No. 64: Subsidy for the introduction of low-carbon equipment (November 25, 2010)

The Ministry of Economy, Trade and Industry will establish a new system to provide a subsidy to medium-sized companies that introduce equipment like a boiler capable of reducing carbon dioxide emissions. The subsidy is proportionate to the emissions and scheduled to be 3,000 yen per ton that is about two times as much as the price for the international transaction. A medium-sized company gets the amount equivalent to the reduction of two years when it introduces the equipment. The government wishes to promote the introduction of low-carbon equipment and stimulate domestic economy simultaneously. It projects to create the investment effect of at least 30 billion yen and the reduction of carbon dioxide of about 500,000 tons for two years.

The equipment subject to the subsidy is such low-carbon equipment as city gas boiler and heat pump that has great effect on the reduction of carbon dioxide emissions. The current price of emission trading is about 1,500 yen per ton, and the government plans to set the price at 3,000 yen to stimulate investment will of medium-sized companies. If a company introduces a biomass boiler of about 10 million yen, it can get a subsidy of 1,200,000 yen because carbon dioxide emissions will be reduced by 400 tons in two years. The government will aggregate the emission quotas purchased from medium-sized companies and put them together into large quotas for the sales to power companies and steelmakers.

Many large Japanese companies currently purchase emission quotas from China and East European countries, creating the problem of outflow of capital to foreign countries. Medium-sized companies account for about 13% of Japan’s total emissions, but many of them are hesitate to make an investment on environment because of heavy financial burden. The government wishes to play an interface role between big companies and medium-sized companies.

No. 63: Support business for the introduction of photovoltaic generation (November 24, 2010)

Several companies will start the support business for the introduction of photovoltaic generation. Mitsubishi UFJ Lease & Finance will start the lease business for large-scale photovoltaic generation equipment. The company will lease photovoltaic generation equipment with an output of several tens of kilowatts to help manufacturing plants introduce photovoltaic generation equipment. It wishes to increase the sales to several billions of yen in three years.

Taisei Corp. will begin construction support service of large-scale photovoltaic generation to be built in an ex-waste disposal site for local governments. The company is now accumulating know-how for selecting the most suitable construction method responding to the foundation strength and wind velocity in an ex-waste disposal site in Mie Prefecture. Although waste disposal sites usually cannot be diverted to other uses because of the legal constraints even if they are filled up, they are suitable for photovoltaic generation because they are big in area and sun-kissed. It will submit proposals of photovoltaic generation to local governments with emphasis on the cost-benefit performance.

Itochu Techno Solutions will launch the service to estimate electricity generated of photovoltaic generation equipment. The company estimates electricity generated on the basis of such factors as the amount of sunlight of the candidate site and examine the feasibility of construction projects planned by power companies. The service costs several hundreds of thousand yen per project.

Surplus power generated by photovoltaic generation equipment at homes and plants is currently purchased by power companies. The Japanese government examining the possibility of purchasing whole amount of electricity generated with a view to introducing a policy in 2012 at the earliest. The policy is expected to ask power companies to purchase sunlight energy generated for the purpose of generating electricity.

No. 62: A new biofuel comes to the Japanese market in 2013 (November 22, 2010)

A new biofuel jointly developed by BP of Great Britain and DuPont of the U.S. is scheduled to be introduced into the Japanese market in 2013. The new product is not easily mixed with water, and the existing gas stations can sell it without modifying the facilities. The two companies plan to market this product as the vehicle fuel following bioethanol. Called biobutanol, it is mainly made of sugarcane. They will provide the production know-how to companies currently producing bioethanl to expand the market worldwide. Biobutanol will be put on the U.S. market in 2012 under the brand name of Butamax, and subsequently will be put on the Japanese market in 2013.

