MAIN PAGE | SPEECHES & EDITORIALS | 2000 | COMBATING ENVIRONMENTAL PROBLEMS
PACIFIC BASIN ECONOMIC COUNCIL
MAIN PAGE | SPEECHES & EDITORIALS | 2000 | COMBATING ENVIRONMENTAL PROBLEMS
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Combating Environmental Problems: Tokyo Gas, PBEC, COP6 and the Future
WITH THE START IN THE HAGUE on November 13 of the United Nations Framework Convention on Climate Change approaching, global environmental issues are once again becoming a focus of interest and discussion. It is highly significant that at such a time Australia and Japan, respectively the main producer and consumer of energy and resources in the Asia-Pacific region, are taking advantage of the prime opportunity offered by the 38th Joint Meeting of Japan-Australia Business Co-operation Committees to discuss environmental issues. I would like to begin today by explaining the position and actions concerning the environmental policy of Tokyo Gas, to which I myself belong. By virtue of my position as Chairman of the Working Committee on the Environment of the Pacific Basin Economic Council (PBEC), I shall then proceed to provide you with some background on the study of environmental issues by that organization. Then finally, I should like to explain my views concerning COP6. Environmental action taken by Tokyo Gas Tokyo Gas supplies city gas to some nine million customers in Tokyo and the surrounding area, and has annual group sales of \1.1 trillion. In terms of number of customers, it is the world's third largest gas distributor after Centrica of the United Kingdom and Gaz de France of France. In the face of growing deregulation, the biggest business challenge the company faces is how to raise cost competitiveness and develop and commercialize technologies for making best use of gas. Another important challenge faced in recent years has been how to take advantage of the revolution in information technology. And of course it goes without saying that an important goal of management has been to play a leading role in combating environmental problems. As a major company in Japan's energy sector, Tokyo Gas has long considered environmental action to be an important plank of business policy, and has constantly been at the forefront of action to protect the environment. Worthy of mention in this respect is the fact that it was over 30 years ago in 1969, when Tokyo was suffering the effects of serious atmospheric pollution, that Tokyo Gas first introduced liquefied natural gas (LNG) and then signed a "pollution prevention agreement" with the Tokyo metropolitan government. Tokyo Gas has thus long played a pioneering role in the fight against air pollution. Highly valued for being a clean and stable source of energy, LNG use in Japan has steadily grown over the years. Total use in Japan reached 52 million tons in 1999, of which around seven million tons, or 14%, was imported from Australia. Equivalent to 1.25 million barrels per day of oil, LNG accounts for 13% of the total energy supply in Japan, showing that it has completed its transition into a core energy source. Tokyo Gas is focusing on four points in particular in readiness for what some are already calling the "century of the environment".
In short, Tokyo Gas's objective is to leverage its technology to encourage concerted action to combat environmental problems not only by Tokyo Gas itself, but also by individual customers and at the local and international level. To provide some indication of what effects such actions have achieved, I shall take the first point-reducing the environmental impact of gas use by the customer-as an example. For instance, despite the fact that gas sales have risen by an annual rate of 2.5% since 1995, total NOx emissions last fiscal year from city gas appliances remained at approximately the same level of around 146 million tons. Moreover, Tokyo Gas expects the spreading use of high-efficiency gas appliances and cogeneration systems and moves to use natural gas as an alternative fuel to petroleum in order to effectively reduce CO2 emissions at the stage of use by the customer by seven million tons in 2010. This is equivalent to 3% of Japan's commitment at COP3 in Kyoto to cut CO2 emissions by approximately 220 million tons. Internationally, too, Tokyo Gas continues to promote the use of natural gas to help protect the environment. It is, for example, working with its affiliates to provide engineering services required for the construction of LNG terminals in the Asia-Pacific region, and provides capital participation and technology transfer for natural gas reticulation project and gas district heating and cooling projects in Malaysia. PBEC Tokyo Declaration on Environmental Issues Another way in which Tokyo Gas is making an international contribution to combating environmental problems is through its involvement in PBEC's Working Committee on the Environment, of which I am chairman. As you are aware, PBEC is a non-governmental organization formed from some 1,100 businesses from 20 countries in the Pacific Rim region, and was established in 1967 in order to promote economic cooperation in the private sector. It's establishment was promoted by the Japan-Australia Business Co-operation Committee established. Therefore it may justifiably be said to be one of the fruits of the cooperation and friendship between Japan and Australia. To date, PBEC has expressed its overall position in the form of joint declarations, and these have had some impact on the policies adopted by Asia Pacific Economic Cooperation(APEC) and