Transition Gets Trickier for Japan

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Spurred by international pressures, Japan has stepped up its climate ambitions by setting a 2050 net-zero goal, upgrading its nationally determined contribution, and allocating fuel-mix targets to balance its energy security and economic needs. However, recent high oil and LNG prices are forcing Japan to put its lofty goals on hold. Utilities are restarting old oil-fired power units to prevent winter power shortages while the government is subsidizing refiners on rising wholesale inflation driven by stronger commodity prices. Lacking indigenous resources of its own, Japan is one of the world’s largest crude importers and its second-largest LNG importer. This, combined with the arduous restarts of nuclear reactors, have forced it to cling to coal longer than other developed economies and made the energy transition trickier. Tokyo has revised its 2030 goal to reduce greenhouse gas emissions by 46% (from 2013 levels), up from the previous 26% target. Japan declined to join the COP26 pledge to phase out coal, which accounts for 30% of the country's electricity supply, but promised to reduce coal use as soon as possible. Under its latest 2030 power plan, the government introduced a 1% share for hydrogen/ammonia, while doubling the share of renewables and reducing coal’s share. A COP26 outcome that allows countries to buy carbon credits from others is seen as a win for Japan, which sees them as key to achieving its 2030 goals.

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