Decarbonization Solution Green&Circular

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Last Update:2024.02.16

Hear about Global Trends to Realize a Decarbonized Society

As the world faces major turmoil such as the Corona disaster and Russia's invasion of Ukraine, efforts to "decarbonize" seem to be at a standstill. Where, in fact, is the global trend headed? Senior Research Fellow Takashi Hongo, who once prepared environmental guidelines for loans at the Japan Bank for International Cooperation (JBIC) and is currently analyzing climate change issues and financial mechanisms for biodiversity at the Mitsui & Co.

The world will continue its efforts to decarbonize

--Please tell us again why we should aim for a decarbonized society.
Hongo: Climate change is a problem that will eventually occur as long as humans continue their activities, and I think it is inevitable that we have reached this point in our history. This is because human activities depend on the use of the Earth's resources, such as fossil fuels and food production. If we continue such activities beyond the Earth's resilience, the amount of carbon dioxide and other substances will inevitably exceed a certain level. It was the Fifth Assessment Report of the IPCC (2014) that scientifically analyzed this and recognized it as a carbon budget (carbon emission quota) for countries around the world.
--Based on this, the Paris Agreement (2015) institutionalized and agreed to various initiatives, such as the long-term goal of limiting average temperature increase to "2°C," or preferably "1.5°C." - Based on this, the Paris Agreement (2015) institutionalized and agreed to various initiatives, such as the long-term goal of limiting average temperature increase to "2°C," or preferably "1.5°C.
Hongo: Yes. Although each country's policies and companies are in a different situation, the situation must be addressed by the world as a whole.
Item Contents
Purpose Hold the average temperature increase since pre-industrial times well below 2°C as a common global long-term goal; pursue efforts to limit it to 1.5°C.
Target In order to reach the above targets, emission peaks are reduced as early as possible and as rapidly as possible according to the latest science, so that a balance between anthropogenic emissions and absorption of greenhouse gases can be achieved in the second half of the century.
Targets for each country Each country prepares, submits and maintains a contribution (reduction target). National measures are taken to achieve the objectives of each country's contribution (reduction target). Country contributions (reduction targets) are submitted and updated every five years to show progress over time.
Long-term low emission development strategy All countries have developed long-term low emission development strategies. Should endeavour to submit. (COP decision inviting submission by 2020).
Global stocktaking Periodic review of the implementation of the Agreement to assess overall progress every five years. The results of the global review of implementation will inform the renewal of actions and support by countries.
Source: Ministry of the Environment, "White Paper on the Environment, the Sound Material-Cycle Society, and Biodiversity 2009," Chapter 2: Climate Change Measures to be Accelerated in Light of the Paris Agreement
-but there are a growing number of factors that have been hindering decarbonization efforts in recent years. There are stories about the Corona disaster, where factories stopped and became cleaner, but the most obvious is the energy problem caused by Russia's invasion of Ukraine. News of Germany's expansion of coal-fired power, for example, makes the decarbonization movement seem to be at a standstill.
Hongo: Even if an agreement to address climate change is reached in the Paris Agreement, if health is harmed by energy shortages or if it is necessary to maintain the economy in order to make a living, then that can naturally take precedence. However, in the long term, we cannot avoid the need to decarbonize.

During the recovery from the Corona disaster, many countries adopted a "green recovery" policy, which means that if the same economic stimulus measures are to be implemented, they should be focused on climate change and environmental measures. In response to the current energy crisis, it is expected that an energy strategy will be developed that is based on security and also contributes to climate change measures.
--So you're talking about a higher level of decarbonization.
Hongo: Yes, the G7 Leaders' Declaration for 2022 also states that the goal of a "decarbonized society" will remain unchanged, but that energy security will be secured. Of course, in the short term, there may be some regressions and delays. However, I think it is safe to assume that the realization of a decarbonized society is a goal that will not change.
The G7 Summit was held in Germany on June 27, 2022. Climate change, energy and health were discussed.

