The financial crisis that started in the United States has touched off a great upheaval in the world economy, the likes of which are said to come once every 100 years. A new world economic system will take clearer shape in the coming years, and whether Japan will continue to play a major role will depend on its planning and execution of industrial and technology policies suited to the new global economic system, as well as closely related resource and energy policies. It must do this while keeping an eye on the medium- and long-term trends underpinning the rapid changes in the international order, including the rise of such emerging countries as China and India, a relative decline in American influence, instability in the medium- and long-term supply of fossil fuels accompanying the growth of the emerging economies, and the increasing seriousness of global warming. With respect to resource and energy policy in particular, Japan, which depends on imports for nearly all of its needs, can do little by itself. Moving away from traditional diplomatic frameworks and building global relations of coordination and cooperation are urgent tasks for Japan, and strategic diplomacy with the public and private sectors working together will be essential.
Based on this recognition, the Tokyo Foundation has conducted surveys and studies on energy trends in Japan and throughout the international community since April 2007 as part of its research efforts in the field of Energy Issues and Japanese Foreign Policy. These studies have suggested resource and energy diplomacy policies that Japan should adopt, and have resulted in the proposals presented below.
We hope that these proposals will be reflected in the nation’s resource and energy strategy.
Policy Proposal
Priority Issues in Japan’s Resource and Energy Diplomacy: Relations with the United States and Russia in Nuclear Energy and with China in Rare Earth Metals
The major thrust of Japan’s resource and energy diplomacy has traditionally been to secure a stable supply of fossil fuels, namely oil and natural gas. These efforts first evolved around Middle Eastern and a few Asia-Pacific countries, and then since the end of the Cold War have spread to include former republics of the Soviet Union, mainly Russia, Azerbaijan, and Kazakhstan.
In recent years, however, against the background of global warming and uncertain medium- and long-term supplies of fossil fuels, we have seen a rapid rise in the importance of nuclear power; wind and solar power, renewable energy sources that take advantage of advanced technology; and electric and other next-generation vehicles. At the same time, new movements in resource and energy diplomacy have appeared.
In June 2008, just before the G8 Hokkaido Toyako Summit, which focused on global warming issues, the International Energy Agency released its Energy Technology Perspectives 2008 . This includes multiple scenarios for the realization of sustainable energy in the future, and simulations together with the technical background necessary for these scenarios. The harshest of those scenarios is one in which CO2 emissions are reduced by half by 2050, for which dramatic energy savings and technical innovations will be essential . This will require an additional annual investment equivalent to about 1.1% of average annual global GDP, with the total cost rising to $45 trillion. Even including technical innovations in a range of fields—energy savings and increased energy efficiency; renewable energy from solar, wind, and biomass resources; carbon capture and storage; and in the transport sector, electric, plug-in hybrid, and fuel-cell vehicles— calculations indicate that there will be a need to build 32 new nuclear power plants each year worldwide.
In Japan, as seen for example in the New National Energy Strategy presented by the Ministry of Economy, Trade, and Industry in May 2006, the focus in energy trends both domestically and internationally is on (1) promoting the use of nuclear energy and (2) increasing energy efficiency through the use of advanced technology , reducing reliance on petroleum and other fossil fuels, and raising nuclear energy generation efficiency. The measures and policies needed to achieve this are considered to be priorities in the field of resource and energy diplomacy.
In the light of the above, the Tokyo Foundation offers the following two proposals for Japan’s resource and energy diplomacy, which will be needed to promote the use of nuclear energy and energy efficiency through the use of advanced technology.
In the area of peaceful use of nuclear energy, Japan should focus on building a reciprocal relationship with Russia, actively contribute to strategic stability in US-Russia relations, and create a framework for Japan-US dialogue on cooperation with Russia on nuclear energy.
To create a stable supply environment for rare earth elements, Japan should initiate opportunities for continuous joint Japan-China research in the fields of developing recycling technology and addressing environmental problems that accompany rare earth development, in order to build a reciprocal relationship between Japan and China.
· Promotion of further peaceful use of nuclear energy is essential to cope with global warming. In this area, Russia, as a major nuclear power, cannot be ignored.
· It is possible for Japan and Russia to build a reciprocal relation in the field of peaceful use of nuclear energy.
· Since Japan’s and America’s nuclear energy programs are unified for all practical purposes, as seen by the Toshiba-Westinghouse and Hitachi-GE alliances, stability in US-Russia relations is essential. However, the Iranian nuclear development program continues to be a problem, and US-Russia relations remain strategically unstable.
· The outbreak of the Georgian crisis in August 2008 forced the administration of George W. Bush to withdraw a US-Russia nuclear energy agreement that had been signed in May and submitted to Congress for approval. Future measures will be left to the new Obama administration.
· Therefore, Japan should act positively to contribute to strategic stability in US-Russia relations. Various frameworks exist between the United States and Russia and between Japan and Russia for dialogue on the possibility of cooperation in the field of nuclear energy. Between Japan and the United States, however, no framework exists for discussions of nuclear energy cooperation with Russia. We therefore propose establishing a framework for Japan-US dialogue, timed with the inauguration of the new Obama administration, that will allow the participants to exchange views on nuclear energy cooperation with Russia.
