DEEP DIVE: U.S., Japan Key Partners in Green Energy Transition

While many industry leaders have looked to the European Union as the guidepost for environmental health and safety regulation, there remain others who are invested in the U.S. for its ability to influence climate policy through emissions reduction and the exporting of liquified natural gas (LNG).

Key U.S. allies like Japan have urged American policymakers not to exit from the global stage as there remains lots of work to be done to reach emissions targets, diversify energy supplies, and streamline regulatory frameworks for greater consistency.

These changes have been facilitated by a shift in focus toward renewables across global energy markets and more sustainable supply chains, and more are expected in the long-term, as more countries on the leading edge of green energy shift to solar, wind, geothermal, and nuclear sources.

Despite the export permit pause issued 26 January 2024 by the Biden Administration, U.S. Ambassador to Japan Rahm Emanuel said “emphatically yes” when asked whether Japan or other economic powers in the region could still depend on U.S. energy exports.

“America’s a reliable ally, for not only Japan’s LNG, but for the energy capacity and development of the ASEAN [Association of Southeast Asian Nations] countries here in the Indo-Pacific,” Emanuel said during POLITICO's Energy Summit 5 June 2024 in Washington, D.C. “And a lot of those countries look to the United States for that.”

A Balancing Act

During his state visit to Washington and joint address of Congress 11 April 2024, Japanese Prime Minister Fumio Kishida praised American innovation and said he was committed to working with the Biden Administration on clean energy and addressing climate change.

However, Japan's Minister of Economy, Trade and Industry (METI) Ken Saito said 30 January 2024 following the announcement of the LNG permit pause that he was concerned about the potential delay of some new projects that could affect the country's energy supply. Japan imported 5.5 million metric tons of LNG from the U.S. in 2023, up 34% from the prior year.

The conundrum presented by LNG is the conflicting timelines for maximizing the payout for LNG, which is expected to remain economically viable over a 20-year period, versus the window for taking significant climate action, which is expected to occur within the next decade.

“The timeline is where the stress level is between climate goals and energy security,” Emanuel said. “LNG is key to getting coal out of the portfolio. All of us, the United States included, and also developing and emerging economies - are trying to figure out how you can create energy stability during the transition, with the least impact on the climate.”

Emanuel said the U.S. is aware of Japan's energy needs and highlighted some nuclear energy research projects the two nations are collaborating on, including the commercialization of fusion energy and the development and construction of small modular reactors (SMRs) to enhance energy security and support clean energy transitions. South Korea has also agreed to collaborate with Japan and the U.S. on emerging technologies.

“They [Japan] are a key investor in that their own transition and key technologies that are going to be important in that area,” Emanuel said.

'Impossible Without Allies'

A key to understanding the U.S.-Japan relationship is to identify both the areas of policy alignment as well as the separations between the two in policy and approach to compliance and enforcement.

Both the U.S. and Japan are signatories to the Paris Agreement, committing to limit the global temperature rise to below 2°C and pursue efforts to limit the increase to 1.5°C above pre-industrial levels. Each have submitted nationally determined contributions (NDCs) which amount to a 50-52% reduction of greenhouse gas (GHG) emissions below 2005 levels by 2030 for the U.S. and a 46% reduction below 2013 levels by 2030 for Japan.

The size and scale of the U.S. and its more decentralized approach is a key contrast with Japan's Ministry of Environment, which provides a uniform regulatory framework across the country.

Japan places a significant emphasis on reducing methane emissions throughout the LNG value chain. This includes rigorous standards for methane leak detection and repair during production, transportation, and regasification processes. In addition, its regulations cover the entire lifecycle of LNG, from extraction to end-use combustion.

The U.S. addresses lifecycle emissions, but the emphasis and regulatory mechanisms can vary widely between states. Federal initiatives like the U.S. Environmental Protection Agency (EPA) Methane Challenge Program encourage voluntary reductions in methane emissions across the natural gas supply chain.

“These are tough issues - to give your country the economic and energy security they need while you transition,” Emanuel said. “And the key word is transition. You’re not flipping a switch. You need to do it in a way that does not adversely affect climate, while continuing to give your country the security they need to grow economically.”

——-

Editor's Note: 3E is expanding news coverage to provide customers with insights into topics that enable a safer, more sustainable world by protecting people, safeguarding products, and helping businesses grow. Deep Dive articles, produced by reporters, feature interviews with subject matter experts and influencers as well as exclusive analysis provided by 3E researchers and consultants.