Trade & Industry towards Carbon Neutrality | EU-Japan Online Conference | June 2021 | Summary

Japan and the EU share the objective of reaching carbon neutrality by 2050. Both implement policies and support investments towards this goal, building the foundation for a sustainable green growth. Innovation in clean technologies and their successful commercialization are needed for modern and competitive economies.

The EU-Japan Economic Partnership Agreement signed in 2018 creates an open trade zone covering over 600 million people and a third of the global value of goods and services. This agreement reaffirms the shared commitment of the EU and Japan to sustainable development. As such, it can contribute to promoting trade and investment between Europe and Japan, in industrial solutions for a decarbonized society.

Businesses from both sides already work together in a number of sectors contributing to decarbonization, such as renewable energy, hydrogen or clean mobility. This cooperation can be expanded, to the benefit of an accelerated, cost-effective, large scale deployment of low-carbon industrial solutions in the EU, Japan and other regions.

Building on the strength of bilateral trade, and leveraging the effect of EU-Japan cooperation on regulations and standards, this event focused on technologies and sectors that are key to achieving carbon neutrality by 2050 in the EU and Japan: renewable energy, hydrogen, clean mobility, and the raw materials required by these industries. It aimed at facilitating the exchanges of experiences between business representatives from the EU and Japan about the potential opportunities associated with green growth, on both markets and on the global scene.

Video recording & Presentations

Summary

Opening session

Opening the conference, representatives from the European Commission and the Ministry of Economy, Trade and Industry of Japan (METI) stressed the importance of Japan-EU’s cooperation to eagerly tackle climate change. Jacob Werksman, from DG CLIMA, underlined that both Japan and the EU need to boost a cost-effective clean energy transition to make their economy more sustainable and reap the multiple economic benefits from it. Trade, tightly linked with sustainability, has the potential to serve this purpose according to Ewa Synowiec from DG Trade. The European Partnership Agreement signed in 2019 and the recently signed EU-Japan Alliance for Green Growth are relevant examples of this joint approach to promote trade and investment under common high global standards for making this green transition possible. Takashi Omote from METI agreed that bilateral dialogues and collaboration are a necessity to achieve climate-neutrality, but also stated that effort must be realistic since renewable energies costs differ between European and Asian countries.

Besides, both sides touched upon their recently raised mid-term climate targets. Jacob Werksman highlighted the European Green Deal and the upcoming “Fit for 55” legislative package, translating EU’s climate ambition and legislative framework. Takashi Omote outlined the key ideas of Japan’s Green Growth Strategy to foster research and development on innovative technologies. Green transition is therefore in the very centre of their respective societies and their bilateral relations, they said.

Thematic Session 1 : “Renewable energy: decarbonizing the economy at the source”

In this first session focused on renewable energy, David Kang from BloombergNEF introduced the global trend, before Gu Yoon Chung from Enel Green Power and Satoshi Kuwano from Kansai Electric Power Company respectively explained the current state of play in Europe and Japan. If everyone contends the general attractiveness renewable energies are generating worldwide, climate targets cannot be achieved without additional efforts: European and Asian countries should collaborate to lower costs and conduct massive building said David Kang, grid edge technologies must be optimized to better control demand-side added Gu Yoon Chung, while decarbonization of fossil fuels is suggested by Satoshi Kuwano. Enel Green Power and Kansai Electric Power, as key players in the power generation sector, can contribute to fostering the global deployment of renewable energies leading to the decarbonization, digitalization and electrification of society.

Thematic Session 2: “Hydrogen: a new vector to store and distribute low-carbon energy”

Then Tim Karlsson from the IPHE, Jorgo Chatzimarkakis from Hydrogen Europe, Hiroshi Fukushima from the Japan Hydrogen Association, explained the many interests and various advantages hydrogen represents for both Europe and Japan. According to Tim Karlsson, several national roadmaps and international hydrogen initiatives have been launched at different scales worldwide. The Basic Hydrogen Strategy published by the Japanese government in 2017 was a relevant example raised by the Japan Hydrogen Association. While interest for hydrogen might differ based on each country’s unique national circumstances, Tim Karlsson underlined the leading role the European Commission and Japan are endorsing to drive innovation, establishing regulatory framework, and building the investment’s infrastructure needed for a global market on hydrogen.

