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“Meeting Energy Needs, Reducing Environmental Impact” A Climate Change Forum

Framework Beyond 2012 How to Find Ambitious and Practical Common Ground

March 5, 2009 Hajime Ito President JETRO New York Center 1


“Make the U.S. a Leader on Climate Change” ・Only real solution to climate change requires all major emitting nations to join in the solution. ・Developing nations like China and Brazil must not be far behind in making their own binding commitments. ・To develop an effective and equitable global program, US will reengage with UNFCCC. ・US will invigorate the MEM effort and bring all the major emitting nations together to develop effective emissions reduction efforts. (excerpts from “New Energy for America”)

• We will make it clear that America is ready to lead. To protect our climate, we must call together a truly global coalition. We will ensure that nations like China and India are doing their part, just as we are now willing to do ours. (excerpts from the speech on Energy Independence and Auto Efficiency Standards—Jan 26,2009)

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Lessons of Kyoto Protocol ○ Kyoto Protocol is the first international agreement on reduction of CO2 emission. ○ Only 30% of global emissions are covered by Kyoto Parties. ○ United States, China and India have no obligation. ○ Emissions of emerging countries continue to increase significantly, and share will rise 62% in 2050. Global CO2 Emission from Fuel Combustion (2006) RussiaParties Kyoto United States U.S. Emerging countries

Mexico 1% Iran 2%

Germany Canada 3% 2%

31%

49%

S.Korea 2% India 4%

Others 19%

Russia Japan 6% 4%

20% China 20%

Estimation of future Global CO2 emissions

US 20%

UK 2% Italy 2% Australia 1% France 1% Other Kyoto Parties 10%

(Source) IEA Source: Research Institute of Innovative Technology for the Earth (RITE)

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Key Concept of Commitment of Future Framework

Bali Action Plan “b(i) b(ii)”, mitigation b(i) Developed Countries ・ Measurable, reportable and verifiable (MRV) nationally appropriate mitigation commitments or actions, including quantified emission limitation and reduction objectives (QELROs) b(ii) Developing Countries ・ Nationally appropriate mitigation actions in the context of sustainable development, in a measurable , reportable and verifiable (MRV) manner ・ Supported and enabled by technology, financing and capacity-building 4


Mid-term CO2 Reduction Targets Targets of reduction of CO2 emissions [Mt-CO2]

Reduction targets in 2020

8,000

Comparered Comparered to 2005 to 1990 level level

US 7,000

(P res .O bama's  commitment) 14%  below 2005 level by 2020

6,000

E U27 5,000

20%  below 1990 level

4,000

US (Pres.Obama's commitment: 14% below 2005 level)

▲14%

±0%

EU (Mid-term target: 20% below 1990)

▲14%

▲20%

Canada (Mid-term target: 20% below 2006)

▲21%

▲3%

Australia (Mid-term target: 5% below 2000)

▲10%

▲5%

C hina 3,000

2,000

J apan 1,000

6%  below 1990 level

India

C anada

      C anada 20%  below 2006      Aus tralia 5%  below 2000

Australia 0

2

4

6

8

0

2

4

6

0

0

0

199

199

199

199

199

200

200

200

200

201

202

203

0

Source:UNFCCC、IEA、EEA Note: Land‐use change and forestry are not included, except for Australia.  China and India’s emissions are energy‐related only.

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President Obama’s GHG Reduction Targets “A New Era of Responsibility: Renewing America’s Promise” (Feb. 26, 2009) (14% below 2005 level by 2020 & 83% below 2005 level by 2050) (Million tons CO2 Eq.)

