Japan Business Federation (Keidanren)

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Tokyo, Japan

Climate Lobbying Overview: The Japanese Business Federation (Keidanren) has historically lobbied negatively on many strands of climate change regulation in Japan. In the recent years however, Keidanren has become more positive in its top-line statements, placing increasing emphasis on promoting technologies and innovation to achieve the national 2050 carbon neutrality goal announced by the Japanese government. Despite this shift in its top-line messaging, Keidanren’s position continues to be oppositional towards regulatory measures, emphasizing the role of voluntary measures and initiatives that it leads. This is significant as many Japanese corporations defer their political engagement to trade associations, of which Keidanren is probably the most powerful and influential.

Top-line Messaging on Climate Policy: Keidanren has mixed top-line messaging on climate, which has become more positive in recent years. In an NHK interview in May 2022, Keidanren Chairman Tokura warned that we are close to 450 ppm and "don't have time" to act, adding that once the "tipping point is crossed... the warming will advance irreversibly" and "the global ecosystem will collapse". In June 2020, Keidanren launched its Challenge Zero initiative, emphasizing the role of voluntary, business-led technology innovation in decarbonization. Despite the "zero" in the Challenge Zero initiative, it does not state numerical nor mandatory targets (dates or emissions intensity) for the companies participating.
In 2019, Keidanren supported the need for global reduction of greenhouse gases, including Japan’s midterm NDC target to 2030 in its position statement on the electricity system reform. However, in its public consultation response in May 2019 on the long-term growth strategy under Paris Agreement, Keidanren appears to oppose the use of an explicit longer-term GHG emission target, pushing instead for a “vision”. In 2020, through its announcement of the Challenge Zero Initiative, Keidanren appears to generally support the Paris Agreement goals including a net-zero target, although it does not give a specific timeline, only stating “at the earliest possible date” and through deploying “innovative technologies”. In the same year, Keidanren stated broad support for Japan’s NDC target in its statement on post-corona recovery, however suggesting this should be achieved by voluntary initiatives with government backing and technology innovation. In October 2020, Keidanren’s ex-chairman, Mr. Nakanishi stated support for Japan’s target for carbon neutrality by 2050 in a presentation to the cabinet office. However, he suggested this should be led by innovative technology solutions.

Engagement with Climate-Related Regulations: Keidanren engages on climate regulations with broadly negative positions.

Keidanren’s historical opposition to any form of regulated carbon pricing has shifted towards support for emissions trading as evidenced by its GX Transformation policy proposal from May 2022. Chairman Tokura expressed a more mixed support for cap-and-trade in a June 2022 Nikkei Business interview, recommending that it should be extended to the whole country in the future, though with an unclear timeline. In the meantime, he promoted an industry-led voluntary initiative and appeared cautious about the price level, saying that 10,000 and 15,000 yen/t-CO2 (roughly 100-150 USD/t-CO2) currently discussed in Europe is too much for Japan. In the same interview, Mr. Tokura appeared unsupportive of carbon taxes.

In 2021, in a presentation to a Ministry of Economy, Trade and Industry (METI) subcommittee, Keidanren appear to show some support for government regulation but only to set up market-based solutions on climate, calling for general policies including tax support and regulatory reform to promote infrastructure expansion and zero emission energy procurement. Since opposing the inclusion of an emissions trading scheme in the MoE’s Plan for Global Warming Countermeasures under the Paris Agreement in 2016, Keidanren has consistently opposed explicit carbon pricing policy and carbon taxes, including at a MoE subcommittee meeting in 2018, in a position statement on the Basic Energy Plan in the same year, and in its 2019 position statement on tax reform. However, in 2021, Keidanren’s ex-chair Mr Nakanishi appears to suggest in a press conference that discussion on carbon price should not be held from the position of assumed energy cost increase, but that tax related to energy should be reorganized to allow positive outcomes for companies, and stated in 2021 that further discussion should take place on how such tax will be utilized. In 2021, Keidanren was a member of METI’s Study Group on Economic Methods for Realizing Carbon Neutrality Around the World. Here, Keidanren appear to not support carbon tax as well as emissions trading, suggesting it can take away resources from R&D and have a negative impact on achieving the carbon neutrality goal. Keidanren has also emphasized the success of voluntary initiatives by companies to respond to climate change and appear to suggest that regulation, especially around carbon pricing is therefore unnecessary.

Positioning on Energy Transition: In 2018, Keidanren’s ex-Chairman, Mr. Nakanishi stated that climate change mitigation policy relates directly to energy policy, which requires balanced consideration including economic competitiveness of Japan, and that any measures to increase the cost of energy will disrupt this balance thus should not be implemented. At a MoE committee meeting in 2019, Keidanren appears to disagree that environment should be considered above the economy within the S+3E of the energy policy. In 2021, in its presentation to METI’s Advisory Committee for Natural Resources and Energy, Keidanren appears to support energy transition with major exceptions that balance of S+3E be maintained. They have advocated for a mix of energy sources including nuclear and thermal coal to ensure low cost and secure supply. Keidanren has remained in favour of a prolonged role for coal in the energy mix, both domestically and across Asia. In 2019, through its public comment submitted to METI on the long-term growth strategy under Paris Agreement, Keidanren explicitly opposed the inclusion of the statement for the abolition or ban on the construction of new coal-fired power plants.
Keidanren has traditionally emphasized the financial burden of measures to boost renewable energy, including in its public comment to the 5th Basic Energy Mix proposal in 2018. In 2019, Keidanren appears to show some degree of support towards promoting renewable energy, but on the condition that this fulfills the requirements of “low-cost” and “stable” energy. In October 2021, in a public comment on the 6th Basic Energy Plan, Keidanren frames its support for renewables becoming the main power source in 2030, on the condition that they must be "low cost" and "stable", while emphasizing the economic concerns of the feed-in-tariff. In the same submission, Keidanren opposed the rapid phasing out of fossil power, especially criticizing the reduced share of LNG-fired power proposed in the draft Energy Plan.

In 2021, at a METI committee meeting, Keidanren advocated for the continued use of "high efficiency" coal power while phasing out older inefficient plants, to support introduction of greater renewable energy and securing a role for nuclear in the energy mix.
In February 2021 Keidanren appears to support renewable energy and its introduction as the main power source but states the need for reform to the legislation including review of the FIT system to bring down costs. Through a position statement in 2020 on post-Covid-19 economic recovery, it appears to support decarbonization of the energy system through measures including mainstreaming of renewable energy, although no specific timescale for the transition is given.
In April 2021 in response to Japan’s renewed NDC target, the ex-Chairman of Keidanren, Mr. Nakanishi appears to suggest support for an energy transition pathway that includes an increase in renewables and nuclear. He also suggests the need to upgrade the energy grid system, improve energy efficiency through the application of Best Available Technology (BAT), business transition, policy support and ESG investment to realize decarbonization. However, there is some ambiguity regarding the pace and extent of this transition and its alignment with IPCC recommendations.

Industry Association Governance: Keidanren appears to have disclosed its board and company memberships as well as about membership (chairs) of committees and working groups. Keidanren has partially disclosed its positions on climate change policies relevant to its operations and has some detailed engagement activities undertaken to influence these policies. It also has a dedicated webpage regarding its climate change positions and direct engagement on climate relevant policy issues.

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