Indeed, the environmental benefits were put forward both by Hydrogen Europe and the Japan Hydrogen Association, alongside with energy security and economic benefits for the latter. Green hydrogen enhancing economic circularity, Jorgo Chatzimarkakis supported the progressive creation of an integrated market based on a global auctioning system to ramp-up clean hydrogen projects. Hiroshi Fukushima presented a snapshot of hydrogen projects implemented in Japan, encouraged by the national government’s policies aiming to move forward a hydrogen society.

Q&A Session 1: “Clean energy for clean industries, transports and buildings”

Several questions from the audiences were picked up and answered from the panelists in this first Q&A session. Topics included the sources of hydrogen, for which there is a certification scheme in Europe but not yet in Japan and at international level, according to the panelists. The overall methodology is still under discussion between countries involved in the IPHE, indicated Tim Karlsson. The audience also asked about the limited deployment of wind power and green hydrogen in Japan, to which panelists replied that the main issue is the cost. Finally, each speaker mentioned a practical way to enhance EU-Japan collaboration on clean energy transition: publishing guidelines, introducing an auctioning market, establishing targets and joint certification schemes, demonstrating business cases, maturing hydrogen technology were some ideas raised.

Thematic Session 3 : “Transport: towards zero-emission mobility”

This session focused on the example of the automobile industry, an important component of the transport sector. Transport represents 23% of CO2 emission as reminded Ruth Heuss from McKinsey & Company. Lutz Rothhardt from BMW Japan and Ferry Franz from Toyota Motor Europe developed how automobile companies are transforming their long-established fossil-based models by introducing new technologies to produce low-carbon vehicles. According to Ruth Heuss, regulations pushed the industry to move forward and set ambitious lifecycle decarbonization targets. In this regard, Lutz Rothhardt illustrated how BMW will reduce carbon footprint along all the lifecycle of their vehicle to match the Paris Agreement target and CO2 neutrality in 2050. Ferry Franz also highlighted Toyota Motor’s active commitment to sustainability. The next challenges will be to expand battery cell manufacturing and build out infrastructures for next generation vehicles to scale-up. Both BMW Japan and Toyota Motor Europe are involved in it by mostly developing electric vehicles for the former, and hydrogen ones for the latter.

Thematic Session 4 : “Raw materials for decarbonized economies”

After three sessions talking about the technologies required for the transition to decarbonize economies, this last thematic session focused on the raw materials at the core of these technologies. Here, speakers from the OECD, Umicore and Sojitz Corporation, were gathered to share their knowledge, experiences and commitments to ensure a stable supply of these essential materials. Rodolfo Lacy from the OECD stressed on how important recycling, finding substitution and increasing trade are to avoid a supply risk of some critical materials. Atsuya Hanazawa followed up with this, by presenting Umicore’s measures to overcome the dilemma between the increasing demand for batteries and the urgent need for decarbonization. Using renewable electricity in production and increasing recycling’s rate of battery waste are two out of the five measures presented. Finally, Minoru Hasegawa from Sojitz Corporation emphasized on the importance rare earths represent in the green transition and the real supply risk Japan is facing. Securing independence of raw materials is the business they are involved in.

