Japan

JP-3:Mandatory energy efficiency benchmarking in industry

Policy Description

The Act on the Rational Use of Energy allows for the introduction of mandatory energy efficiency targets for designated sectors in the form of benchmarks as well a 1% annual energy efficiency improvement obligation for all businesses.

Description

The Act on the Rational Use of Energy (amended in April 2010) introduced mandatory energy efficiency targets in the form of benchmarks, to be specified in secondary legislation [1,4].  It has also introduced 1% annual energy efficiency improvement obligation for all businesses. 

For designated sectors (Steel, Electricity, Cement, Paper & Pulp, Oil Refinery, Chemical), targets have been set at the energy efficiency level of the best performing companies (top 10% - 20%) within that industrial sub‐sector. These targets must be met in the medium (2015) and long term (2020). A higher level target can be adopted in the future if further energy‐saving potentials can be taken into account. The benchmarks are based on sector studies and are negotiated between government and the sector, although it is unclear whether international or domestic benchmarks are being used. 

 

Every year, companies must report progress on: 

  1. status of the benchmarking indicator
  2. energy intensity reduction (by at least 1% annually) and
  3. the status of its energy management system. 

Based on companies’ reports, the indicator’s average value and standard deviation for each sub‐sector will be published by the government. The names of companies performing well (beyond the target) will be also published.

Those industries which have taken early actions and have achieved the benchmark target level can ask for exemption from the annual 1% energy efficiency improvement target by helping small and medium-size companies achieve higher energy efficiency levels [4].

Policy Information Expand this section for information on the key features of the policy, such as its date of introduction, categorization, main objective(s) and linkages with other policies.

Policy Categorisation

Policy Instrument Type: Administrative

Position in the Pyramid

About Us

Participation: Mandatory

Period

Start Date: 2010

Policy Linkages

Supported By Fiscal incentives for energy efficiency Supporting Measure
Complements Keidanren Voluntary Action Plan (VAP) (ENDED) Effort Defining
Complements Japanese Voluntary Emissions Trading Scheme (JVETS) Effort Defining
Supported By Mandatory Energy Management Supporting Measure

Agencies Responsible

Ministry of Economy Trade and Industry (METI)
New Energy and Industrial Technology Development (NEDO)

Primary Objective: Energy

Objective

Closing the gap between the average energy efficiency level in a sector and the level of the best performing companies in that sector

Target Group

Heavy industry. Sectors covered since 2009: cement, iron and steel (in 2009) [1]. Further targets under development for pulp and paper and chemicals.

Driver of energy consumption or emissions affected by policy: Energy efficiency relative to peers/best practice

Implementation Information Expand this section for information on targets, monitoring, verification and enforcement regimes, and implementation requirements and tools.

Coverage

Steel, Electricity, Cement, Paper & Pulp, Oil Refinery, Chemical, covering about 70% of final energy use in Japanese industry [1].

Quantitative Target? yes

Target: Targets have been set at the energy efficiency level of the best performing companies (top 10%‐20%) in each sub‐sector.

Time Period: Unclear (*1)

Progress Monitored? yes

Verification Required? yes

Enforced? yes

Sanctions: Publishing the company's name on a list of under-performers and imposing fines.

Requirements on the Target Group

Every year, companies must monitor and report progress on: 

 

  1. status of the benchmarking indicator
  2. energy intensity reduction (by at least 1% annually) and
  3. the status of its energy management system. 

Support by Government

The government provides the guidelines, evaluates the monitoring reports, and provides the analytical basis for annual update of the targets.

Implementation Toolbox

The most important tool providing support to the implementation of this policy are the sector specific guidelines and methodologies for reporting on energy efficiency and for establishing the benchmarks, developed by METI [1].

Complexity of Implementation

Government

METI develops methodology, sets targets, monitors, evaluates, and revises the benchmarks.

Target Group

Companies have to report annually on status benchmark indicator.

Impacts, Costs & Benefits Expand this section to find information on policy effectiveness and efficiency.

Impact Quantitative Estimate Qualitative Estimate
Estimated effect on energy consumption or emissions Not available Not available. Effect could be limited as Japan is generally already considered to be among the more efficient countries in industry. However, this depends on how the benchmark is exactly established (national, international, or dynamic).
Estimated costs/benefits for industry Not available Not available. Marginal abatement cost could be high as Japan is generally already considered to be among the more efficient countries in industry.
Estimated cost for government Not available Not available
Other Benefits
General Benefits Industry increases its energy efficiency and reduces its CO2 emissions, which provides benefits for the environment and economy, improving competitiveness
Specific Benefits Allows industry sector to grow because it is based on a performance-based energy efficiency measure instead of an absolute emission cap. Provides better insight into a companies energy efficiency (and competitiveness) relative to its peers and remaining improvement potentials.

References & Footnotes

References

[1] Akihiro MATSUTA (2009). Energy Efficiency and Conservation Division, Agency for Natural Resources and Energy, Ministry of Economy, Trade and Industry, Japan. 2009. http://www.ceps.eu/files/task_force/2009/07/6AkihiroMATSUTA.pdf

[2] IEA (2010). Summary of Country Reports Submitted to Energy Efficiency Working Party; January 2010

[3] OECD/IEA (2008). Energy Policies of IEA Countries. 2008 Japan Review. OECD/IEA.

[4] Yukari YAMASHITA (2011).Industrial Energy Efficiency Policies in Japan. IEA-IIP Policy Pathway workshop on Energy Management Programes, OECD/IEA, October 2011

Other Useful Resources

Energy Management in Japan (PDF | 1.19mb)

This presentation provides an overview of industrial energy efficiency policies in Japan. It focuses on Japan's energy management programme. It was presented during the IEA-IIP policy pathway workshop on energy management programmes (Paris, October 2011).