· Exchanges of views should be started on how to proceed with cooperation between the United States and Russia and between Japan and Russia, and to identify the obstacles to such progress, in the areas of both peaceful nuclear energy use and nuclear nonproliferation. As an extension of these talks, Japan can search for possible ways to work together with the United States in regard to nuclear energy cooperation with Russia. This will not, obviously, resolve points of US-Russia strategic conflict, but it will undoubtedly help to stabilize the situation. It may also lead to building a stable trilateral relationship centered on cooperation in the field of nuclear energy.
· In Washington, there are influential groups that show deep understanding of the importance of cooperation with Russia in the field of nuclear energy, including the authors of a report by the Center for Strategic and International Studies, a US think tank, on nuclear energy agreements between the United States and Russia. There is a real possibility that such a framework could be established through cooperation with these groups.
· The new Obama administration officially starts on January 20, 2009. However, it will take several months to set a direction in its Russia policy, including resubmitting the US-Russia nuclear energy agreement for ratification by Congress. If the first meeting in this new framework could be held in Washington by March 2009, before that direction is established, it may be possible to provide input to the Obama administration with regard to the importance of nuclear energy cooperation with Japan and Russia.
· Rare earth elements are uncommon mineral resources, referred to as the “vitamins” of industry.
· These elements are used in the high-performance, high-efficiency motors in next-generation automobiles, energy-saving home appliances, and nuclear reactor materials. They have a high level of use in advanced energy-saving and environmental technologies, and the global demand for them is expected to increase. They are essential elements in the technical support of Japan’s energy policies.
· Rare earth elements, more than other rare minerals, have properties that make them difficult to replace with other materials and difficult to recycle and store. Deposits and production of rare earth elements are heavily concentrated in China.
· Today Japan imports nearly 100% of its rare earth elements from China. Even with diversification of supply countries or development of the ocean floor resources near Japan, the facts that demand will continue to grow and that good deposits exist in China lead to the conclusion that it is desirable to maintain a stable supply from China as a primary source.
· China is positioning rare earth elements as important national strategic materials with its resource policy of “Middle Eastern oil, Chinese rare earth metals.” Development with foreign capital is prohibited, and “resource nationalism,” such as restricted export licensing, is intensifying. This gives rise to concerns in terms of stable supplies for Japan.
· Past activities between Japan and China in the field of rare earth elements include the launch of Sino-Japanese rare earth conferences in 1988, based on an agreement between the director-general of the Agency for Natural Resources and Energy of Japan and the vice chairman of the State Planning Commission. In these conferences Japan and China share information and ideas on the production and sales of rare earth and nonferrous metals, as well as government policy trends regarding them.
· Recent developments have shown China, despite the rising intensity of its resource nationalism, to be approaching Japan with interest in advanced technology including Japan’s superior processing, application, and recycling technologies. China must also deal with issues related to environmental problems from excessive mining and other causes.
· In consideration of these circumstances in China, Japan should cooperate in technical fields, where it is allowed, for the development of Chinese rare earth elements, build a reciprocal relationship by advancing Sino-Japanese cooperation in dealing with environmental problems, and create an environment that promotes a stable supply of these elements.
· To promote a continuing stable supply from China, the Sino-Japanese relationship should not be limited to one of simple Japanese imports from China, as it has been up to this point. Rather, it will be important to promote stability by building a reciprocal relationship in which Japan and China jointly develop and use rare earth elements.
· One proposal, therefore, is to initiate opportunities for continuous joint Japan-China research in the fields of recycling technology development and coping with the environmental problems that accompany rare earth development, in order to build a reciprocal relationship between the nations.
· Japan’s cooperation in environmental measures in the development of rare earth elements in China will be a useful experience for environmental measures when Japan itself develops sources of these elements in countries other than China.
Proposals for Japan-China Joint Research on Rare Earth Development
· Aims
To ensure a stable supply of rare earth elements from China by building a reciprocal relationship through Japan-China joint research on rare earth recycling technology and measures to address the environmental problems that accompany rare earth development, which are challenges faced by both countries.
· Research Topics
Rather than haphazardly providing China with the cutting-edge processing and application technologies that are the basis of Japan’s competitiveness, the proposals call for joint research in fields that constitute shared challenges for Japan and China, thus building a reciprocal Japan-China relationship.
Proposed topics of research:
1. Development of rare earth recycling technology
· Develop technology to collect and recycle rare earth elements from commercial products
· Develop less expensive recycling technology
2. Technology to address environmental problems in rare earth development
· Develop more environmentally friendly extraction technology
· Develop technology for disposing of and managing radioactive waste, including thorium produced in the development process.
* Other, such as anti-aging technology for withstanding storage of rare earth elements
How Japan Can Meet Global, Domestic Challenges and Develop the Human Resources Needed for a Brighter Future: Sasakawa Peace Foundation–Tokyo Foundation for Policy Research Joint Symposium Report
