The figure that rang out at COP26 was 1.5C, the limit to the rise in global temperatures that must be kept to in order to avoid the worst effects of climate change. Leaders at the summit reiterated the commitment to that number and its importance has only been emphasized by the extreme weather events witnessed since.

In addition, the global energy crisis exacerbated by Russia’s aggression against Ukraine has illuminated the geopolitical risks associated with fossil fuels, underlining the additional energy security rationale for transformation. As the urgency for climate action intensifies, Japan has embarked on an ambitious mission to build a virtuous cycle of economic growth and decarbonization. In doing so, it will work strategically to establish international frameworks to practically address the many challenges involved, against a backdrop of both cooperation and economic competition.

The challenge

As heatwaves, droughts, fires and floods continue to occur with alarming frequency, the dangers of climate change become ever more evident. In order to stop further catastrophic rises in temperatures, the world’s energy systems need to undergo a swift and dramatic shift away from fossil fuels.

But economic, structural and resource conditions vary significantly from country to country, meaning that each nation’s path to decarbonization will be different, requiring a flexible and realistic support framework. Among emerging economies, some are still heavily dependent on fossil fuels, and their rapid growth trajectories will see demand for energy continuing to increase. Coal currently accounts for 50% of the energy mix in Vietnam and 60% in Indonesia, levels requiring a long journey to carbon neutrality.

When representatives of nearly 200 countries meet at COP27 in Egypt in November 2022, a key issue is set to be how developed nations will financially support their developing counterparts in the energy transition. That process must be underpinned by actionable planning and implementation of science and technology.

Showing the way

In response to this worldwide crisis, Japan is setting out to create a blueprint for international collaboration by working towards a practical framework together with its regional partners. Japan enjoys close historical, cultural and economic connections to countries in Asia, along with a strong track record of development assistance and cooperation. Aiming to build on these ties and experience, Japan will work closely with Asian and Middle Eastern nations to contribute to the regional energy shift.

At the heart of this strategy is the Asia Energy Transition Initiative (AETI), announced in May 2021 with the aim of providing a practical roadmap towards decarbonization, leveraging Japanese technology, systems and knowhow. The AETI is centered around a concept of balancing the 3Es: Energy security, Environment and Economic growth.

Recognizing countries’ unique circumstances, Japan will support the creation of practical roadmaps for energy transitions and establish an Asian transition finance framework, from which lessons applicable to other regions and territories will surely emerge.

With $10 billion pledged to support a wide range of technologies and initiatives, Japan is putting its money where its mouth is to support the advancement of renewables, energy efficiency and cleaner fuel sources. Investments have already been announced for projects in Thailand, Vietnam, Indonesia and Malaysia, with more in the pipeline. Meanwhile, technology developed domestically in areas such as renewable energy grids, mobility, storage batteries, ammonia and hydrogen through the 2 trillion yen ($14.5 billion) Green Innovation Fund will be transferred across Asia.

Efforts are also underway to collaborate and share knowledge in carbon capture tech through the Asia CCUS network and contribute to the development of necessary human resources, including by organizing conferences and other events to accelerate advances in relevant sectors and fields.

Practical pathways

In line with the AETI, Japan is building the foundations of the regional energy shift, as evidenced by the 10 agreements signed at the Asia Green Growth Partnership Ministerial (AGGPM) public-private forum in April 2022. Among these is a collaboration between Japanese renewable specialist RENOVA and PetroVietnam Technical Services Corporation (PTSC) on offshore wind development in Vietnam. This multi-year project will combine PTSC’s strong construction and operational capabilities in offshore oil and gas with RENOVA’s expertise in wind power, along with renewables tech and financing. By accelerating the sector’s growth in Vietnam, the goals are to both boost the economy and contribute to decarbonization.“RENOVA plans to leverage accumulated lessons from projects in Japan and in Vietnam to developments in other Asian countries such as the Philippines, South Korea, Indonesia and other countries that we are expanding to,” explains RENOVA executive SAIKI Kei.

“We believe Japanese companies as a whole can contribute technical and financial value, as well as knowledge transfer.”

Another venture that emerged from the AGGPM is a partnership between Japanese trading firm ITOCHU Corporation and Malaysia’s Malakoff Corporation Berhad to advance utilization of ammonia and hydrogen. Subject to the outcome of a feasibility study that is being pursued by ITOCHU-Malakoff, the project aims to decarbonize power plants in Malaysia by the reduction of coal usage via ammonia co-firing, as well as the development of a Combined Cycle Gas Turbine (CCGT) plant using hydrogen converted from ammonia. Additionally, the initiative includes the development of ammonia receiving terminal, which can contribute decarbonisation in the region not only by the supply to the power plant but supply to the industrial complex nearby as well as opportunities for bunkering as a marine fuel.

Technical challenges remain before ammonia and hydrogen can be fully deployed, notes MATSUO Hisashi of ITOCHU’s Urban Environmental & Power Infrastructure Department. And with hydrogen being a new energy source, and Japan being ahead of the curve, it will be critical for knowledge on related technology and procedures to be shared with Asian countries, along with training of personnel, to ensure its safe use.

Just as importantly, conditions in much of Asia are different to those in Europe, where adequate land for wind and solar power is available and coal power plants are coming to the end of their operational lifetimes points out MATSUO. Conversely, many Asian countries have recently brought coal-fired plants online to meet the energy demands from their economic growth and land for renewable energy is limited. “Given that there are similar limitations with renewables in Japan’s energy market, Japanese companies can contribute to achieving carbon neutrality in Asia from the same perspective” suggests MATSUO.

Another major hurdle will be, “the development of the value chain of ammonia/hydrogen in terms of infrastructure as well as the establishment of a commercial framework,” according to MATSUO. Nevertheless, many of the lessons Japan learned from developing LNG infrastructure should be applicable and — along with government support and cross-border cooperation — help expedite the process.

Virtuous green circles

International cooperation is again in the spotlight at COP27, and Japanese Prime Minister KISHIDA Fumio has also floated the idea of an ‘Asia Zero Emissions Community’ (AZEC) through collaboration with regional neighbors. The underlying goal is for Japan — while bolstering and implementing the AETI and “the ASEAN-Japan Climate Change Action Agenda 2.0” announced in October 2021– to join forces with Asian partners to drive an AZEC initiative.

Cultural, economic and social conditions vary around the globe but the challenge of the climate crisis is faced by all. Japan believes that the drive for decarbonization can also be a driver of growth, an approach in line with PM KISHIDA’s ‘new form of capitalism,’ which aims to address social issues while creating a virtuous circle of growth and distribution.

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