10000 9000 8000 7000 6000 5000 4000 3000 2000 1000 0

Mid-Term Target (14% below 2005 level by 2020) 6,242

6,575

7,075

7,257

(– 1.0 Bt in 12yrs ( – 87Mt/yr, –1.4%/yr)) ● 6,241

Long-Term Target (83% below 2005 level by 2050)

1,234 ●

( – 5.0 Bt in 30 yrs ( – 167Mt/yr) )

1990 95 2000 05 2010

2020

2030

2040

2050

Source: Energy Information Administration, USDOE 6


Simple Equation

Energy Efficiency

Clean Energy

Growth

Energy Use CO2 Emissions CO2 Emissions

( = Supply) ×

×

Energy Supply

GDP

GDP

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President Obama’s Federal Renewable Portfolio Standard (double in 3 years, 10% by 2012 & 25% by 2025)

Wood

40.2%

Wind

27.5%

Waste

16.7%

Geothermal 15.1% Solar/PV

0.5%

American Recovery & Reinvestment Plan “Double the production of alternative energy in the next 3 years.” (January, 2009)

25%

Petroleum Natural gas & other gas Nuclear Hydroelectric

10%

2000

in 2006

Coal

1995

Other renewable

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

2006 2012

2025

Other Renewable

Other renewable in 2006 is 2.4% Hydroelectric + other renewable in 2006 is 9.5%

Source : Energy Information Administration, USDOE 8


American Recovery and Reinvestment Act of 2009 ($787.2 Billion) Clean Energy Programs (over 11 years) 1. Smart Grids

$ 17.0 Billion

2. Building/Appliance Efficiency - Federal green building ($ 4.5 Billion) - State energy program ($ 6.3 billion) - Renovation of defense facilities ($ 4.4 Billion) - Weatherization for low-income homes ($ 5.0 Billion)

$25.8 Billion

3. Renewable Energy and Alternative Energy $ 6.4 Billion - Renewable energy research ($ 2.5 Billion) - CCS research for coal-fired power plants ($ 3.4 Billion) 4. Clean Vehicle - Advanced battery research ($ 2.0 Billion)

$ 3.3 Billion

5.Transit $17.7 Billion - Investments in public transportation ($8.4 Billion) - Investments in high speed rail and Amtrak ($9.3 billion) 6. Green Job Training

$0.5 Billion

Total $70.7 Billion (+ Clean Energy Tax Incentives over 10 years $ 20 Billion) Source: Center for America Progress

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Sectoral Emission Reduction Potentials in 2020 (1) ≤0$/tCO2 Elec.: Fuel switching among fossil fuels Elec.: Nuclear

United States

Elec.: Renewables

EU-27

Elec.: Energy saving Japan Other energy conversion sectors Russia

Iron & steel Cement

China

Paper & pulp India Chemical Annex I & OECD

Aluminum Other industries

Major developing countries

Transport

Other developing countries

Res. & com. sectors 0

1000

2000 3000 4000 CO2 emission reduction potential (MtCO2/yr)

5000

Note: emission reduction potentials of CCS excluded

Source: “Global Emission Reduction Potentials and Scenarios in Energy Supply and End-use Sectors”, RITE 10


Sectoral Emission Reduction Potentials in 2020 (2) 0–25$/tCO2 Elec.: Fuel switching among fossil fuels Elec.: Nuclear

United States EU-27

Elec.: Renewables Elec.: Energy saving

Japan

Other energy conversion sectors Russia

Iron & steel Cement

China

Paper & pulp India Chemical Annex I & OECD

Aluminum Other industries

Major developing countries

Transport

Other developing countries

Res. & com. sectors 0

1000

2000 3000 4000 5000 CO2 emission reduction potential (MtCO2/yr)

Note: emission reduction potentials of CCS excluded

Source: “Global Emission Reduction Potentials and Scenarios in Energy Supply and End-use Sectors”, RITE 11


EC Proposed Post-Kyoto Scheme in January 2009 (1) - Developed countries should reduce 30% below 1990 level in 2020. - Developed countries’ overall target should be distributed in a manner that is fair and ensures comparability of effort, with considering 4 indicators Example of a distribution of targets for developed countries using 4 indicators * Share according to GDP/capita