Q&A Session 2 : “Zero carbon over the full lifecycle of goods and services”

A second Q&A session was conducted to let speakers from the two previous sessions reply to questions from the audience. Regarding one about the electric vehicle’s environmental impact being dependent on the domestic share of fossil fuels based electricity, Ruth Heuss stressed on the importance to align the timelines of different actors both in private and public, domestic and international areas. Toyota Motors Europe and BMW Japan agreed to contend technological progress as being part of the solution. Then, the moderator responded by asking the responsibility panelists companies are endorsing to drive down demand in their commitment to net zero. Since global mobility demand will increase according to Ruth Heuss, influencing consumers behaviour will be hard for the industry sector. OECD reminded that buying CO2 offset is a possible solution here. Finally, two specific questions were asked to Umicore and Sojitz Corporation. Atsuya Hanazawa is open to any partnership with japanese companies for recycling if sharing the same philosophy of carbon neutrality, while Sojitz Corporation is effectively getting support from the Japanese government to reduce national dependency from China on rare-earth.

Conclusion

To conclude this EU-Japan conference on trade & industry, representatives from the METI of Japan and from the European Commission were invited to express their views on today’s discussion. Both Takashi Omote from METI and Joaquim Nunes de Almeida from DG GROW formulated their keen interest to further encourage trade, business, policy exchanges by discussing and cooperating together. Developing international standards and rules for low carbon products was for instance underlined. Takashi Omote finally reiterated his opening remarks regarding the higher cost of renewable energies in Japan and Asia globally, related to regulations and natural barriers, while saying that METI is open to discuss and change the administrative hurdles to foster further deployment of renewables. Joaquim Nunes de Almeida also mentioned business cooperation in third markets, which he described as a particularly important and promising trend of EU-Japan relations.


More about the companies and organizations

European Commission

Directorate General for Trade (DG TRADE)

This department of the European Commission is responsible for the EU Commission’s policies and agreements on trade with countries outside the EU. It negotiates bilateral, regional or multilateral agreements with third countries and monitors its implementation. The EU has recently signed an Economic Partnership Agreement with Japan, allowing to lay down common high standards along shared values on which further economic exchanges are conducted. | More about the Directorate General for Trade

Directorate General for Internal Market, Industry, Entrepreneurship and SMEs (DG GROW)

The Commission’s Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs works to ensure an open internal market for goods and services and help turn the EU into a smart, sustainable and inclusive economy by mostly supporting SMEs and enforcing industrial property rights. | More about Directorate General for GROW

Directorate General for Climate Action (DG CLIMA)

The Directorate-General for Climate Action (DG CLIMA) is responsible for formulating and implementing EU climate policies and strategies to turn the EU into the first climate-neutral continent in 2050. It contributes to greening finance, ensures the dissemination of climate action into the EU and Member States policies and budgets, and participates in international negotiations on climate. It aims to tackle global warming at EU and international level. | More about DG CLIMA

Ministry of Economy, Trade and Industry of Japan (METI)

The Ministry of Economy, Trade and Industry (METI) is in charge of economic and industrial development and administration related to mineral and energy resources. The Bureau for Industrial Science and Technology policy aims to build an open innovation system to enhance Japan’s industrial technology capabilities. Besides, the Bureau for Trade Policy is involved in the overall management, formulation, implementation of affairs concerning international cooperation in the field of trade and economy. | More about the Ministry of Economy Trade and Industry

BloombergNEF

BloombergNEF is a leading provider of strategic research on the pathways for the power, transport, industry, buildings and agriculture sectors to adapt to the energy transition. Analysis, data and research produced by the BNEF are widely used by journalists and policy makers from around the world. | More about BloombergNEF

Enel Green Power

Enel is a Roma-based multinational company, one of the world’s leading integrated power utilities. It is the first private power network operator globally, has one of the largest global customer base and is the largest private player in producing energy from renewable sources. Enel Green Power is the Enel Division dedicated to the development and operation of renewable energy plants. Enel Green Power is present in 32 countries worldwide and manages more than 1.200 power plants, mostly in Europe and in hydroelectric. | More about Enel Green Power

Kansai Electric Power Company

The Kansai Electric Power Company engages in the business of electric power, heat supply, telecommunications and gas supply services, mainly in the Kansai region of Japan. The company also develops international activities; it has participated in a total of 20 projects in 12 countries, including wind power in Europe. It was established in 1951 and employs around 18.000 people. | More about Kansai Electric Power Company

