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4.110. For larger-scale solar production, the feed-in tariff (FIT), introduced in July 2012, contributed to the growth of solar generation capacity from 0.9 GW in 2012 to 34.4 GW in 2017. However, the fifth SEP, approved by the Cabinet on July 2018, states that the FIT has become too financially burdensome , and plans to replace it by an auction system and sales on the wholesale market (Section 4.2.2.2).

4.111. Regarding wind energy, the SEP acknowledges the environmental constraints, the scarcity of suitable locations available onshore, the grid connection, and the high costs of production. It sets an ambitious cost objective of JPY 8 to JPY 9/kWh in 2030, and plans to develop this energy essentially offshore, and to introduce a bidding system to limit costs.

4.112. Geothermal, hydropower and biomass are envisaged by the Plan as essentially local sources of energy produced by small-scale facilities. The Government is to provide assistance to these types of project and to the building of distribution systems combining small-scale energy renewable sources.

4.113. The basic legislation on energy efficiency is the 1979 Act on the Rational Use of Energy (Energy Saving Act), last amended in 2013, which sets a non-binding target of a 1% per year improvement in energy efficiency, an objective met during the last five years by the majority of energy-intensive businesses. While this legislation did not change during the period under review, numerous initiatives were taken regarding energy efficiency, in the form of additional secondary regulation, notably regarding the setting of efficiency norms for the various sectors, including construction, voluntary actions by private actors and government, and private-sector research programmes, e.g. on AI, IoT, and big data applied to energy; smart grids; smart meters; optimal design of electrical appliances; and insulation and construction materials. It is also expected that the structural reforms of the gas and electricity market (see below) will have an effect on energy efficiency and, in particular, on the management of electricity peak demand.

4.114. The Government is in the process of adapting and expanding the efficiency monitoring process of the Energy Saving Act and its correlative schemes of sanctions and support mechanisms. A specific government effort is directed towards medium and small enterprises in that regard, via local support offices. During the period under review, the benchmark programme, which sets targets for energy consumption per unit of productions, etc. was extended to 16 industrial sectors.

4.115. The Agency for Natural Resources and Energy and its Advisory Committee for Natural Resources and Energy in the METI are responsible for energy policy, planning, and legislation, as well as regulation of the industry. The Nuclear Regulation Authority in the Ministry of the Environment is responsible for the supervision of nuclear power plants.

4.116. According to Japan's latest notification to the Committee on Subsidies and Countervailing Measures, during the review period, several schemes provided support, in form of subsidized loans and/or grants, to energy-related activities aimed at implementing the country's energy policy objectives regarding supply, stockpiling, renewable energy, energy efficiency, and environmental protection (Table 4.19).

Table 4.19 Domestic support to energy-related projects, 2020
(...)
Scheme: New Energy and Industrial Technology Development Organization Project Activities;

Budgetary Outlays: FY2016 (final results): Energy Systems (JPY 6.3 billion); Energy Conservation and Environment (JPY 4.9 billion); Industrial Technology (JPY 16.4 billion); New Industry Creation and Discovery of Technology Seeds (JPY 4.5 billion); FY2017 (final results): Energy Systems (JPY 8.5 billion); Energy Conservation and Environment (JPY 5,.4 billion); Industrial Technology (JPY 13.9 billion); New Industry Creation and Discovery of Technology Seeds (JPY 4.4 billion, fixed completion date); Subsidy for "Ene-farm", etc. introduction support operating cost subsidy for expansion of use of fuel cell (FY2016 (settlement of accounts) JPY 8.0 billion, FY2017 (settlement of accounts) JPY 6.7 billion;

Duration: April 2009-March 2021;
(...)

4.117. Production of coal was 0.68 million tonnes of oil equivalent (MTOE) in 2017 (i.e. 0.16% of Japan's Total Primary Energy Supply (TPES)), while imports accounted for 114.78 MTOE. Imports of coal increased after the Fukushima nuclear accident (from 23% of the primary energy supply in 2010 to 25% in 2017, and from 28% of the power generation in 2010 to 32% in 2017). This was due to the fact that coal constitutes a relatively cheap source of energy for power generation. However, it emits a considerable amount of greenhouse gases, which runs counter to the reduction objectives undertaken in the context of the Paris Convention. The Government intends to keep coal as a major source of energy, since it is expected to represent 25% of the total primary energy source in 2030 and 26% of electricity production, while encouraging the adoption of technologies reducing emissions, such as Integrated Gasification Combined Cycle, Ultra Super Critical pressure, and Carbon Capture Utilization and Storage.

4.124. The share of oil and oil products in the TPES was 43.0% in 2015, 41.5% in 2016, and 39.0% in 2017. It is planned to decrease this to 33% by 2030. Its share in power generation, which was 9% in 2017, is also planned to be decreased, to 3% by 2030. These planned decreases are largely voluntary, and can be explained by the geopolitical uncertainties surrounding this source of energy and the subsequent wide price variations it registers, as well as the plan to switch to fewer or no greenhouses gas-emitting sources of energy.