JAPAN Trends and Developments Contributed by: Takahiro Kobayashi, Shigeki Okatani, Yusuke Murakami and Hirohiko Tanaka, Mori Hamada
Mori Hamada Marunouchi Park Building 2-6-1 Marunouchi Chiyoda-ku Tokyo 100-8222 Japan Tel: +81 3 6212 8330 Fax: +81 3 6212 8230 Email: info@morihamada.com Web: www.morihamada.com
Introduction The energy market in Japan is currently at a major turning point. In October 2020, the Japanese government published a policy target to achieve carbon neutrality by 2050, and in April 2021, released an even more ambitious target to cut greenhouse gas (GHG) emissions by 46% by FY 2030, compared with FY 2013. Against this backdrop, one of the most important poli- cy issues is how to further grow renewable energy into one of the main power sources, and how to integrate it into the wider electricity market in Japan. On 18 February 2025, the Japanese government approved the Seventh Basic Energy Plan, outlining measures to achieve a stable energy supply and a decarbonised society. In this plan, the government clearly stated its policy to maximise the use of both renewable energy and nuclear power, aiming to increase them to a maximum of 70% of total power sources by FY 2040, thereby altering its nuclear ener- gy policy, which has been in place since the Great East Japan Earthquake of 2011. Simultaneously, the government also approved the “GX2040 Vision”, indi- cating its commitment to achieving a stable energy supply, economic growth and decarbonisation in an integrated manner, in alignment with the global warm- ing countermeasures plan.
Renewable Energy Legislation Major reform
The Japanese government has implemented major reform to change the fundamental framework for the country’s feed-in tariff (FIT) programme, under which electricity generated by approved developers from renewable energy sources is purchased by offtakers at fixed guaranteed rates for a fixed term (ten to 20 years). Under the FIT programme, offtakers pass their extra costs from purchasing renewable sourced elec- tricity to end-users by adding those costs to electricity bills. Since the FIT programme was introduced in 2012, the development of renewable power plants (especially photovoltaic (PV) power plants) has boomed and the annual cost of power has exponentially increased to approximately JPY4.8 trillion as of 2026, and is expected to further increase in the coming years. Thus, in an effort to reduce the additional burden on households and businesses, the Ministry of Economy, Trade and Industry (METI) has worked to shift from the FIT to the FIP (feed-in premium) programme, with more market risks transferred to developers. In June 2020, the Diet (Japan’s national legislature) brought in the Act to Partially Amend the Electricity Business Act and Other Acts in Order to Establish a Resilient and Sustainable Electricity Supply System (the “FIT/FIP Reform Act”) to implement the funda- mental reform of the existing FIT framework. The FIT/ FIP Reform Act came into effect on 1 April 2022 and substantially amended the existing Act on Special
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