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4.108. Another significant development was the adoption by the Cabinet, in May 2018, of the Basic Plan on Ocean Policy, which contains a component on the development of offshore mineral energy and mineral resources. In this context, the Government revised the Plan for the Development of Marine Energy and Marine Mineral Resources in February 2019. This Plan contains, inter alia, support measures for resource mapping and technology development for better production of marine energy and deep-sea mineral resources, to an amount of JPY 37.89 billion for the duration of the Plan. This covers not only oil and natural gas but also methane hydrate gas.

4.109. The 2018 SEP indicates that the Government will propose measures aimed at utilizing solar power for residential consumption and as a distributed power source to carry out local production for local consumption. The support measures taken since application of the SEP include an annual JPY 2.8 billion subsidy scheme to support the construction of net zero energy houses equipped with storage batteries or electric vehicle charging/discharging facilities, and an annual JPY 2 billion subsidy scheme for companies constructing local micro grids i.e. energy systems which can be operated independently from large-scale electric power systems in case of blackout. The Government is also subsidizing the acquisition of storage batteries for residential and small factory use, based on a target/maximum eligible price system whose scales are described in Chart 4.9. Measures are also expected to be taken to ensure the proper recycling of used solar panels.

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
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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;
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