the World Trade Organisation(WTO). At the next annual meeting in Tokyo next April, a "Tokyo Declaration on Environmental Issues" is to be announced. Although the declaration is at this point in time still being drafted, I would still like to put some of the points it contains to you so as to elicit your valuable opinions and to incorporate them into the massage. First, I should like to suggest the addition of a fourth E-namely, explosion of population causing urban problems-to the three Es (the economy, energy and environment) already regarded as requiring concerted action in order to achieve balanced development. This is based on a model known as the Kaya Identity developed by Professor Emeritus Kaya of Tokyo University. CO2 = CO2/E * E/Q * Q/L * L This model consists of four variables, each of which can serve as a policy objective. Thus in order to reduce CO2 emissions, it is important to (1) choose energies that generate lower CO2 emissions (CO2/E), (2) reduce energy consumption per unit economic output (E/Q), and (3) curb population growth (L), while improving living standards. (Q/L). (1) and (2) have already been the subject of considerable discussion, while there is little that companies can do with respect to (3). What I should therefore like first to focus on is the fourth point. Q/L can be expanded to Q/E * E/L where increase in energy productivity and possible extent of restraint in energy consumption per capita are required. The world population is forecast to grow from 6 billion at present to 7.7 billion in 2020, and it is estimated that in the Asia-Pacific region, 55% of a population of over 4.6 billion will be concentrated in urban areas in that year. It is therefore important that we in business develop more efficient energy systems and urban infrastructures to serve populations concentrated in cities and ensure the best possible standard of living. And as the Kaya Model indicates, such actions are essential to ameliorate global environmental problems. In more specific terms, therefore, greater cooperation is required among central and local governments and private enterprise. Such means as the recently-discussed Private Finance Initiative (PFI) need to be used to enable the private sector to play the leading role in developing energy-efficient urban infrastructure. It is also important to promote the sound development of local agricultural, forestry and fishery industries to curb urban population growth and enhance CO2 sinks. The second important point for incorporation into the Tokyo Declaration is the issue of economic structural reform in the 21st century. The key in this respect is reorientation away from the traditional emphasis on extensive growth, i.e. outward, quantitative growth premised on mass production, mass consumption and mass generation of waste, toward intensive growth, which focuses more on quality. First and foremost, this requires the development of a "resource recycling society" to promote the reduction and greater reuse and recycling of energy and resources. Another vital factor is the further growth of the information, knowledge and service driven New Economy, which is most evident in the case of the economic up-beat in the United States in the 1990s. It is also important to encourage the further development of industries working in microscopic fields that are related to molecular and atomic levels, such as electronics, bio-genetic engineering and information technology, by accelerating progress in nanotechnology (microtechnology where the unit of measurement is a mere billionth of a meter), which has been attracting strong interest in recent years. Returning to the Kaya Model, drastic reform of E/Q (i.e. energy per unit economic output) can be achieved by the shoots of the new economic models. Fresh economic drive can thus be obtained from smaller resource and energy inputs, and it is this that holds the key to harmonization of the (3+1)Es mentioned above. The Tokyo Declaration also includes a ten-point action plan based on the above concepts that emphasizes how PBEC member companies can voluntarily play pioneering environmental roles in their own communities either locally, regionally or globally. As I mentioned, the declaration is still at the drafting stage, and I should be glad to hear the valuable views of those here on how to further improve the implication of the declaration as a genuinely useful guide to actions by member companies in the 21st century. Expectations of COP6 I should like to conclude by explaining my own personal opinion concerning COP6 to be held next month. The basic objective of the Japanese government at COP6 in the Netherlands is to make the Kyoto Protocol adopted at COP3 in Kyoto in December 1997 come into force by 2002. If this is to be achieved, however, it will be necessary to lay down rules concerning the operation of the Kyoto Mechanisms, such as emission trading (ET), joint implementation (JI) and the clean development mechanism (CDM). It will in addition be necessary that an international consensus be reached on matters such as use of sinks and technology transfers to developing countries. Regarding measures to combat global warming, two conferences of the parties have been held since COP3: COP4 in 1998 in Buenos Aires, and COP5 in 1999 in Bonn. Due unfortunately to conflicts of interests between countries and regions concerning how to handle this issue, however, these conferences have achieved little of real consequence. Hence, there are concerns that if things continue as at present, COP6 may