[ Nippon Keidanren ] [ Journal ]
Messages from "Economic Trend", March 2005

"Technology for Energy Conservation" and "China"

Fumiaki Watari
Vice Chairman of the Board of Councillors, Nippon Keidanren
President and CEO, Nippon Oil Corporation

The Kyoto Protocol officially went into effect last month. Henceforward it is vital that we implement concrete measures to reach the aggressive targets set under the protocol.

We cannot help but wonder, however, how effective the protocol will be in preventing global warming without the participation of the United States and the commitment for greenhouse gas reduction from China. The former is the largest producer of carbon dioxide in the world, and the latter has been increasing energy consumption dramatically in recent years. In this respect, Japan, who actually chaired the conference in Kyoto, might be criticized for lack of leadership. As we reflect on these developments and contemplate on what our next steps should be to combat global warming, two key points come to mind: "Technology for Energy Conservation" and "China".

Japan is a world leader in energy efficiency. Finding itself faced with two major oil crises, the country committed itself to energy conservation early on, mobilizing every available technology. The outcome has been the development of electric appliances which can meet the stringent energy efficiency standards only "front runner" manufacturers can reach, hybrid cars, on-site fuel cells for household use to name a few. On-site fuel cells for household use will be put on the Japanese market this year first in the world.

The energy conservation effort has rapidly spread in Japan, because being poor in energy resources, the country was heavily exposed to fluctuations in energy prices on the international market. On the other hand, China, becoming a net importer of oil in 1993, is still fairly rich in oil resources and far less sensitive to energy cost. Statistically speaking, China's energy consumption per GDP is eight times greater than Japan's at the current exchange rates. The crux of the issue here is that improvement in energy efficiency has not caught up with the speed of their economic growth. Unless proper measures are taken, efforts against global warming enforced only by the Kyoto Protocol member countries may not effect sufficient change globally. Besides, due to our geographical proximity to China, Japan will not be free from any direct adverse effect of air pollution and acid rain from China, either.

In order to preempt such devastating consequences, it is necessary for Japan to extend its hands in positive cooperation to China and its energy conservation policies. China could certainly draw from the technological strides Japan has made in reaching its energy conservation goals, while simultaneously achieving economic growth. We are past the point of gentle cajoling, and must seek specific measures to foster cooperation with China, so that they will adhere to the framework in the making following the Kyoto Protocol.

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