Challenges and Opportunities in Japan

THE BIG ENERGY QUESTION SUSTAINABLE CITIES: Challenges and Opportunities in Japan A Roundtable Discussion OCTOBER 16, 2014, AT THE GRAND HYATT, TOKY...
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THE BIG ENERGY QUESTION

SUSTAINABLE CITIES:

Challenges and Opportunities in Japan A Roundtable Discussion OCTOBER 16, 2014, AT THE GRAND HYATT, TOKYO

Hosted by National Geographic in Partnership with Shell

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Introduction

Setting the Scene

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The Challenges of Japan’s Cities

Finding the Right Energy Mix

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Improving Energy Efficiency and Conservation

Developing Sustainable Transport Systems

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Key Priorities for Energy in Japan’s Cities

In Summary

NOBUKO ASAKAI Senior Manager, Accenture Japan DAVID BRAUN Director of Outreach, National Geographic CLAY CHANDLER Director, The Barrenrock Group SATOSHI CHIDA Director for International Relations, Bureau of Environment, Tokyo Metropolitan Government JEFFERSON EDWARDS General Manager, Global Gas and LNG Market Development, Shell HIRONORI HAMANAKA Chair, ICLEI Japan and Chair, Board of Directors, Institute for Global Environmental Strategies (IGES) YOICHI HORI Professor, The University of Tokyo

Participants

TOMOAKI KOBAYAKAWA General Manager, Corporate Marketing and Sales Department, Customer Service Company, Tokyo Electric Power Company (TEPCO) HIROSHI KOMIYAMA Chairman of the Institute, Mitsubishi Research Institute YUTAKA MATSUMOTO Project General Manager, Toyota Motor Corp. ALEX MOEN Vice President of Explorer Programs, National Geographic HIDEKI MORI Deputy Executive Director, Climate Change Policy Headquarters, City of Yokohama SHUZO MURAKAMI President, Institute for Building Environmental and Energy Conservation (IBEC) SHIGERU MURAKI Vice Chairman and Director, Tokyo Gas Co., Ltd. HIDETOMO NAGATA Vice President, Cities Solution Centre Japan, PricewaterhouseCoopers

TERUYUKI OHNO Executive Director, Japan Renewable Energy Foundation SHIGEO OTSUKA Editor in Chief, National Geographic magazine (Japan edition) NOBUYUKI OZAKI Senior Fellow, Railway & Automotive Systems Division, Social Infrastructure Systems Company, Toshiba Corporation MASAHIRO SHIRAKAWA General Manager, Social Engineering Systems Division, Power & Social Infrastructure Business Group, Fuji Electric Co. MINORU TAKEDA Country Chairman, Shell Japan NOBUO TANAKA Global Associate for Energy Security and Sustainability, The Institute of Energy Economics, Japan (IEEJ) TOSHIFUMI YOSHIZAKI Vice President, Smarter Cities, IBM Japan

As part of the Great Energy Challenge, a National Geographic initiative in partnership with Shell, key experts from business, academia, government and non-profits met in Tokyo on October 16th. The event, titled

SUSTAINABLE CITIES:

Challenges and Opportunities in Japan was designed to explore how we plan, create and manage the model sustainable city of the future from an energy perspective. Taking a global view but with a focus on Japan, it addressed overarching themes of how we meet the increasing demands for energy supply while reducing carbon emissions, and the role innovative technology may play in advancing energy efficiency. This was the fifth event in a global series supported by Shell, and followed an earlier discussion on sustainable cities held in Istanbul, Turkey. Other debates held around the world have covered subjects including biofuels, the Arctic and natural gas. Masahiro Shirakawa, Fuji Electric Co., Ltd., Satoshi Chida, Tokyo Metropolitan Government (opposite top, left to right); Teruyuki Ohno, Executive Director, Japan Renewable Energy Foundation, Nobuko Asakai, Accenture Japan,(opposite center, left to right); Yoichi Hori, The University of Tokyo (below, left); Roundtable convenes (below, right)

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Framing the forum’s discussion topic, several questions helped guide the conversation:

What are the biggest energy-related issues facing Japan’s cities? How do we fuel Japan’s city of the future? How can Japan’s technology leadership advance energy efficiencies in its cities? What is next for improving transport efficiencies in Japan’s cities? What solutions should Japan focus on to support sustainable growth in its cities and cities around the world?

} On behalf of National Geographic Alexander Moen, Vice President of Explorer Programs, welcomed participants to the Big Energy Question. Providing context for the event, he explained that National Geographic is, at its core, an educational and scientific organization supporting fieldbased research and science to better understand the world around us. For over 125 years it has shared its findings to inspire people to care about the planet, and now, through a series of initiatives, National Geographic is deepening its audience’s engagement with some of the world’s most important topics. A key program in this is the Great Energy Challenge, which launched in 2010 in partnership with Shell. Acknowledging that the attendees for today’s event were drawn primarily from Japan,

Moen expressed his hope that the event would be the start of a broader global dialogue. Moen introduced the event’s moderator, Clay Chandler, who brought a broad perspective to the table as an award-winning journalist in Asia. Chandler has written for distinguished publications, including the Wall Street Journal, the Washington Post, and Fortune magazine. As the former Asia editor for McKinsey, Chandler has worked on a series of high-profile publishing projects, including “Reimagining Japan: The Quest for a Future That Works.” Chandler now lives in Hong Kong and is the Director of the Barrenrock Group with specific expertise in Asia. |