Efforts in Japan and other countries difficult to make simple comparisons

--I have heard that the actual situation differs from country to country and from company to company. In this context, I have heard that Japan has already taken some measures to address environmental issues through tireless improvement activities, and that it is disadvantageous to further reduce CO2 emissions from this level. And I have the impression that the EU is skillfully leading the way toward a decarbonized society. What is the actual situation?
Hongo: I hear that a lot, but I can't simply compare Japan and the EU because they are on different paths. Japan has been promoting energy conservation for a long time, and as a result, it has helped to decarbonize the country. In the EU, energy conservation is strongly promoted as a response to the energy crisis caused by Russia's invasion of Ukraine, and there are some similarities between Japan and the EU. The EU is also actively promoting investment in renewable energy generation. It is also proactive in investing in renewable energy generation and other projects.

From an economic point of view, CO2 regulation (decarbonization) is costly. Paying the cost means that there are people who receive it, and in the economy as a whole, it has the same effect as an economic stimulus package. The problem is that those who pay the costs are not the same as those who receive them, and actual economic and industrial policy must take into account those who bear the costs, viewing it as a redistribution of income. We believe that decarbonization efforts will be a driver of growth. Japan, on the other hand, seems to focus only on paying the costs and not on receiving the benefits, i.e., the economic benefits. Recently, however, there seems to be a growing belief in Japan that decarbonization efforts can be a driver of growth.
-- So, what do you think Japan needs to do to stand on its head wisely in the future?
Hongo: Given the situation where money is not being invested, we need to set rules on CO2 and climate change issues so that investment can proceed. If we can create an investment environment where Japanese companies can take advantage of their past accumulation and strengths, a virtuous circle will be created: corporate activity will increase, salaries will rise, and households will become richer. Of course, since trade is a prerequisite, we must devise ways to combine overseas procurement with Japanese supply in a way that is both efficient and conducive to long-term growth.

Japan has an advantage in CCS (Carbon dioxide Capture and Storage) technology.

--The Japanese government currently states that it aims to achieve carbon neutrality by 2050. What are your thoughts on the main initiatives and their feasibility?
Hongo: One is our energy conversion efforts. We are shifting from coal to LNG, which has low CO2 emissions, but since natural gas does not have zero CO2 emissions, hydrogen and ammonia are envisioned as energy options beyond that.

In Japan, we are working to develop technologies to realize such energy options. With regard to hydrogen, we are focusing on technologies to extract hydrogen through electrolysis of water using renewable energy, and technologies to fix the CO2 emitted when extracting hydrogen from methane (natural gas) underground using carbon dioxide sequestration (CCS). Both are low-carbon and decarbonized hydrogen that can reduce CO2 emissions from the hydrogen production process, and CCS can increase the energy options available. This CCS is an area in which Japan has advanced technology, and I think it is a major feature of Japan's efforts in decarbonization.
Conceptual diagram of the Tomakomai CCS demonstration test in Hokkaido, in which Mitsui Oil Exploration Co.
--Either way, the cost of energy is going to be greater than ever before.
Hongo: But by doing so, we are trying to promote energy transition and technological innovation. During the Kan administration, the government launched the "carbon price for growth" initiative to ensure that economic growth is commensurate with the costs involved, and one of its policies is the "GX League," a mechanism to promote voluntary emissions trading. There is also a movement to improve the "Greenhouse Gas Emissions Accounting, Reporting, and Publication System" to enable proper information disclosure. These things are progressing gradually.