Share according to GHG/GDP

Share according to GHG '90-'05

Share according to Population '90-'05

EU27 USA Japan Canada

(a) -10.2% -14.3% -12.8% -12.6%

(b) -10.1% -12.3% -5.6% -14.6%

(c) -5.2% -15.9% -12.5% -19.3%

(d) 1.7% 8.2% 1.7% 7.8%

Target relative to 2005 (e)= (a+b+c+d) -24% -34% -29% -39%

Australia & New Zealand

-12.2%

-16.3%

-19.9%

10.0%

-38%

Other OECD Europe

-17.9%

-4.4%

-11.9%

3.7%

-30%

Commonwealth of Independent States

-1.0%

-20.0%

8.0%

0.6%

-12%

Average developed countries

-10.5%

-12.8%

-8.5%

4.5%

-27%**

* The countries with very high and very low level are modified in some indicators. ** -27% below 2005 level means -30% below 1990 level. Source: “Towards a comprehensive climate change agreement in Copenhagen - Extensive background information and analysis - part 1 (Commission of European Communities)”

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EC Proposed Post-Kyoto Scheme in January 2009 (2) - CDM should be reformed only to deliver real additional reductions. - For advanced developing countries and highly competitive economic sectors, CDM should be replaced by a carbon market crediting mechanism. Reductions in developed and developing countries and trade in emission rights (result of a model calculation) Amount bought Achieved (+) or sold (-) in domestic 2020 via the reduction in carbon market as 2020 vs 1990 a % of 1990 emissions emissions

Reduction in 2020 vs baseline emissions

Amount sold via carbon market as % of baseline emissions

-19%

-6%

-20%

-6%

Brazil

-20%

-6%

India

-13%

-4%

2020 target vs 1990 emissions

Developed countries EU

-31%

-22%

9%

-30%

-20%

10%

USA

-24%

-9%

15%

Japan

-24%

-6%

18%

Russia Developing country China

-38%

-46%

-8%

Source: “Towards a comprehensive climate change agreement in Copenhagen - Extensive background information and analysis - part 1 (Commission of European Communities)� 13


Japan Considering Mid-term Target of Reduction of CO2 Emissions (1) Implementing CO2-reduction technology to varying degrees in 4 cases Case 4 Case 3 Case 2 ** Case 1* "NIES Japan AIM "NIES Japan AIM "IEEJ Maximum "IEEJ Continuous Model-III" Model-II" Introduction Case" Effort Case" CO2 Reduction ratio based on 1990 (***: GHG not CO2)

+6%

-4%

-15% ***

-25% ***

Cost

-

$52 trillion (total through 2020)

$2.3-2.9 trillion/yr

$5.7-6.9 trillion/yr

The figures below indicate the improvements in Japan's energy efficiency necessary to implement each of the four technology "case". Residential photovoltaic (PV)

1.3M houses (4 times the current number)

3.2M houses (10 times the current number)

6.6M houses (20 times the current number)

17.7M houses (55 times the current number)

Wind Power (compared to current)

4 times

5 times

10 times

10 times

Next generation automobile (ration in stocks)

-

20%

20%

35%

Gasoline mileage (improvement from 2005 to 2020)

-

15%

26%

29%

Energy efficient houses (% of newly-built houses meeting the strictest standard for energy efficiency)

80%

80%

100%

100% & also present houses have to match strict standards

High-efficiency water heater (compared to current)

2.5 times

40 times

63 times

63 times

* “Continuous Effort Case”: The efforts to improve the efficiency of equipments up to date are to be continued on the trajectory of existing technologies. ** “Maximum Introduction Case”: In addition to the above Continuous Effort Case, this case assumes utmost dissemination of equipments, of which energy efficiency performance will significantly improve with cutting-edge technologies that are already at deployment stage, while not imposing obligatory measures on the people. 14


Japan Considering Mid-term Target of Reduction of CO2 Emissions (2) - The Japanese government is now considering a mid-term (2020) target for CO2 reduction. - The target will be announced in June 2009. The table below includes estimates of marginal cost ($ / t-CO2) for meeting the CO2 benchmarks in the left-hand column. The percentage is relative to Japan’s 1990 emission level.