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} Chandler launched the debate by describing his own experiences of living in Tokyo during the 1980s. He befriended a professor of urban planning who provided a real insight into “how complicated, unique and amazing” Tokyo is. This was reinforced by the daily commute on public transport. “It was amazing to me that this city worked as efficiently as it did,” said Chandler, who recalled a day when the trains and subways went on strike. “Millions of people who had been underground were suddenly walking above ground to get to work … single-file, step by step, inching along the sidewalk.” This made Chandler recognize that Tokyo is so complicated, delicate and well organized that “even the tiniest shock throws out its equilibrium.” Chandler reflected that Tokyo had once again been forced to restore its delicate equilibrium after the 3/11 earthquake. For Chandler, Tokyo is the best place in the world to discuss the challenges and opportunities for energy and cities. Recognizing that 50% of the Earth’s population now lives in cities, which consume 75% of our energy and produce 80% of our carbon emissions, Chandler believes that in “thinking about the problem of energy, cities have to be part of the equation.” Tokyo is the world’s largest metropolis and “in many ways the most complicated and efficient.” What’s more, Chandler noted Japan’s exceptionally high dependence on energy sources outside the country, making Tokyo “the perfect ground zero to discuss energy and sustainable cities.”

Setting the Scene JAPAN’S CITIES AND THE GLOBAL CONTEXT

Olympics published exactly 50 years before. The author had observed the acute problems that came with Tokyo’s 10.6 million population: overcrowding, congestion, housing shortages, pollution and more. Although the author’s fears that Tokyo would destroy itself have proved wrong, Otsuka fully understood his anxiety. Otsuka stated that the global population stands at over seven billion and is projected to grow by about one billion every decade. This would further increase the concentration of people in cities. In 2007 urban populations exceeded rural populations for the first time, and by 2100 cities will probably house 70% of the world’s population, with UN estimates expecting Tokyo to remain the world’s largest city in terms of population. Otsuka noted the world’s continued dependence on fossil fuels and the enormous pressure to extract the energy resources needed to support urban populations and economies. Tokyo, for example, consumes as much as 674 petajoules of energy, “equivalent to Nordic states.” Most of this energy comes from overseas. Otsuka expanded on this idea, asserting that to feed the world’s growing population would require

“more concentrated agriculture,” which would demand more energy and “increase the burden on the environment.” Yet, while Otsuka acknowledged the many challenges of urbanization, including rapid unplanned growth and the slow expansion of infrastructure, cities also offer opportunity. They have contributed to diversification of energy supply and more effective utilization of energy and improvements in mobility. He believes that by making the right choices for our cities, “the world will become more livable and be more environmentally friendly.” Citing Tokyo as a positive example, Otsuka argued that by “implementing various measures, we have become a mammoth city and driven Tokyo to further development.” Otsuka concluded that to maintain sustainable development, Tokyo has to think carefully about its needs and how best to deliver them, especially as its decisions would “receive global attention.” |

Shigeo Otsuka, National Geographic Japan, Clay Chandler, The Barrenrock Group (below left to right)

Further global context for the discussion was provided by Shigeo Otsuka, Editor in Chief of National Geographic magazine’s Japan edition. Otsuka shared with the group a National Geographic article on the Tokyo

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} Chandler opened the debate with the question: “What is a smart city?” Toshifumi Yoshizaki, Vice President, Smarter Cities, IBM Japan, responded that IBM referred to the “smarter city,” not the “smart city,” “because we have to improve the existing infrastructure.” For IBM this involved utilizing IT. He outlined two meanings of “smart city.” “Literally it has to become smarter ... we have to improve the environment for the city’s residents to live in. Secondly, smart has to mean autonomous as well. As an ecosystem, improvements must be made. So the perspective is always from the people who are living there, and from their perspective the city environment must be improved.” Hidetomo Nagata, Vice President, Cities Solution Centre Japan, PricewaterhouseCoopers, said that he would replace the word “smart” with the word “bespoke.” He explained that, “each individual has different needs, so rather than trying to provide the same solution to all people we want to deliver the optimal service to each individual, and we will utilize information for that.” He warned that “utilizing IT does not always mean it is smart. We have to design the system and utilize the infrastructure to enable it to be smart.” Hiroshi Komiyama, Chairman of the Mitsubishi Research Institute, commented that after hearing the previous speakers he was now thinking about ”smart” in terms of a city’s residents. “We have an abundance of goods. So when we have a lot of goods … how do we set our next goal?” He gave the example of learning, saying, “a city can continue to become smarter by learning—a city that has interactions and exchanges.” An estimated one-third of Tokyo’s residents will live alone by 2030, possibly unhappily. “But if they can have exchanges and interactions in society, then I think they would be very

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The Challenges of Japan’s Cities WHAT ARE THE BIGGEST ENERGY RELATED ISSUES FACING JAPAN’S CITIES?

happy,” adding that this has important health ramifications. Here Chandler agreed that we can’t “just think of smart cities in the context of energy, because there is a whole broader range of problems.” He suggested that “there’s a cultural aspect to the smartness of cities that is not just technology and software.” As an example Chandler referenced recycling, contrasting Hong Kong’s relaxed attitude to waste with Tokyo’s complex but strictly enforced culture of recycling. “That has nothing really to do with technology,” Chandler said. “It’s the culture. It’s this kind of software that I think makes some cities smarter than others…and makes Tokyo one of the smartest cities in the world.” Shuzo Murakami, President, Institute for Building Environmental and Energy Conservation (IBEC), agreed that “we should not just consider smart cities in the context of energy.” Citing the importance of people’s health, he noted that in an age of mass consumption we need “to become slimmer.” To accomplish this, “new lifestyles and new values” must be created and provided in the city. “I think that is akin to a smart city. Information service as well as education service is important … and must be enabled by IT.” Nobuko Asakai, Senior Manager, Accenture, also agreed that smart is not just limited to energy but “has to encompass our whole lives.” Considering the benefits IT brings to optimization, Asakai said that “in the context of cities, it will mean the kind of services that can be provided.” Here she cited electronic voting as well as integrated services from buses to banking. “By utilizing IT platforms, what has [traditionally] been vertically oriented can [now] be integrated for the purpose of optimization. I believe this is one way forward for the world having a smart city.” Asakai went on