not result in significant rules or agreement. At COP3, developed countries worked together and in unison with developing countries to address the issue of global warming, and basic agreement was reached on the Kyoto Mechanisms as the measures that should be taken. Different countries and regions' interests clashed, however, when it came to filling in the details. We have consequently reached a critical stage where it is uncertain whether the Kyoto Protocol will come into effect by 2002, 10 years after Rio de Janeiro ("Rio+10") as envisaged at COP5. Turning back to Japan, people are beginning to realize what an enormous burden Japan's international commitment would impose to cut CO2 emissions by 6% from 1990 levels by 2010. Japan's CO2 emissions per unit of GDP are 95% those of the EU and 56% those of the U.S. This means that substantial strides have already been made toward conserving energy, which in turn means that there is a strong possibility that the cost of reducing CO2 emissions in the future in Japan will be excessively high in comparison with Europe and North America. A further problem in this regard is the fact that the strong opposition of the public in general and local residents in particular to nuclear power, which had been considered to be the trump card for cutting CO2 emissions, has necessitated a downward revision of the construction plan of nuclear power plants in the future. The Advisory Committee for Energy was consequently set up by the Japanese Ministry of International Trade and Industry (MITI) as a consultative body to the government to re-examine the future course of energy policy in Japan, and it is to unveil a plan in April next year. The main focus will be on what energies should be used to make up for the shortfall caused by the reduced role of nuclear energy, and it appears likely that natural gas, alongside new energies and energy conservation, will have an even greater role to play. Major obstacles will, however, inevitably be encountered if CO2 emission controls are to be tried working on the basis of the traditional economic structure and conventional energy supply and demand patterns. One is reminded in this context of the first and second oil crises, which erupted in the 1970s. At a summit held in Tokyo in 1979, Japan's maximum oil imports were set at 6.3 million barrels per day, which at the time was regarded as placing severe restrictions on the Japanese economy. Instead, however, the challenge served as a springboard for economic structural reform, resulting in the growth of knowledge-intensive industries and the birth of cutting-edge industries in such fields as mechatronics and information technology. Stunning strides were made toward energy conservation, and an increasing share of energy demand was met by petroleum substitutes. The end result was to help drive economic growth in the eighties. The severe limitations imposed on the Japanese economy were thus overcome through the joint actions of the public and private sectors, and Japanese oil imports now stand at 5.3 million barrels per day. Likewise, Japan's international commitment to cut CO2 emissions by 6% may be the trigger that is needed to create a rejuvenated Japan. The creation of high added value from smaller energy and resource inputs in the New Economy, such as in the nanotechnology and knowledge-led industries described above, is well within the bounds of probability given Japan's technological capabilities, the economic recovery, and the fresh rise in entrepreneurship. The futurist Alvin Toffler calls the IT and biotechnology-driven bio-information age the "fourth wave". This new wave, when it can be ridden, will not only make it possible to achieve international commitments to cut CO2 emissions, but will also open up new horizons to Japan and the rest of the Asia-Pacific region. Conclusion I have up to this point discussed various issues relating to the environment. In closing, I should like to consider briefly what can be achieved bilaterally by Japan and Australia. As I noted earlier, Japan imports some seven million tons of LNG a year from Australia. In order for Japan to reduce CO2 emissions and achieve the best energy mix, a greater proportion of energy demand must be met by natural gas. As Tokyo Gas and Toho Gas have already made clear, we plan to raise the contracted volume of LNG imports from Australia from around one million tons at present to around two million tons, and I understand that electric power utilities too are considering increases. LNG imports in 2004 will as a result increase to 10 million tons (a 50% increase on present levels), and annual turnover will be worth US$1.7 billion. This will contribute greatly to the economies of our two countries, and also help combat global environmental problems. It also appears likely that cooperation between Japan and Australia to enhance CO2 sinks, such as the forestation projects already in progress, will expand and progress further. It will in addition be necessary to tap the potential of the two countries to help develop new technologies. It is necessary to further strengthen cooperative ties between Japan and Australia by making use of the two countries' technologies, funds and resources in the interests of the sustainable development of the Asia-Pacific region and the world as a whole, and I believe there exists ample potential to forge a new partnership between the two countries in the 21st century. This paper was presented at the 38th Joint Meeting of Japan-Australia Business Co-operation Committees. |
