ACEA

Japan Opts for Integrated Approach

Top runners and close consultation in Japanese recipe

Tokyo, May 2007 (ACEA) _ Slow progress towards meeting its Kyoto Protocol commitments on reducing greenhouse gases (GHGs) prompted the Japanese government in April 2005 to update its national plan for reducing carbon emissions covering every sector of the economy. Car manufacturers are set the challenge to improve fuel-efficiency by 20% before 2015. However, infrastructure adjustments, “eco-driving” and fiscal incentives will have to deliver significant carbon reductions as well.

Tokyo’s increasing sense of urgency comes from the mounting difficulty of meeting its Kyoto targets, especially in the transport sector. Between 1990 and 2004, CO2 emissions from transport actually rose by 20%. Having pledged to cut GHGs by 6% by 2012 (over 1990 emissions), Japan finds itself 8.1% above the commitment year’s output. This means the country will have to reduce GHGs by 14.1% by 2012.

New standards

The original targets for passenger cars were intended to achieve by 2010 an improvement in fuel economy of 23% compared to the 1995 baseline. New standards to be implemented this year will set carmakers the challenge of achieving a fuel efficiency performance, which by 2015 must be more than 20% better than in 2004. This translates into a CO2 target of 138g/km – rather less ambitious than the 130g/km target by 2012 the European Commission wants to set for Europe, but with a great deal more lead-time and early knowledge of the system to be applied.

Nevertheless, the new Japanese standards rank among the most stringent in the world. They seek to improve fuel economy values by 23.5% for passenger cars, 7.2% for small buses and 12.6% for small freight trucks over 2004 levels.

Policy mix

Japan is not relying solely on vehicle related standards to reduce CO2 emissions. It has a long standing road infrastructure improvement programme which is aims at delivering 14,000 miles of new highways and is also encouraging eco-driving. Other measures include incentives to buy and operate low-emission vehicles and traffic demand management.

Japan has adopted an ‘integrated approach’ to reducing vehicle carbon emissions which requires efforts from industry, government and automobile users alike and forms part of an overall national strategy to achieve Japan’s Kyoto commitments. It consists of three main strands:

• Greater fuel efficiency (target: 21 million tonne reduction by 2010)


• Road infrastructure and traffic management improvement (target: 28.3 million tonne reduction by 2010)


• Eco-driving (target: 1.3 million tonne reduction by 2010)

In a speech to the Japanese Diet in January 2007, Prime Minister Shinzo Abe spoke of his determination to meet the 6% by 2012 Kyoto target. He has instructed the government to keep the national plan for reducing carbon emissions under review and to propose additional measures, if required.

Top runners

Japan’s Ministry of Economy, Trade and Industry (METI) assesses carmakers’ efforts to improve fuel efficiency by setting targets using the “top runner” approach. This method has been used in Japan since 1998 to promote the sale of energy efficient products in a wide range of industries.

Manufacturers of products for which energy efficiency targets have been set are required to meet the standard on a sales weighted basis. This means that a manufacturer retains the freedom to produce a product that does not comply with the target in order to meet a particular consumer demand, provided he can offset this by the sale of other products with a higher energy efficiency.

Weight categories

Encompassing both cars and light trucks, the Japanese system “top runner” approach for cars sets average fuel economy targets for different vehicle weight categories. They are more stringent in the lighter weight categories and less stringent in the heavier weight categories. The "top runner" method sets targets for each weight category by reference to the best performing vehicle in that weight class.

The targets are set following close consultation with the auto-industry about technical feasibility. The 2015 standards will allow manufacturers to earn credit from the over-fulfillment of the target in one weight category to compensate for underperformance in any other category. This will help to preserve the diversity of the model mix.

If the standards are not met, or if the vehicle manufacturer cannot prove that appropriate mechanisms are in place to ensure that they will be met, the government will issue a long series of warnings, recommendations, public announcements and orders before resorting to sanctions. A fine of up to 1 million yen may eventually be imposed if an order is violated.

Performance

In assessing whether the 2015 standards have been fulfilled, the Japanese authorities will take into account not just the absolute fuel efficiency of the vehicles sold by each manufacturer, but also how a manufacturer has performed in relation to other manufacturers who sell similar types of vehicles.

The authorities have recognised that allowance should be made for the fact that high-performance vehicles cannot be expected to comply with the same standards as those with less powerful engines in the same weight category. Before issuing sanctions the Japanese authorities will also take into account such exogenous factors as changes in emission and safety regulations since the standards were set, because these regulations often negatively affect the CO2-reduction efforts of the manufacturers.

Japanese vehicle manufacturers are currently reporting that more than 80% of their newly sold vehicles already comply with the original 2010 target levels.

Consumer demand

The Japanese approach to reducing vehicle carbon emissions requires car manufacturers to put on the market vehicles, which comply with the “top runner” targets. But the Japanese authorities understand that the manufacturers have only a limited influence over consumer behaviour.

The forecast improvement of 23.5% in the fuel economy of passenger cars by 2015 is based on the assumption that there will be no change in the model mix. The Japanese government accepts that it has the responsibility to support the manufacturers efforts by tax incentives. Only by working closely together can the Japanese government and car industry ensure that the consumer will purchase fuel-efficient vehicles.

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