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to reinforce Murakami’s point that “new values can be generated and new lifestyles can emerge by sharing,” and that “open sourcing and crowdsourcing could provide some answers.” The conversation moved on to look at specific examples of how cities have become smarter. Hideki Mori, Deputy Executive Director, Climate Change Policy Headquarters, City of Yokohama, stated that in terms of energy and low carbon, Yokohama is trying to create an environmentally modern city by inspiring people to live there. He explained that “by living [in the city] there is less of a burden on the environment.” He added that this is not just an energy challenge but a psychological challenge as well. Mori cited an electric-car-sharing initiative that enabled Yokohama citizens to see “how we are saving energy and reducing carbon emissions while enjoying it” and assured them of Yokohama’s proactivity in becoming a smart city. This allows them to further “solicit people’s consciousness.” The scheme had 10,000 members, highlighting its attraction and how “it’s building awareness for the environment.” Mori also said that Japan's Ministry of Economy, Trade and Industry is producing a new initiative “to generate a new lifestyle in terms of energy management.” He concluded that “many activities must be implemented so that we can enhance the understanding of the people living there.” Here Chandler reiterated the complexity of getting “the technology and the cultural software to mesh together.” He cited Beijing’s failed efforts to encourage cycling by providing free public bicycles. “The idea may be a good one, but the execution and how to coax people to the program can be complicated.” Masahiro Shirakawa, General Manager, Social Engineering Systems Division, Power & Social Infrastructure

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Business Group, Fuji Electric, detailed how a METI subsidy is also enabling four energy demonstration projects, including one in Keihan with Nippon Steel. “It’s an off-grid, regional smart grid,” he explained, “and what’s different from others is that, because this is not a power company’s grid, we are able to do different types of tests and demonstrations.” One of these is dynamic pricing, where summertime peak rates were raised by 20%, 30% and 50%. The result was “people just began to save energy.” Shirakawa admitted they had not been sure how to replicate this nationwide until the 3/11 earthquake. The nuclear power plant accident at Fukushima prompted the need for nationwide energy savings, “and so TEPCO decided to introduce smart meters to households.” He explained that within seven years, 27 million households will have smart meters, rising to 88 million in ten years. “This is a Japanese experience that we can share with the world,” he said, though cautioning that “Japan is different… we are a very homogenous people, so when we start something, we all start all at once.” Satoshi Chida, Director for International Relations, Bureau of Environment, Tokyo Metropolitan Government, explained that in learning the lessons from the 3/11 earthquake, Tokyo’s smart energy initiative was to be low carbon, livable and disaster resilient. He stressed that “we need to have more stability in the supply and demand of energy, because we are the largest city in the world and also the center of the economy in Japan.” This means that Tokyo’s “state-of-theart urban functions” and the lifestyle of its residents has to be maintained. Understanding these crucial factors has led to two initiatives: the first is to be energy-prepared for the next major disaster, and the second is to

diversify its energy sources. On top of this, Tokyo, like other cities, must play its part in combating global climate change, which means that “energy conservation is going to be important and greenhouse gases must be reduced. We must take a proactive stance as a city.” Hironori Hamanaka, Chair, ICLEI Japan, and Chair, Board of Directors,

Institute for Global Environmental Strategies (IGES), responded to a “difficult” question on whether smart city strategies were purely local or could be universally applied. Hamanaka pointed out that cities vary enormously, even within Japan, and there is even greater diversity around the world. Hamanaka noted that Japan’s cities are experiencing “a nationwide aging and declining population, a birthrate issue.” This is a particularly serious problem for rural regions where “you can see a decline in regional cities—they say ‘cities full of shutters.’” Hamanaka also pointed out that the industrial structure of cities is changing as production moves overseas, causing “a decline or decaying in cities.” Citing Kitakyushu’s steel and chemical industry as an example, he explained that because industry is the center of the city’s economy, its decline means “less tax

income, which causes deterioration of the financial status.” Because of and in spite of this, municipalities “must invest in infrastructure. You need to renew infrastructure or you need to invest in welfare and in health and medical systems.” Acknowledging that generating the money to make a city more livable “is a great challenge,” Hamanaka argued that “you have to adjust to the financial state…you need to prioritize and make it efficient.” Hamanaka suggested that families should develop self-help to care for the elderly in the community, and that public works needed to be enhanced, such as Toyama’s ongoing project to increase accessibility. “But you need to have a compact city…because as a “lowcarbon, socially and economically sustainable city, it becomes an easily livable city…opportunities for people

to interchange and opportunities for health, these all come down to livability.” In tackling climate issues simultaneously with social and economic issues “compact cities is a direction that everyone is looking at globally.” Chandler added that he feels that despite current economic issues, Japan is still a world leader and that “Japan is right at the forefront of … dealing with energy issues.” He cited the author William Gibson, who said that whenever he wanted to see the future, he went to Tokyo, “because that is the world’s future.” |