Various difficulties are expected in achieving the goal of virtually zero emissions by 2050. It may be possible to achieve it if costs are taken into account, but that is not likely to happen. On the other hand, since the entire world is aiming for virtually zero emissions, not just Japan, it will be important to create negative emissions (carbon negatives) on a global scale, even if this means incurring a certain amount of cost.
--What do you mean by negative emissions?
Hongo: This is an initiative to reduce the amount of CO2 in the atmosphere by directly separating, capturing, and fixing CO2 from the atmosphere, rather than reducing CO2 emitted from economic activities. While large-scale afforestation activities are one method, what Japan expects and is trying to do is an extension of CCS, which I mentioned earlier.
-On the other hand, CO2 fixation through forest protection and management and organic farming. Furthermore, you are also seeing the emergence of more accessible moves toward decarbonization, mainly through startups, such as the development of feed that reduces methane gas contained in cow burps. However, it is still a tiny amount compared to large-scale initiatives such as CCS. How do you feel about this spread?
Hongo: Indeed, in terms of impact on CO2 emission reduction, it may not be significant. However, small efforts are born out of the positive mindset of each and every one of us. Therefore, rather than dismissing them as meaningless, we hope that they will serve as a catalyst for social change. There is a possibility that major innovations will emerge from these efforts. In addition, it is the consumer who ultimately bears the cost of decarbonization. In order to gain their approval, I think it is important to have a high level of interest in the movement around us.

Tackling the Circular Economy is also an inevitable task

--What are your thoughts on the circular economy?
Hongo: The circular economy is another important initiative. The reason for this is the same as the "reasons why we should aim for a decarbonized society" I mentioned at the beginning of this article: all human lives and economies are based on the use of natural capital, or what is found in nature. It is the same with agriculture. If we use too much natural capital, we will exceed the Earth's supply capacity. We are approaching that limit. Therefore, a circular economy that makes effective use of limited natural capital is also inevitable.

Key examples of the circular economy include the reuse of recycled paper and plastic bottles, and the recovery and reuse of precious metals. With regard to precious metals, the company became famous for recovering those found in discarded electronics to make medals for the Tokyo Olympics. Piles of discarded electronics are also known as urban mines, right?

What should not be overlooked here is that for the circular economy to circulate nicely, three conditions must be met: " technology to extract and recover resources," " established recovery routes," and " sufficient stocks. In terms of increasing stocks, we would like to focus on rare earths and rare metals, which are also strategic commodities, in the future.
-In both decarbonization efforts and the circular economy, the developed countries are taking the lead and doing their best. In essence, the world as a whole must work on these issues, but how much difference is there in the current awareness and efforts?
Hongo: If we include the SDGs, we can say that there is a wide variety of differences. However, when it comes to climate change countermeasures, there are only two types of differences: high awareness and low awareness. There are countries with negligible CO2 emissions to begin with. There are also developing countries where the cost burden of decarbonization is very difficult to bear. The International Civil Aviation Organization (ICAO) is a good example of how to involve such countries. They have set a goal of no increase in CO2 emissions for international aviation after 2020. And they are starting with countries that have voluntarily joined the program, starting in 2021. But at that point, we have covered about 80% of CO2 emissions, and we will increase the phases every three years and eventually encourage all countries to participate. Thus, rather than waiting for all countries to align, I think it is important to start with what we can do.

In addition, the EU is currently considering a "border carbon tax. The idea is to charge imports that do not pay emission costs the same cost as products manufactured in the EU, in the form of a tariff, in order to make them equally competitive. Although there is opposition from other countries, this is one way to raise awareness of decarbonization in countries and entities that are less aware of the issue.
--Finally, what do you think Japan needs to strengthen in the future?
Hongo: I think what Japan is not good at is developing a market environment for technology, especially in the formulation of regulations and rules. The government is making efforts in this area in cooperation with ASEAN countries, so I have high expectations for the future.
--Thank you very much for your time today.

Takashi Hongo

Senior Research Fellow, International Information Department, Mitsui Bussan Institute for Strategic Studies.
He joined the Export-Import Bank of Japan (currently Japan Bank for International Cooperation) in 1981. He has served in various positions, including Special Advisor in charge of the Environmental Business Support Office. He was seconded to the former Economic Planning Agency and the former Industrial Bank of Japan. Participated in ICAO CORSIA Task Force, ISO TC207 (Carbon Neutrality), ISO TC265 (CCS), etc. Participated in many committees and research groups, including the Science and Technology Committee for Environment and Energy, Ministry of Education, Culture, Sports, Science and Technology, the CO2 Reduction Project Verification and Evaluation Committee, Ministry of the Environment, and the Technical Committee of NEDO. He is a part-time lecturer at the Faculty of Economics, Dokkyo University.

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