The Energy Conservation Law has been the primary policy instrument to propel energy efficiency investment since the oil crisis in the 1970s. The law was first enacted in 1979 and amended in 1998, 2002, 2005, 2008, and 2013 to expand the target and enhance the requirement and enforcement mechanism, and as a result Japan achieved top-tier energy efficiency in the world. The law not only targets specific machines and devices such as truck and refrigerator but also requires businesses to draft and implement an energy conservation plan for their factories, buildings, and fleet. For example, proprietors recording the total energy use of 1,500 L in toe per year must draft and implement a long-term plan to improve the efficiency by 1% or more annually, and the latest amendment in 2013 encourages “peak cut” – curbing electricity demand during peak hours through measures such as demand shift, cogeneration, and storage battery installation.
For individual machines and devices, the law establishes the “Top Runner Program,” which sets energy efficiency standards based on the performance of the best available technologies (“top runners”) for each item. The program began in 1999 with standards for 11 items, and expanded the coverage over time to 27 items. The focus of the program has been on automobile and office and home appliance, but the latest amendment in 2013 added building material as an auxiliary item to save energy used in other devices. The impact of the program has been eminent; for instance, the energy use of standard air conditioner decreased by 43.3% between 1995 and 2012, and the average fuel efficiency of passenger car rose by 58.5% between 1993 and 2012.
Table: Target Items in the Top Runner Program
To take advantage of the program, a new labeling system was also created to enable consumers to understand and compare the energy performances of various products. The label includes (1) a colored symbol showing whether or not the product meets the standards, (2) achievement rate relative to the standard, (3) energy efficiency, mostly represented as expected annual electricity bill, and (4) standard fiscal year. It is now a popular decision-making indicator for many consumers, and its importance continues to grow with the rise in electricity rates.
Figure: Sample Label
The regulatory approaches under the Energy Conservation Law has made unique success in Japan in the past 35 years due largely to the cooperative relationship between businesses and regulators, and the law gained popularity among the general public as a plain and transparent regulation. Nonetheless, the uniform reduction mandate on commercial energy use is said to be unfair as the difficulty in achieving the target depends on the baseline energy use. At the same time, the Top Runner Program now covers roughly half of the energy use in residential and commercial sector, but misses some energy-intensive appliances and devices such as washer/dryer and commercial refrigerator/freezer. Furthermore, the program also sets separate standards for each size-based subcategory, and it could possibly be discouraging downsizing of several items such as passenger car and television. These instances suggest that the 35-year-old law has made important contributions to energy conservation in Japan but still has space for improvement.
Figure: Energy Use per Nominal GDP in 2010
(Source: Energy Data and Modeling Center)
Nordqvist, Joakim (2006). Evaluation of Japan's TopRunner Programme.
Agency for Natural Resources and Energy (2010). TopRunner Program.