Masahiro Shirakawa, Fuji Electric Co., Ltd., Nobuko Asakai, Accenture Japan, Toshifumi Yoshizaki, IBM Japan (opposite, top to bottom); Group considers the big questions (above)

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} Chandler refocused the conversation on whether Japan has the right mix of energy supply, a question that Japan has had to wrestle with “more intensely than almost any other major economy, especially since 2011.” Chandler highlighted Japan’s flexible and rapid adjustment to suddenly losing 30% of its energy supply when nuclear power was removed from its portfolio after the Fukushima nuclear power plant disaster. “It is hard to imagine another major economy adapting that successfully to such a huge shock in its energy portfolio.” Minoru Takeda, Country Chairman, Shell Japan, agreed that “the whole world was amazed … Japan didn’t have blackouts even though 30% [of power production] was reduced.” Japan increased their gas mix in power generation from 29% in 2010 to 43% in 2013, and increased their LNG use from 70 million tons to 87 million tons—around 38% of the world’s LNG availability. “So the demand side and supply side globally cooperated together and we were able to secure emergency supplies.” Looking to the future, Takeda agreed that “a resilient energy mix is necessary.” Without nuclear there is too much reliance on fossil fuels, “but we have to emphasize renewables as well.” Government efforts have to focus on securing the best energy mix and supply that could resist future shocks. Nobuo Tanaka, Global Associate for Energy Security and Sustainability, Institute of Energy Economics, Japan (IEEJ), added that the government is deliberating on the difficult question of the proportions of each source for the right energy mix. For energy security and sustainability “there is no silver bullet,” he asserted. “Nuclear cannot solve everything, renewable cannot solve everything.” Japan needs gas and some oil in case of emergencies, and coal, if technology could make it

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Finding the Right Energy Mix HOW DO WE FUEL JAPAN’S CITY OF THE FUTURE?

cleaner. “We need all of them,” he argued, adding, “energy-efficiency conservation is also key.” Tanaka recognized that as each energy source comes with different costs and benefits, “we have to make a judgment and balance between cost, sustainability and energy security.” Although the IEA is pushing for a 20% nuclear mix, Tanaka believes a 30% nuclear mix is needed to meet the challenge of sustainability. He interpreted the government’s call for reducing nuclear to mean “reducing the share of the light water reactor, not nuclear.” He advised that “we need to replace it with a fast reactor or advanced reactor … which has less risk of proliferation and is much easier for high-level waste management.” Tanaka pointed out that “there is already a solution in the U.S.” He added: “We have to do it in Fukushima.” What’s more, “Fukushima Daini, the second nuclear power plant in Fukushima, is a place where we should demonstrate the technologies readily available from the U.S.,” to encourage uptake in Japan and other countries. Tanaka acknowledged this will be “really challenging,” but argued that the way to restore confidence in Japanese technology and regain public trust in nuclear was to “show that we can deal with the Fukushima cleanup, and beyond Fukushima, the new nuclear technology, which is definitely necessary … for Japan in the future.” On this issue Tanaka knew he was “challenging the public, challenging the politicians,” and to his surprise had received “fairly good support from the nuclear community.” Their investment in the light water reactor system made them reluctant to change technologies, “but there is no other way.” Tanaka stressed that “we cannot convince the public by just saying, ‘We can go with the current

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technology … we can go with light water reactors.’ No way. We need something new that is manageable and already exists to convince the Japanese public that, ‘Hey, nuclear may have a future.’” Tanaka then turned to coal, which he considers “important for energy security” because of its abundance. The growing Asian economy is going to use coal, so “Japan should help these countries use coal as cleanly as possible.” Japan could demonstrate and offer its cleaner coal technology and very efficient coal power plants, as well as carbon capturing and storage. However, Tanaka expressed caution about expanding coal power, asserting that it should only be used where carbon capture and storage (CCS) could be added later. “CCS readiness is a condition to use coal

power plants in Japan,” he explained. “We could demonstrate CCS with… new efficient technologies,” showing that coal can work with a certain level of carbon price called the joint crediting mechanism. “This is an important way to transfer technologies to India or ASEAN countries,” he concluded. The conversation then turned to nuclear power. Tomoaki Kobayakawa, General Manager, Corporate Marketing and Sales Department, Customer Service Company, Tokyo Electric Power Company (TEPCO), expressed his company’s regret for the events at Fukushima. He went on to explain that although nuclear energy was criticized, Japan has to “face the fact that we don’t have our own energy, so we have to rely on fossil fuels. However, we have to reduce the use of fossil fuels.” Kobayakawa

argued that although “nuclear power generation has experienced an accident …it is the ultimate way to generate energy without burning fossil fuels.” In considering other energy sources Kobayakawa said there is hydro, LNG and coal, and that “from our point of view, we don’t have a preference on using more LNG or more coal.” He added that they want to reduce energy usage but also must “generate energy to use in the city,” adding that he believes “we should not separate the supply and demand side.” Komiyama expanded the conversation proposing that “you have to look at [energy] as a global issue and…think about the difference in the conditions of developing nations and industrialized nations.” Komiyama explained that in industrialized nations, energy consumption is declining because of the abundant availability of goods. For example, Japan’s 58 million cars are regularly replaced, “so Japan’s gasoline consumption is declining by 2% each year.” By 2050 “factories will be about one-fifth,” and “energy efficiency will improve by three times.” This would significantly reduce the energy consumption of industrialized nations. Komiyama added, “I don’t think we can build a new nuclear reactor,” which would be expensive and unpopular with the public. Komiyama also stressed that it would cost about the same to develop new nuclear power as to develop new mega solar power, pointing out that with solar power, PV or renewables “you spend a lot of upfront investment. But after that it is virtually zero cost.” What’s more, PV is “very durable” and remains highly efficient over time. With this in mind, and considering that PV is “not that expensive,” Komiyama urged that “the Japan model should be a 100% renewable energy mix,” maybe by 2050. “Technically and

