ,50% all sectors.

Industry’s action plan towards a low-carbon society

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Target indicator Baseline year 2030 reduction target

Japan Iron and Steel Federation CO2 emissions BAU -9 Mil t-CO2

Japan Chemical Industry Association CO2 emissions BAU -2 Mil t-CO2

Japan Paper Association CO2 emissions BAU -2.86 Mil t-CO2

Japan Cement Association Energy intensity 2010Less than -49MJ/t-cem

(more than -1.4%)

Liaison Group of Japanese Electrical and Electronics Industries for Global Warming Prevention

Energy intensity 2012 More than -16.55%

Japan Automobile Manufacturers Association / Japan Auto-Body Industries Association

CO2 emissions 1990 -33%

Federation of Electric Power Companies of Japan - - -

Petroleum Association of Japan Energy consumption BAU -1 Mil kl

The Japan Gas AssociationCO2 intensity

Energy intensity 1990

-89%-84%

Examples of 2030 reduction target

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�Technical cooperation to develop Law Concerning the Rational Use of Energy overseas

�Cooperation to develop Energy saving-labeling e.g. Vietnam

�Sectorial cooperation such as Steel, Coal fire power plant, and LED.

Japan’s International Cooperation in Energy Efficiency

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Japan’s Strategy in Energy Efficiency

InternationalDomestic

-Virtuous Cycle of business and economic growth-Contribution to reduce GHGs emission globally

- Enhance innovation in business sector

- Challenge for further energy savings towards 2030

- Technical cooperation to develop energy efficiency policy

- Promote Japanese technology overseas in global market

- GHGs reduction under Paris Agreement