Estimate of Japanese Estimate of Japanese A research institute B research institute EU's proposal (20% below 1990)

$53

+7%

$50

Âą0%

President Obama's commitment (14% below 2005 level)

$54

+7%

$100

-2%

(reference) "Maximum Introduction Case"

$110

-3%

$200

-3%

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Japan’s proposal for a Post-2012 framework (1) Basic Structure New Protocol is preferable option (or significant amendment of KP) Shared Vision ¾ At least 50% reduction of GHG by 2050 to be adopted by all countries as a shared vision ¾ Vision on how to pave the way to reduce global emissions by 2050, including innovative technology and low carbon society ¾ All countries will take effective mitigation actions while developed countries will need to lead the global efforts by fulfilling the significant reductions ¾ Also major developing countries will be required to fulfill international obligations to take mitigation actions, in accordance with their common but differentiated responsibilities and respective capabilities

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Japan’s proposal for a Post-2012 framework (2) Developed Countries (OECD Members / Equivalent to OECD / Wishing to be developed countries)

„ Commitment by developed countries: Party

Quantified emission limitation and

reduction rates from 1990

reduction rates from 2000

reduction rates from 2005

reduction rates from 2007

reduction commitment (Gg-CO2e)

(%)

(%)

(%)

(%)

A

xxx

xxx

xxx

xxx

xxx

B

xxx

xxx

xxx

xxx

xxx

* Reduction rates from the base years mentioned above are illustrative and non-exhaustive.

„ Commitment – achieved in principle through domestic measures (international flexibility mechanisms as supplementary measures) „ Comparability – sectoral energy efficiency/ GHG intensity with due consideration for the MAC/ others 17


Japan’s proposal for a Post-2012 framework (3) Developing countries A) Major developing countries expected to take further mitigation actions based on economic development stages, response capabilities, shares of GHG emissions „ Binding targets for: ¾ GHG intensity or energy intensity in major sectors (e.g., power, iron/steel, cement, aluminum, road transport) ¾ Economy-wide GHG/GDP or Energy Consumption/GDP (with estimate of total GHG emissions based on GDP forecast) „ National measurement system for relevant data related to its targets B) All developing countries „ Voluntary national action plan to be reviewed periodically by COP Review of actions by countries with the changes of circumstances As a result of the review for the change of economic development stages etc., the higher level of commitments/actions can be applied to the countries 18


2009 Schedule 18 Feb 25-27 March 29 March-8 April 1-12 June June-July 8-10 July Aug-Sept September Autumn October November 7-18 December

Informal Ministerial (Nairobi; hosted by Denmark) Workshop on Sectoral Approach (Bonn) AWG/KP, AWG/LCA (Bonn) AWG/KP, AWG/LCA (Bonn) Greenland Dialogue (Greenland; hosted by Denmark) G8 Summit/MEM (Maddalena) AWG/KP, AWG/LCA UN General Assembly/ Summit on Climate Change (NY)

APP Ministerial (China) Informal Ministerial? Another Session of AWG/KP, AWG/LCA? APEC Summit (Singapore) East Asia Summit (Thailand) AWG/KP, AWG/LCA, COP 15 (Copenhagen)

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Mid-term Strategy and Long-term Strategy Future Estimates (BAU)

Global Efforts of Energy Conservation

Global CO2 Emission Stop and reverse global

Innovative Technology RD&D Halve current global emissions ďźˆCool Earth 50 proposal

Long-term Strategy

Mid-term strategy

emissions via a framework that all major economies participates in.

Achievement of the ultimate Goal Current level

2020

2050

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“Cool Earth-Innovative Energy Technology Program” (1) z To achieve the long-term target of “halving the world’s emissions by 2050”, - development of innovative energy technologies is indispensable. - Japan should lead with its world-top-class energy technologies. z To this end, this program identifies technologies which should be tackled by priority, creates road maps and considers international cooperation.