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technology wise it is viable,” he asserted. This would mean that in Japan, “energy consumption will be one-third, and we will be able to supply energy 100% by renewable. This is where we should aim for, I believe … hopefully that will be the picture of the world energy mix. There will be no gas necessary.” Komiyama hopes that this model could be expanded to the whole world’s energy mix by 2100, speculating that, “Energy costs will be cheaper. I think electricity will probably be free.” Teruyuki Ohno, Executive Director, Japan Renewable Energy Foundation, picked up on Komiyama’s ideas, stating that three positive things had come out of the 3/11 earthquake. First, energy efficiency had improved. Tokyo Metropolitan Government had set major corporations a goal of 8% CO2 reduction between 2010 and 2014—a target that “people said could not be done.” But after 3/11 “improvements have been made in terms of energy conservation, and we have reduced CO2 by 22%.” Second, renewable energy has made progress. From 2000 to 2010 renewable energy increased only by 0.5%; however, “in the past two years it has increased by two percentage points.” The third point is that energy supply has diversified to include “smaller players” alongside the major utilities. Ohno urged that “these three advantages should be brought to the fore and promoted.” However, coal-fired power plants and nuclear power plants remain in the energy mix despite the technological advances of renewables because “the government is not promoting [renewables] enough.”

in terms of supply Muraki agreed about the need to establish the best energy mix and feels that nuclear is a part of that. “American shale gas will be developed in the Asian market,” he said, adding, “it is going to be more dynamic. It is going to become more flexible. Natural gas is considered to be very expensive in Asia, but I think it will converge to a more reasonable price.” The gas pipeline from Russia would also make a difference. Muraki stated that it is important for Japan’s supply to become “more flexible and more diversified.” Turning to the smart city, Muraki pointed out that energy is essential for powering the service infrastructure of smart cities. But we have to find ways to make the energy supply both resilient and environmentally friendly. To achieve this, “diversification…and

renewable energies are going to be very important [for] the city.” Muraki emphasized that electricity, gas and heat must be integrated in a network for effective use. An autonomous energy system must also be established for resilience. What’s more, a city’s residents must be satisfied—all while ensuring that Japan remains globally competitive. “Resilience as well sustainability is going to be very important from the point of view of energy,” Muraki concluded. |

Nobuo Tanaka, The Institute of Energy Economics, Japan (IEEJ), Hiroshi Komiyama, Mitsubishi Research Institute (opposite, left to right); Minoru Takeda, Shell Japan (below)

Shigeru Muraki, Vice Chairman and Director, Tokyo Gas Company, Ltd. believes that in Japan’s energy policy there is too much emphasis on supply and the country needs “to be focused on the demand side more.” However,

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} Chandler moved the conversation to focus on energy efficiency and conservation, highlighting Japan’s history of success following the 1970’s oil crisis and the 3/11 earthquake. Chandler asked whether Japan has already maximized its energy efficiency or whether significant improvements were still possible. Murakami began by asserting that Tokyo’s power consumption per GDP was probably the best in the world, demonstrating that “Japan has become energy efficient.” Agreeing with other attendees, he expressed the need for “an argument from the demand side.” While energy efficiency has improved since 1973, he feels the new system had not “guaranteed a high-quality life … and that is a problem.” He explained that powering cities involves energy consumption (demand) and supply. In terms of consumption, Japan has become very efficient and “even if we don’t do anything we will continue to improve…and be ahead of the world.” However, in terms of supply “there are a lot of new challenges” after the 3/11 earthquake. Murakami explained that resilience means both strengthening against supply stresses and making Japan’s actual supply system resistant to the natural disasters that threaten Japan. Murakami urged the building of such resilience into Japan’s energy system.

Improving Energy Efficiency and Conservation HOW CAN JAPAN’S TECHNOLOGY LEADERSHIP ADVANCE ENERGY EFFICIENCIES IN ITS CITIES?

that photovoltaic and renewable energies will increase significantly. Finally, he thinks that fuel cells and battery energy management will be very important for the network. He acknowledged the problem of the distance between supply and demand, saying that they must ensure “a compact alignment of demand and supply of renewable energy,” which would “encompass the design of the city as well.” Hamanaka thinks that energy efficiency still has room for improvement. He said that two oil crises have made industry energy efficient, but steelmaking, for example, “still has challenges to overcome” in moving to a low-carbon society. However, Hamanaka suggested that perhaps Japan’s greatest efficiency gains will lie in the private sector—households. He expressed concern that Japan’s housing, especially older houses,

have low insulation performance compared to other advanced nations. Murakami emphasized that Japan’s energy consumption per household “is about half [that of] Western countries.” This is due to the simplicity of Japanese life, with many houses not using heating. He agreed that home insulation is poor, which undermines health and living standards, and that “compared to industry and transportation, energy consumption in the housing sector is increasing.” As Japan’s offices have the world’s lowest energy consumption, it is arguable that in the private sector “there are more improvements to be made.” Asked about new technologies, Murakami said that solar power could turn most households into energy generators, but questioned whether people feel it is worth the investment. He concluded that “the technology is there, including energy conservation technology, so it is really about how to penetrate that.” |

Hironori Hamanaka, ICLEI Japan and Institute for Global Environmental Strategies (IGES) (left); Shuzo Murakami, Institute for Building Environmental and Energy Conservation (IBEC), Tomoaki Kobayakawa, Tokyo Electric Power Company (TEPCO) (below, left to right)