Biobutanol produces fewer by-products in production than bioethanol, and it can shorten the production process considerably. In addition, it has higher energy density than bioethanol. The former has two thirds of energy amount per volume of gasoline, but the latter has more than 80% of energy amount per volume of gasoline. The two companies will produce butanol in Southeast or in Brazil and ship the finished products by sea. The energy amount consumed in production and transportation is small. It can satisfy the environmental standards required by the Japanese government, and it can be sold at nearly the same price as bioethanol per calorie.

Oil distributors put “bio gasoline” that contains a chemical compound of bioethanol called Ethyl tert-butyl ether (ETBE) on the market in 2007, and increased the number of sales bases to increase the sales volume to date. However, new capital investments are required to expand the production of ETBE. Amid the growing demand for larger production of ETBE, a new type of biofuel is expected to be in greater demand in the future.

No. 61: NEDO’s white paper on wind energy technology (August 18, 2010)

Japan’s government-affiliated organization, New Energy and Industrial Technology Development Organization (NEDO), published a white paper on renewable energy technology. In this white paper, it mentioned Japanese government’s plan to halve cost of wind generation on land, while promoting wind generation on the sea and wave activated generation.

It clarified technological problems and solutions of six power generation methods, namely, wind power, sunlight, solar heat, biomass, and wave power. Japan will improve the technology of wind generation, both on land and on the sea, to increase the share of wind generation from the current 0.5% to 3.6% toward 2030. It develops the technology to design high-performance windmills, run them calmly, and generate electricity even with moderate wind. The generation cost of the land model is currently 9-15 yen per kilowatt and projected to decrease to 5-8 yen in 2030. At the same time, Japan projects to decrease the cost of wind generation on the sea to 12-17 yen toward 2020 and 8-11 yen toward 2030 to make it more popular across the country.

The government also emphasizes the necessity of wave activated generation to make the best use of high density wave energy on the coastline of the Honshu main island, insisting that Japan can see bright future for the development of generation technology that utilizes the characteristics of a country surrounded by the sea. It also mentioned a plan to decrease the cost of ocean-thermal energy conversion, which utilizes the temperature difference between surface water and deep water, to 5-7 yen per kilowatt by 2030.

No. 60: Develop the mass production technology of butanol (August 16, 2010)

Idemitsu Kosan and Research Institute of Innovative Technology for the Earth (RITE) in Kyoto will jointly develop the technology to mass produce butanol that is the next-generation biofuel. Using rice straws as the raw material, the two organizations will produce butanol with the help of the self-developed recombinant fungus. Butanol is burnable with higher efficiency and more utilizable than bioethanol. They are scheduled to build an experimental plant toward 2013 and start to mass produce butanol in 2020.

Existing gas filling stations can handle butanol without any problem because it is easily mixable with gasoline and usable also for the diesel engine. This is why it is regarded as the favorite of biofuel. It generates 30% more calorie than ethanol when it is burnt and allows for a higher fuel-economy rating. In addition, it can be used for the production of synthetic fibers and as raw materials of biodegradable plastics and paints. The two organizations founded an association to develop the technology that changes such nonfood plant-based fibers as rice straw and corn haulms into sugar and puts the resulting sugar into the culture tank of RITE-developed recombinant fungus to produce butanol.

They plan to develop the mass production technology by changing the recombinant to be incorporated into the microorganism and by studying the method to culture microorganisms in a large quantity. They aim to produce 300 liters of butanol out of one ton of plants. They are confident that once the mass production system is established, the production cost of butanol will go down to 30-40 yen per liter as low as bioethanol and butanol grow popular as an alternative to fuels, such as gasoline and diesel and petroleum-derived chemical raw materials. Because the technology uses nonfood plants as raw materials, the technology does not adversely affect food production because it uses nonfood plants as raw materials, and it favorably affects the efforts to prevent global warming.

No. 59: Increase Japanese presence in the world water service market (August 11, 2010)

The world water service market was once dominated by four European companies, namely Veolia Water, Suez, and SAUR of France, and RWE of Germany. However, their combined share decreased from 60% to 30% in the past eight years because of the increasing presence of Asian companies including Hyflux of Singapore and K-Water of Korea. Japanese companies are also accelerating their efforts to increase the presence in the world market in collaboration with local governments.