International Partnership for Hydrogen and Fuel Cells in the Economy (IPHE)

The IPHE, established in 2003, is an international intergovernmental partnership currently consisting of 19-member countries and the European Commission. Its objective is to facilitate and accelerate the transition to clean and efficient energy and mobility systems using hydrogen and fuel cell technologies across applications and sectors. This partnership provides a forum for sharing information to accelerate the cost-effective transition to the use of hydrogen and fuel cells in the economy. | More about IPHE

Hydrogen Europe

Hydrogen Europe brings together diverse industry players, large companies and SMEs, who support the delivery of hydrogen and fuel cells technologies. It represents the European hydrogen and fuel cell sector, with more than 260 member companies and 27 member national associations. The objective of Hydrogen Europe is to enable the adoption of hydrogen as a fuel for Europe’s low carbon economy. | More about Hydrogen Europe

Japan Hydrogen Association

Japan Hydrogen Association was launched in december 2020 to promote the formation of a hydrogen supply chain and global partnerships in the hydrogen sector. The JH2A will make policy proposals to the government, undertake international collaborations with other related organizations, conduct research and analysis. It currently gathers 195 companies, organizations and local governments. | More about JH2A

McKinsey & Company

McKinsey & Company is a global management consulting firm advising world’s leading businesses, governments, and institutions. It provides industry practice solutions, functional practice solutions and managerial solutions. Founded in 1926 in London, it operates additional offices in more than 65 countries worldwide with over 30.000 employees. | More about McKinsey & Company

BMW Group

BMW Group is a German world’s leading premium manufacturer of automobiles and motorcycles which also provides premium financial and mobility services. The company’s production network comprises 31 production and assembly facilities in 15 countries, and a workforce of more than 120,000 employees. BMW Group Japan established in 1981 provides financial services and acts as a wholesaler by importing and distributing BMW Group vehicles. The partnership signed with Toyota Motor in 2011 led to the production of jointly developed models in 2019. | More about BMW Group

Toyota Motor Europe

Toyota Motor is a Japanese multinational founded in 1937, the largest automobile manufacturer in the world based on 2020 unit sales, and the largest listed company in Japan by market capitalization. The company is the global leader in sales of hybrid electric and in hydrogen fuel-cell vehicles. Toyota Motor started operations in Europe in 1963. Toyota Motor Europe now employs over 25000 people, overseeing the sales and marketing of vehicles and managing Toyota’s manufacturing and engineering operations in the region. | More about Toyota Motor Europe

OECD

The OECD is an intergovernmental economic organization founded in 1961 which fosters world trade by bringing together representatives from governments, parliaments, international organisations, business and labour, civil society. It provides a forum to share best-practices, exchange experiences, set international standards, and advice on public policies. | More about OECD

Umicore

Umicore is a Belgian global leader in clean mobility materials and recycling founded in 1989. The company focuses its R&D efforts and commercial activities on clean technologies such as control catalysts, materials for rechargeable batteries and recycling. It has 50 production sites and 15 R&D technical sites worldwide with over 10.000 employees. | More about Umicore

Sojitz Corporation

Sojitz Corporation is a general trading company, engaged in a wide range of businesses globally, including buying, selling, importing, and exporting goods, manufacturing and selling products, providing services, and planning and coordinating projects, in Japan and overseas. The Group also invests in various sectors and conducts financing activities. The broad range of sectors in which Sojitz operates includes those related to automobiles, plants, aerospace, medical infrastructure, energy, mineral resources, chemicals, foodstuff resources, agricultural and forestry resources, consumer goods, and industrial parks. It was founded in 2003, and operates worldwides with its nearly 20.000 employees. | More about Sojitz Corporation

Supported by

This event is organized with the financial support of the European Union’s Partnership Instrument. The opinions expressed are the sole responsibility of the organizer and speakers, and do not necessarily reflect the views of the European Union.

Organized by

EU Japan Centre for Industrial Cooperation

Climate neutrality