Kobayakawa stressed three key points. First, that Japan has to overcome its energy vulnerability. He noted that cars are 100% reliant on oil and that for heating and nonelectricity energy “we have to reduce our dependence on fossil fuels.” He cited the adoption of central heating by Western countries and suggested that heat pumps could enhance primary energy efficiency by a factor of three. Second, turning to technology, Kobayakawa believes

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} Chandler now turned the discussion to energy in transportation and how Japan is solving the problem of moving people more efficiently. Yoichi Hori, Professor, University of Tokyo, stated that for him the problem with electric cars is the limited driving distance before recharging. He finds it strange that people think batteries for a 50-kilometer drive were “good enough.” Instead he looked ahead to an electric car with motor capacitor and wireless. The gas engine would be replaced by an electric motor, bringing many benefits, including controllability and improved fuel efficiency “by two or three factors.” Today’s chemical-based wire capacitor batteries would be replaced by supercapacitors “capable of recharging several millions of times” instead of mere thousands. For recharging, Hori thought quickcharge stations will become obsolete because “it is better to use wireless functions to directly supply energy to the car.” Cars that rely on batteries will always have a short driving distance, which may be suitable for cities but not long journeys. Instead, Hori is researching wireless transfer, which is a completely new way of delivering electricity to the car without plugging into anything. Hori hopes for a wide uptake but thinks that calls for wireless transfer to be in place by 2020 are unrealistic, adding, “I think it will take 100 years.” Hori acknowledged that car manufacturers “are doing a good job with cars but we have to do something better with infrastructure.” He hopes that such technology may be realizable within 50 years, explaining that “wireless transfer of energy is relatively easy compared to improving roads,” with several kilowatts of wireless transfer antenna costing about 100 yen. “So, the infrastructure, which people think is going to be very expensive, is going to be relatively cheap.”

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Developing Sustainable Transport Systems WHAT IS NEXT FOR IMPROVING TRANSPORT EFFICIENCIES IN JAPAN’S CITIES?

Yutaka Matsumoto, Project General Manager, Toyota Motor Corporation, stressed that Toyota is taking wireless energy transfer very seriously, but it isn’t “something that can be realized overnight.” This means that lithium-ion batteries will remain important for electric vehicles. Matsumoto shared Toyota’s strategy for next-generation cars, saying that cars are no longer stand-alone products but must be combined with infrastructure. Linking technology with social infrastructure “will lead to smart communities.” This is ultimately linked to urban planning for compact cities, a good case in point. “People who are thinking about urban planning and people who are thinking about infrastructure will have to work in collaboration.” This could help to develop a new generation of cars for the future. Toyota referred to this as “smart communities” rather than “smart cities,” because “when we think about next-generation cars, it should also encompass rural areas as well.” Similarly, the next generation of cars should cater to an aging population. This means that future car design will have to consider the consumer as well as energy efficiency. “Even if we have outstanding technology, it has to be meaningful for society. If it is not welcomed by the citizens, it will not have any social significance.” He feels that for most consumers, the current electric vehicles “are not compelling enough in terms of technology.” Crucial to next-generation cars is selecting the best energy supply. While wireless transfer is being perfected, Matsumoto believes that “various technology-driven cars will be introduced to the world” that will require technology to support them. Here Toyota believes that hydrogen energy is promising for high-speed refueling, especially as the limitations of lithium-ion batteries cannot be

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overcome. Toyota is preparing to introduce fuel cell cars capable of running for several hundred kilometers and several hours on just a few minutes’ charge. This will make them “fun, convenient and practical to drive.” Although, hydrogen infrastructure will need to improve, and “hydrogen energy can be seen as promising in terms of energy supply. That is the reason why companies are working on fuel cell cars as well as hydrogen-driven cars and electric vehicles.” Responding to a question on whether auto-drive vehicles could deliver energy savings (for example, by reducing traffic jams and moving in lockstep), Matsumoto noted that all car manufacturers are developing auto-drive technology. He feels that complete auto-driving will be possible in the future and would probably work best on highways. However, he doubted that people will suddenly mass convert to auto-drive because “people want to drive. There is that desire.” Toyota, therefore, is exploring partial autodrive, which “can instruct us as to the most efficient route or be a drive-assist function for the elderly … it could break in an emergency or make sure that you stay in the lane.” By incorporating elements of auto-drive technology, “we can make existing cars more convenient and comfortable,” Matsumoto added. Dr. Nobuyuki Ozaki, Senior Fellow, Railway & Automotive Systems Division, Social Infrastructure Systems Company, Toshiba, agreed that mobility is a big issue, highlighting that although Tokyo is “well organized … there is still congestion.” Ozaki believes that city commutes would only be about 50 kilometers, but that commutes from outside the city would have to be handled differently. “In the last mile, we can use very compact mobility measures,” he said. “All the transportation modes