Toyo Engineering, one of Japan’s leading engineering companies, and a subsidiary of Panasonic collaborate with Osaka City to construct and operate a small-scale water facility in Ho Chi Minh City of Vietnam in 2011. Furthermore, Osaka plans to take the initiative in building a consortium and constructing a large-scale water service facility with an investment of seven to eight billion yen on a Build-Operate-Transfer (BOT) contract.

Tokyo is also energetic to market its water supply technology to foreign countries. The leakage rate of water supply is said to be 10-20% in advanced countries and 50% in some developing countries, but Tokyo can take pride in the leakage rate as low as 3%. Tokyo’s technology seems to have a good prospect in the world market, but what matters most in the world market is the water supplied population. Veolia Water has 139 million water supplied population, whereas Tokyo has only 12.5 million.

There are about 8,000 public water suppliers in Japan, and each supplier is managed by a local government. Nearly 80% of the suppliers are very small with a water supplied population of less than 5,000. As a matter of fact, Japan is far behind England and Germany in privatizing the water supply business. This is why local governments need to collaborate with private companies to market their technologies.

Japanese membrane technology
Japanese presence in offering the water supply business as a system is low, but it has a big share in water treatment membrane market. Nitto Denko has 32% share and Toray has 27% share in the world. But a radical change is going on in the Chinese market. A Chinese maker originating from a university laboratory has been growing at an increasing rate of 80% per year for the past three years. It now accounts for 30% share in the Chinese domestic market using the low-price strategy. Toray built a mass production plant of its membranes in Beijing with an investment of 7.5 billion yen. With this new plant in Beijing, Toray increased the production capacity of its reverse osmosis membrane by 50%. Korea is also emerging a rival in the world market. Korea is reported to launch a substantiative experiment of the membrane treatment technology with an investment of 19 billion yen under the government’s leadership.

To compete with Chinese and Korean companies, a project attended by 27 universities and companies including Tokyo University and Toray has been launched in Japan. The leading authority in water treatment membrane from Toray takes the leadership. The project tries to develop a system named the Megaton Water System. As the name indicates, it tries to desalinate one million tons of sea water per day. With the help of a government subsidiary amounting to 2.9 billion yen, it tries to half the desalination cost by virtue of generation that uses salinity difference between pure water and sea water. The project team plans to put the technology into practical use in 2013.

With the growing population in emerging countries, the world water supply market is expected to grow 2.5 times as big as in 2007 to 86 trillion yen in 2025. Japan has been exerting lots of energy to make the water treatment technology as a star export product like railway and nuclear power generation.

No. 58: Japanese government’s concrete plan for the purchase of renewable energy (August 9, 2010)

The Japanese government laid down a concrete plan that lets electric power companies purchase renewable energy. Scheduled to be enacted in fiscal 2012, it covers every kinds of renewable energy including sunlight, wind, and geothermal heat, though it currently focuses only on sunlight. It also covers power generated by electric power companies, though only power generated by households is currently subject to purchase. The purchase price of power generated by means other than sunlight is scheduled at 15-20 yen per kilowatt that is a little higher than in EC countries, because Japan’s higher cost for infrastructure improvement leads to higher generation cost.

The purchase price of power generated by sunlight is set at 48 yen per kilowatt in the existing law and will remain higher than other types of power in the new system, but it will be decreased in incremental steps with a view to expecting the industry to reduce photovoltaic generation cost. The key to a lower purchase price of power generated by sunlight is the spread of generation equipment that currently costs 500,000-600,000 yen per kilowatt generation capacity. Because electric power companies need to purchase relatively expensive power, users pay the extra price to be included in the electric power charges. The extra price that the standard household needs to pay is estimated at 150-200 yen per month.