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Japan’s Asia Energy Transition Initiative (AETI), launched in 2021, initially supported the Association of South East Asian Nations (ASEAN) countries towards achieving net zero emissions, including financial assistance of $10 billion for renewable energy.
Japan now looks forward to supporting India’s clean energy transition by including the country in the AETI.
India’s external affairs ministry in March 2022, published the specifications of the Clean Energy Partnership between India and Japan.
This partnership would work on the agenda covered in the India-Japan Energy Dialogue 2007 and will subsequently expand into areas of mutual benefit. India and Japan have made important strides in developing the vision of a secure, resilient, sustainable energy network.
India has set an ambitious target of achieving net zero by 2070. Japan has initiated a goal of becoming net zero by 2050. The countries are utilising new technologies and economic models that would help reduce emissions.
This provides significant opportunities to improve bilateral cooperation towards clean and sustainable energy transitions.
The first India-Japan environment week was held in New Delhi from January 12-13, 2023. During the event, Bhupender Yadav, the Union minister for environment, forest and climate change, held a bilateral meeting with his Japanese counterpart Akihiro Nishimura and discussed various issues, such as the COP27 and G20/G7 leadership, among others.
India and Japan have now taken over the presidentship of G20 and G7, respectively and for India, Lifestyle for Environment (LiFE) is one of the most important priorities during the G20 presidency.
Against the backdrop of Japan’s two important goals — achieving net zero by 2050 and a 46 per cent reduction in greenhouse gas emissions by 2030 — the government issued an interim report on Clean Energy Strategy in May 2022.
The report discussed the need for large-scale investment in the clean energy sector, such as hydrogen/ammonia technologies, creating domestic demand through offshore wind power technology to attract investment and establishing a domestic manufacturing base of 150 Gigawatt hours (GWh) of batteries by 2030.
The Quadrilateral Security Dialogue, commonly known as the Quad, between Australia, India, Japan and the United States has also announced the Clean-Hydrogen Partnership for technology development, efficiently scaling up the production of clean hydrogen and accelerating trade in clean hydrogen in the Indo-Pacific region.
The Indian subcontinent’s massive renewable energy potential can boost green hydrogen (GH2) production and immense potential for a GH2 economy. For example, Nepal and Bhutan have surplus hydropower potential and green hydrogen electrolysers can tap this in countries like India and Bangladesh.
The latter can also import renewable energy from India. The clean surplus hydropower from the countries in the region can be exported and GH2 can be generated. This would reduce the transportation cost and help lower the energy generation cost. Japan and India can also play an important role in clean energy transitions in south Asia.
With its dependency on fossil fuels and foreign energy sources, Japan currently faces twin challenges of energy security and transition. With increasing electricity prices, finding a sustainable energy mix has become necessary. The country ranks fifth globally for its renewable energy capacity in 2021, according to Fitch Solutions.
Japan has also raised its renewable energy targets with an aim for 36-38 per cent of renewables in its energy mix by 2030 based on the Strategic Energy Plan released in October 2021.
A graph representing renewable energy generation in Japan. Source: METI
Japan is the fifth largest energy consumer globally. The supply of fossil fuels has been at a low for the last seven years. But the country continues to rely heavily on fossil fuels consisting of 84.8 per cent of the total primary energy supply (TPES) in 2020.
Renewable energy (RE) resources account for 10 per cent of the total energy. The RE has increased from 5.4 per cent in 2012 to more than 10.4 per cent of the TPES in 2020.
The Feed-in Premium (FiP) scheme by the government of Japan was implemented in April 2022 and is expected to improve the country’s energy transition and complement the existing FiT scheme, which has been in the market since 2012.
The FiP allows the premium to be added to the wholesale price in which the renewable energy suppliers sell electricity at the spot market, thus increasing the competition in the sector.
FiTs were awarded to 250 kilowatt (KW) and 1 megawatt (MW) solar projects in the 12th Solar Auction Tender in June 2022. The FiPs were awarded to solar projects which were above 1 MW. In the auction, the Ministry of Economy, Trade and Industry (METI), Japan awarded 153.7 MW new solar capacity, including 128.94 MW in the FiP scheme and 24.76 MW in the FiT scheme.
Another point of interest for Japan in renewable energy is offshore wind technology with the designation of three areas, i.e., off the coast of Nagasaki, Niigata and Akita areas, for developing wind farms.
A graph showing Japan’s Total Primary Energy Supply. Source: IRENA
In addition to the wind farms, the ministry selected five more areas as promising zones and eleven more suitable zones for developing offshore farms.
This presents a good opportunity for potential investors in such renewable projects. There is a strong interest among foreign investors in the country’s renewable sector.
Events like the India-Japan Environment week would help create a roadmap to integrate variable renewable energy into the system through technological, institutional and personnel cooperation.
The increased reliance on fossil fuels remains a big hurdle. Acknowledging the challenges, the government has initiated reforms such as the Green Growth Strategy in 2020 to achieve carbon neutrality.
It includes electrification of all the sectors, strengthening the digital infrastructure and increased utilisation of renewable energy and clean energy storage technologies.
The grid interconnection problems have limited the potential of renewables, while efforts have been made to mitigate the challenge. A Long Term Cross Regional Network Development Policy, launched in 2017, deals with cost-benefit analysis, congestion and asset management, with the policy being updated every five years.
Renewable energy auctions can also help reduce the challenge of integrating renewables into the grid. In Japan, solar photovoltaic (PV) prices are higher than the global average and much higher than nations with similar macroeconomic and solar PV development conditions.
The utilisation of auction designs in such as way that it looks beyond price reduction would facilitate smooth grid integration of renewables, timely completion of projects and ensure a just energy transition.