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should be connected, so that better [services] can be provided.” Emphasizing the continued importance of cars, he explained that they must combine high performance and low energy consumption. “If we can find a new [technological] breakthrough, new possibilities may emerge,” he said, especially semiconductors, which “require no power supply and are durable for 100 years.” He concluded that “we believe powerless could emerge in the future.” David Braun, Director of Outreach, National Geographic, summarized the discussion so far as falling under four broad themes. First was the human dimension: “Bringing out the best thing that humans do, the thoughtfulness, the sensitivity, the need to be more people-friendly in our cities and infrastructure. The concern for health in making cities more livable, and the concern for aging and loneliness in terms of how cities on the fringes get rebuilt to very smart mobility standards to benefit elderly people.” The second theme was renewal: “Our ability to constantly reinvent ourselves. Infrastructure needs to be smarter… the use of smart roads that work with vehicles. The vehicles themselves have to be designed and operated in conjunction with the roads and general infrastructure. We also heard about the ‘renewal cycle’ of needing to reinvent cities as more compact, and making them more human yet more efficient at the same time.” The third theme was the need to be strategic and resilient. “Japan has already shown this remarkable ability to adapt and recover following the 3/11 earthquake. We heard that there were no blackouts because Japan could take in natural gas … also about remarkable efficiencies on the consumption side. All of society across the planet has to be thinking

Nobuyuki Ozaki, Toshiba Corporation, Yoichi Hori, The University of Tokyo (opposite, top to bottom); Yutaka Matsumoto, Toyota Motor Corp. (above,center); David Braun, National Geographic (left, center); Moderator wraps up discussions (below)

about making ourselves more resilient. There will be more tsunamis and earthquakes. There will be wars and political disruptions.” And the final theme was innovation. “There were many remarkable and exciting ideas on all kinds of products and energy. Who knows—maybe in 50 years’ time we will have this abundance of energy that will cost us nothing and be constantly, completely renewable.” Chandler agreed that energy issues are complex and unpredictable because of these factors. He gave the example of decades of U.S. anxiety over its dependence on oil imports, which was suddenly resolved through fracking. “The U.S. is exporting energy again—something no one considered.” |

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} Chandler now asked attendees to imagine they were in charge of Japan’s energy policy and explain what their top priorities would be. Hiroshi Komiyama: “I believe that from 2050 we can depend on renewable energies alone because energy consumption will be reduced by a factor of three. We should have alignment on this and control the transition toward this goal.” For example, in Kyushu and Hokkaido, where there is significant photovoltaic energy but low demand, “transmission lines should be constructed … as a public-sector initiative.” Nobuo Tanaka: “First and foremost, we must improve and reorganize transmission lines.” Explaining that Japan is divided, with some power supplied at 50 Hz and some at 60 Hz, he called for integration into “a large single energy market.” Tanaka also considered purchasing renewable energy, perhaps from the Gobi Desert, but to accommodate this “we have to improve the network in Japan.” Teruyuki Ohno: “Energy is not just electricity...there is thermal power too. So heat and electricity need to be produced together.” Ohno called for increased co-generation and distribution, hoping that all energy supply will be renewable by 2050 or earlier. Hironori Hamanaka: “In terms of energy policy infrastructure investment, the national government’s role is important, but at the same time... each local municipality is doing very interesting things...We need to share those experiences, learn the lessons,” and scientists, researchers, local cities and municipalities all have important roles to play. Hamanaka noted that ICLEI (International Council for Local Initiatives) joined together over 1,000-member cities around

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Key Priorities for Energy in Japan’s Cities

the world to share knowledge and work together towards sustainability. Climate-change issues are directly linked to carbon emissions, and this requires accurate measuring, reporting, and evaluation. This will enable cities to “compete with and learn from each other.” Chandler refocused the discussion on business. Masahiro Shirakawa: Global and local alignment is a priority for Shirakawa. Japan “can share its experiences,” and “showcase to the world how we have resolved our energy issues so that we can have a coalition—we can make contributions globally.” Japan’s manufacturers should work together to realize this. Shigeru Muraki: “We have to liberalize and deregulate. We have to have more players in the energy sector, so innovation can be brought to bear.” Japan needs to “make sure that the best model for energy usage is developed and deployed globally.” Japan’s efforts should focus on innovation. For example, fuel cell vehicles are important and Japan leads the world in hydrogen innovation. This is where “we must make further progress … so that it will lead to a low-carbon society when new technologies are developed.” Nobuko Asakai: “As part of corporate reporting I would ensure we shared our different indexes. So each company’s energy consumption performance or environmental performance is reported and SRI investment index is too.” This would help reduce energy consumption because “it is not just about cost. You have to also look at the investor’s view and make sure that it builds corporate enterprise value as well.” Asakai agreed that innovation is crucial, and that “by using open innovation, we can nurture ventures and incubate them.”

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Chandler directed the discussion to cities.

Teruyuki Ohno, Executive Director, Japan Renewable Energy Foundation, Hiroshi Komiyama, Mitsubishi Research Institute, Satoshi Chida, Tokyo Metropolitan Government (above, top row, left to right); Hidetomo Nagata, PricewaterhouseCoopers, Hideki Mori, City of Yokohama, Shigeru Muraki, Tokyo Gas Co., Ltd. (above, bottom row, left to right); Jefferson Edwards, Shell (opposite)

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Satoshi Chida: “Tokyo will host the Olympics in 2020, so from the demand side we must further promote energy conservation as we have been promoting cap-and-trade for large users. We must continue to promote areas where advances are being made.” Innovation is essential and hydrogen energy should be encouraged, first within the public sector and then in the private sector, perhaps through subsidies. Hidetomo Nagata: “The 2020 Tokyo Olympics are a very important opportunity for us to make progress,” where Japan will be able to display its innovations to the world. “Lowcarbon and resilient, green and smart technologies should be showcased. The city’s competitiveness can be enhanced at the same time.”

