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Getting Japan’s Seventh Strategic Energy Plan Right

Merging carbon neutral and circular economy policies sparks one trillion yen in new domestic value
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3 September 2024

Japanese version: 5 June 2024

Mitsubishi Research Institute, Inc.

Tokyo (3 September 2024)—Mitsubishi Research Institute, Inc. published a report covering research and recommendations on Japan’s Seventh Strategic Energy Plan. The institute proposes a merger of carbon neutral and circular economy policies as integral to the success of the upcoming plan. They forecast that the accompanying green transformation investments will bring one trillion yen in new domestic value to the country every year. The report illuminates the specific measures required.

The following is an overview of the report, with the full report available below.

1. Background

2024 is a milestone for the formulation of multiple key basic plans in Japan, including the Strategic Energy Plan and the Fundamental Plan for Establishing a Sound Material-Cycle Society. The year also marks an important turning point that will set the country’s policy direction moving forward. Mitsubishi Research Institute, Inc. (MRI) has long advocated transforming Japan into a carbon-neutral resourcing powerhouse—in policy-speak, holistically pursuing carbon neutrality (CN) and the circular economy (CE)—and proposed it as key to transforming the resource-challenged country into a fully sustainable one.

In this context, MRI has published a policy recommendation report on the merger of Japan’s CN and CE policies, timed to coincide with the consideration of these crucial fundamental plans. Specifically, the report paints a clear picture of the overall concept and synergistic effects of CN–CE merger through quantitative analysis. It also identify challenges, and proposes potential solutions, to the issues currently faced by companies based on surveys and interviews.

2. Outline of Policy Recommendations

CE holds the key to resolving the issues that will emerge in Japan as it transitions to CN. Evaluations using the energy supply and demand model have shown the synergistic effects of CN–CE merger, which include: reducing risks to energy and economic security, reducing the costs of decarbonization measures (Figure１), the potential for an annual one trillion yen in new domestic value.
Figure1: Contribution to reducing marginal abatement costs in achieving CN 2050 GHG reduction targets and marginal abatement costs
Contribution to reducing marginal abatement costs in achieving CN 2050 GHG reduction targets and marginal abatement costs
Source: Mitsubishi Research Institute, Inc.
On the other hand, CN–CE merger has been held back by the tendency for individual companies to prioritize their own interests over more macro-level concerns—in other words, micro-optimization. Corporate surveys and interviews pointed to three main challenges that need to be overcome: resolving the trade-offs between CN and CE, improving information disclosure and collaboration related to CE, and bridging the gap in awareness regarding recycling costs.

To address these issues, MRI proposes three strategic directions: setting government CE targets aligned with CN, cross-industry collaboration using a digital platform, and building consensus on the value of CN and CE.

First, government target setting will require concrete figures and core indicators, such as per capita consumption of natural resources and recycling rates of inputs. Second, collaboration will require the sharing and communication of cross-industry success stories based on the varying degrees of progress in CN–CE measures of different industries. Third, the consensus building process must translate these into more detailed actions, such as incorporating requirements for CN materials and recycled materials in government procurement.
Figure 2: Three key measures for the CN–CE transition
Three key measures for the CN–CE transition
Source: Mitsubishi Research Institute, Inc.

Full Report

The report goes into further detail, and the dataset used for the analysis is publicly available.
Please refer to the general contact below to request the dataset used.

3. Future Plans

Societal issues are becoming increasingly complex and multi-layered, and the importance of interdisciplinary fusion in research is growing. MRI operates under the principle of integrated knowledge to conduct research and make recommendations beyond conventional fields, thus contributing to the creation of a resilient and sustainable society.

For more information

General contact

Center for Policy and the Economy
Mitsubishi Research Institute, Inc.
10-3, Nagatacho 2-chome, Chiyoda-ku, Tokyo 100-8141, Japan
Tel: +81-3-6858-2717
E-mail: pecgroup@mri.co.jp

Media contact

Group Corporate Communications Division
Mitsubishi Research Institute, Inc.
10-3, Nagatacho 2-chome, Chiyoda-ku, Tokyo 100-8141, Japan
E-mail: media@mri.co.jp