- “ 2 1 ” T e c h n o lo g ie s t o b e P r io r it iz e d Supply side

E ffic ie n c y im p ro v e m e n t PPoowweer rGGeenneer ra a t tioionn //t ra t r annssmmisisssioionn 1 . H ig h - E ffic ie n c y N a t u r a l G a s F ir e d P o w e r G e n e r a tio n

Demand side

TTr ra a nnssppoortrtaat io tionn

I Inndduusst ry tr y CCoommmmeer rc c iaial l

L o w c a rb o n iz a tio n

2 . H ig h - E ffic ie n c y C o a l F ir e d P o w e r G e n e r a tio n

8 . F u e l C e ll V e h ic le

9 . P lu g - in H y b r id V e h ic le / E le c t r ic V e h ic le

1 1 . I n n o v a t iv e m a te r ia ls , P r o d u c tio n / P r o c e s s in g 1 3 . H ig h - E f fic ie n t h o u s e a n d b u ild in g

1 6 . U lt r a H ig h E f fic ie n c y H eat pum ps

5 . A d v a n c e d n u c le a r P o w e r G e n e r a t io n

4 .I n n o v a t iv e P h o t o v o lt a ic p o w e r G e n e r a t io n

6 . H ig h - E ffic ie n c y S u p e r c o n d u c t in g P o w e r T r a n s m is s io n

7 . I n te llig e n t T ra n sp o rt S yste m

3 . C a r b o n D io x id e C a p tu r e a n d S to ra g e (C C S )

1 2 . I n n o v a t iv e I r o n a n d S te e l m a k in g p r o c e s s

1 4 .N e x t- G e n e r a t io n H ig h E ffic ie n c y lig h tin g

1 7 . H ig h - E ffic ie n c y I n fo r m a t io n D e v ic e a n d S y s te m

1 0 .P r o d u c t io n o f T ra n sp o rt B io fu e l

1 5 . S t a t io n a r y F u e l C e ll

1 8 . H E M S / B E M S / L o c a l-le v e l E M S

CCr roossss-c-cuuttt in tingg 1 9 . H ig h - P e r fo r m a n c e P o w e r s to r a g e

2 0 . P o w e r E le c t r o n ic s

2 1 . H y d r o g e n P r o d u c tio n 1, T r a n s p o r t a n d S t o ra g e

3. CCS (re sta te d )

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“Cool Earth-Innovative Energy Technology Program” (2) -Promotion of International Cooperation- Sharing Technology Road Maps ◯ Work with IEA to check the current progress of technology development, sharing road maps, to create a framework for cooperation.

Promotion of New International Cooperation ○ Carbon dioxide capture and Storage(CCS) ○ Innovative PV power generation

Acceleration in R&D by Cooperation ◯ Work with foreign research institutions to conduct R&D efficiently while complementing research resources.

Notes for promoting cooperation ◯ Consider the protection of IPR and the prevention of unintended leaks of technology. ◯ Consider IPR on a government basis to ensure smooth transfer of technology.

○ High-performance power storage ○ High-efficiency superconducting power transmission ○Innovative iron and steel making process ○High-efficiency information device and system

-Maximum Use of Current International Cooperation Framework - • IEA Implementing Agreement / General / Developed & Developing Countries including China & India • APP / General / US, Japan, China, India, S. Korea, Australia, Canada • Carbon Sequestration Leadership Forum (CSLF) / CCS/ US, Japan, China, India etc • International Partnership for the Hydrogen Economy (IPHE) / Hydrogen / US, Japan, China, India etc • Generation IV International Forum / Nuclear / US, Japan, China etc • Global Nuclear Energy Partnership (GNEP) / Nuclear / US, Japan, China etc

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Climate Change Forum 2009 | Framework Beyond 2012 : Hitachi in U.S.A.