Chandler now reframed the question to ask what attendees would do if given billions of dollars to solve the energy problem. Yoichi Hori: “We should have electricityrun highways in Tokyo; perhaps 500 billion yen would be required. I think that 20 or 30 years down the road we can do this because Toyota will provide the cars.” Also, gradual improvements could be made to Tokyo’s infrastructure in the run-up to the Olympics. As Chandler opened up the floor to final thoughts, Hori reemphasized the importance of improving Japan’s electric grid. “When electricity is generated, it has to be used as quickly as possible. Batteries are improving…but it is not the way to use energy.” The 50-Hz and 60-Hz grids have to be standardized. Acknowledging that it is a “major

project,” Hori said change should be made gradually, that it could be done in 30 years, and that it must be done “in order to use natural energies.” It was also noted that transitional management was key, as with any major changes in the energy mix. A nationwide campaign was suggested to ensure public engagement and consensus with the fundamental changes being discussed and implemented. Chandler handed the floor over to Jefferson Edwards, General Manager, Global Gas and LNG Market Development, Shell. He reflected on his own experience of living in Tokyo, which reinforced the idea of sustainable communities rather than sustainable cities, saying that “Tokyo as a city is many communities…local communities, communities of businesses, communities of academics, communities of friends.”

He explained that Shell, in partnership with the Centre for Liveable Cities had recently conducted a study about what a “sustainable city” really is. “We looked at 500 cities, and we broke them into six archetypes. The one thing that really struck me was that we had to classify Tokyo as a ‘sprawling megacity.’” Edwards feels Japan’s challenge moving forward will be demographic change. For example, demographic change means that in Japan’s midsize cities and rural communities the cost of the “last kilometer of service— whether it is for energy, water or road,” has gone up rather than down. Shell’s study suggested that cities would become more compact and more vertical. “The best way to capture housing efficiency is to cluster people in a more vertical city. It is a significant challenge, but I have no doubt that

when I come back in another 20 years or so, that combination of brains, skill and energy will have met these challenges.” Finally Edwards noted that “resilience” “has been the word of the day.” The enormous resilience displayed after the 3/11 earthquake led Edwards to conclude that “all of the cities of Japan will continue to be leaders, not followers, in terms of what a sustainable city means.” Edwards thanked Clay Chandler “for his energy wit and wisdom,” and thanked all of the participants “for sharing their wisdom and insight in a stimulating discussion.” Finally Edwards thanked National Geographic for arranging the event, expressing Shell’s appreciation for “the opportunity to work on the Great Energy Challenge in Tokyo as well as other cities.” |

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} Cities are complex and delicately balanced entities that face deep challenges but also offer tremendous opportunities, especially as the global population rises. Although Japan’s overall population is declining, it is a population concentrated in urban areas that continue to expand. As world cities grow and consume more energy, still largely based on fossil fuels, there are real opportunities for diversification of energy supply, more effective energy use and improvements in urban transportation. Tokyo presents a positive example of what could be achieved, being the largest and arguably the most energy-efficient “smart city” in the world—especially in the context of Japan’s dependence on energy imports and susceptibility to natural disaster. It was held that by making the right choices, cities could provide a livable and environmentally friendly solution to the problems of population growth. It proved difficult to clearly define a “smart city,” with attendees preferring alternatives including “smart community” and “bespoke city.” However, it was widely agreed that the term “smart city” applies to more than energy and infrastructure; it extends to all aspects of its residents’ lives. A city is made up of many communities and IT could be used to optimize services for these

In Summary

as well as for individuals. This will require significant improvements to infrastructure, as well as cultural adaptation by the residents themselves. Success would bring environmental, economic and social benefits that would make a city more livable. Compact cities were held to be the key to such success. In terms of energy, cities have to balance supply and demand, resilience and the environment, while reinforcing the quality of life for residents. Japan’s energy mix has been transformed since the Fukushima nuclear power plant disaster of 3/11. Nuclear power generation was stopped and relatively seamlessly replaced with increased imports of oil and gas. This has increased Japan’s dependence on fuel imports and on fossil fuels, and the future of its energy mix is hotly debated. There were strong arguments both for and against the reintroduction of nuclear power. It was suggested that Japan could showcase new, safer nuclear technology. It was also argued that the cost of this was comparable to the cost of developing renewables such as mega solar. Some have hopes that with government support Japan could become 100% renewable powered in the next few decades. It was also noted that natural gas will continue to play an essential role in the Japanese energy mix, and that even coal could play a role if technology were used to keep it clean and capture carbon emissions.

In the area of energy efficiency, Japan’s cities are already world leaders and are expected to lead well into the future. However, there is room for improvement, especially on the supply side. Industry is already largely energy efficient, so it was held that some of the greatest potential gains lie in the areas of housing and insulation. Here, Japan could deploy its technology leadership to make improvements, with heat pumps, solar power generation, home insulation and electric vehicles all being discussed. Electric and hydrogen fuel cell vehicles dominated the discussion on transport. It was noted that Tokyo operates a highly efficient integrated transport network yet still suffers congestion. Technological improvements in electric cars, ensuring high performance, would make them more attractive to consumers. Such advances must go hand in hand with expansions to the supporting infrastructure. As manufacturers work toward cars operated by wireless transfer, still considered decades away, technologies such as hydrogen could offer important stopgap solutions. Looking at the energy priorities for Japan’s cities, attendees agreed on the vital necessity of a resilient energy mix and a transition to renewable energy. Improving and standardizing the energy transmission network is crucial, and everyone agreed that Japan has a clear priority in continuing to innovate in technology and share its learnings with other countries. In all of this, it is necessary to engage the Japanese people in the energy challenges and opportunities that lie ahead. |

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THE BIG ENERGY QUESTION

SUSTAINABLE CITIES:

Challenges and Opportunities in Japan

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