Connecting East and West for Japan’s energy transition

Japan has made strong progress in its green transformation, with over 128 gigawatts of installed renewable energy as of the end of 2023. Renewables accounted for over 25% of Japan’s total electricity generation in 2023, a jump of 3 percentage points from 22.7% the previous year¹. 

More recently, however, the country has weathered a period of political upheaval and market volatility, with rising interest rates and a change in government introducing new uncertainties around the decarbonisation agenda. 

Against that backdrop, Societe Generale’s Positive Impact Day in Tokyo in October brought together clients, government officials and expert speakers to discuss the lessons learned from Japan’s rapid progress and the path ahead for the energy sector. 

The conversations shed new light on the importance of three enabling factors: a stable policy environment, access to financing and the role of international partners. 

“Japan continues to demonstrate how a coordinated, long-term effort to green the economy can attract billions of euros of investment into low-carbon technologies,” said Bruno Gaussorgues, Group Country Head for Japan at Societe Generale. “We are delighted to connect so many clients, policymakers and experts with new insights that will help to take Japan’s green ambitions to the next level.”

To open the conference, Takatsugu Ryuzaki, Director-General for GX Promotion, Ministry of Economy, Trade and Industry (METI), delivered a well-attended keynote address, providing additional clarity on Japan’s policy agenda. 

Japan has made its green transformation (GX) a centrepiece of government policy, with a dedicated GX Transformation Agency and a goal of investing JPY150 trillion in decarbonisation by 2030. Prime Minister Shigeru Ishiba, who took office in October, has continued that policy with a pledge to accelerate the green transition, overseeing the publication of a new draft energy plan in December². Notable targets include increasing the share of renewables to up to 50% of the country’s power mix by 2040, phasing out sales of new petrol-powered cars by 2035 and introducing a carbon levy by 2028³.  

Policy support has also played a key role in promoting the debt markets as a source of transition funding. Japan in 2024 became the first sovereign issuer in the world to sell climate transition bonds, raising ¥800 billion in February. 

For a deeper dive into the debt markets, Nobuki Sato, Director, Debt Management Policy Division at Japan’s Ministry of Finance, was joined by Takako Onitsuka, Director, Environmental Finance Office in the GX Policy Group at the Ministry of Economy, Trade and Industry, and Yukari Takamura, Professor at the Institute for Future Initiatives, The University of Tokyo.

Masamichi Akiba, Head of Debt Capital Markets for Japan at Societe Generale, moderated the discussion.

Scaling up sustainable finance

Japan has recognised that meeting the cost of the green transition will require the participation of the private sector. To that end, the audience was interested to hear of the latest developments in sustainable finance – including some important lessons from Europe. 

Hideki Takada, Director of the GX Acceleration Agency, outlined the Japanese government’s decarbonisation roadmap, which calls for JPY 30 trillion of private sector investment by 2030. 

Raphaël Keller, Minister-Counsellor for Economic Affairs & Head of the Regional Economic Department (Japan-Korea) at the French Embassy in Japan, provided a perspective from Europe, where a clear taxonomy and consistent regulation has been instrumental in guiding capital towards sustainable activities.

Monica Nagashima, Director for East Asia at climate change think tank InfluenceMap, added a reminder of the urgent need to accelerate decarbonisation globally. 

The discussion, moderated by Paul-Antoine Thiebot, Head of Sustainable and Positive Impact Finance for Asia Pacific at Societe Generale, also covered the importance of a level playing field, the role of blended finance, and the need for policy consistency to attract investment and support innovation in green technologies.

Supporting innovation 

The final discussion of the day provided insights from three businesses that are investing heavily in green technologies. 

Tomonori Miyagawa, General Manager of the Structured Finance Unit at JERA, Japan’s largest power generation company, outlined the challenges and opportunities facing an established energy business. 

JERA in 2024 announced a new growth strategy that integrates zero-emission goals with its ambition to deliver energy sustainability, affordability, and stability. Among other targets, JERA aims to increase renewable capacity to 20 gigawatts and develop 7 million tons of hydrogen and ammonia trade by 2035⁴.  

Javier Martinez, Director, Project & Structured Finance and M&A at Canadian Solar, emphasised the importance of stable market prices and regulatory clarity for clean energy developers. With those conditions in place, Canadian Solar has built a sizable portfolio of solar and battery storage projects in Japan, with more in the pipeline. 

Japan’s commitment to green transformation is attracting new entrants such as Hexa Energy Services (HES), which won 11 battery projects totalling 342MW in Japan’s first long-term decarbonisation auction in May 2024. Construction of the first battery storage project, a 30MW facility in Tagawa City, Fukuoka Prefecture, began in November⁵.  

Yuko Watanabe Shah, Executive Manager of HES, introduced the investment case for battery and electrical storage systems to support the transition of Japan’s national electricity grid. HES is a subsidiary of I Squared Capital's Hexa Renewables platform, which manages 1.8 GWh of storage globally. 

The discussion underscored the need for innovative solutions to balance sustainability, affordability, and stability in Japan's energy mix. Shinya Kotani, Director, Energy +, Asia Pacific, Global Banking and Advisory, Societe Generale and Cedric Chatel, Managing Director, Energy +, Asia Pacific, Societe Generale kept the conversation flowing, before Koji Shimamoto, President and Representative Director, Societe Generale Securities Japan, brought the event to a close. 

Societe Generale has been supporting clients in Japan for over 50 years. In recent years, we have supported a number of innovative energy transition projects, including the first utility-scale offshore wind projects and the first solar development backed by a long-term virtual power purchase agreement under the new tariff regime, for Shizen Energy. 

The Japan instalment of our 2024 Positive Impact Day offered fresh perspectives on the ingredients needed to support the next phase of Japan’s economic development. We are grateful to all the speakers and clients who shared their time with us at this valuable forum. 
 

<sub>1. https://www.isep.or.jp/en/1529/
2. https://www.reuters.com/sustainability/climate-energy/japan-targets-40-50-power-supply-renewable-energy-by-2040-2024-12-17/
3. https://japan.influencemap.org/policy/GX-Green-Transformation-5477
4. https://www.jera.co.jp/en/ir/ir_news/20240516_1917
5. https://www.linkedin.com/company/hexa-energy-services/posts/?feedView=all</sub>