may 2006 ministry of economy, trade and industry

May 2006 Ministry of Economy, Trade and Industry

Table of contents

I. Comprehension of current circumstances and challenges

1. Basic recognition of current situation

(1) Change in energy supply-demand structure 1

(2) Diversification of factors which cause and amplify market disruption-including political

uncertainly 8

(3) World-wide trend of restructuring national energy strategies 9

2. Formulation of the ‘New National Energy Strategy’

(1) Objectives of the Strategy 10

(2) Basic perspectives of the Strategy 12

(3) Points of concern in implementing the Strategy 13

(4) Establishment of numerical targets 14

II．Efforts towards implementation

1. Specific programs that constitute the Strategy and their characterization 15

2. ‘Energy Conservation Frontrunner Plan’ 17

3. ‘Transport Energy for the Next Generation Plan’ 19

4. ‘New Energy Innovation Plan’ 21

5. ‘Nuclear Power Nation Plan’ 23

6. Comprehensive Strategy for Securing Resources 26

7. Asia Energy and Environment Cooperation Strategy 29

8. Enhancement of the Emergency Response 31

9. Formulation of the ‘Energy Technology Strategy’ 31

10. Toward implementing the ‘New National Energy Strategy’ 32

1

I. Comprehension of current circumstances and challenges 1. Basic recognition of current situation (1) Change in energy supply-demand structure

In light of the changes after the oil crises and the outlook in the next 30-years, it can be

comprehended that the international energy market is facing a major structural change owing to various

elements concerning both supply and demand conditions.

It is highly possible that the current high price level of crude oil will continue for medium- and

long-term, based on the tight supply-demand structures in the international energy market.

① Long-term shift of the energy market Since the two oil crises, the price of crude oil had been soaring, resulting in the global tendency

to suppress oil consumption by shifting for alternative energy resources or promoting energy conservation.

At the same time, oil production by non-OPEC nations had been increasing. As a result, the international

energy market got into the oversupply condition. For this reason, the price of crude oil had been stable

during the period between the latter half of 1980s and 1990s, ranging moderately from 13 to 19 dollars per

barrel, except for temporary skyrocketing prices during the Gulf War period.

During this stable period, energy demands had been gradually increasing due to continuing

low-level oil prices. On the supply side, investments in upstream development projects were stagnant.

In the 21st century, the international energy market saw increased demands especially in Asian countries

and the United States, which led to the tight supply-demand structures.

As a result, the price of crude oil has started to rise again. Currently, the price still remains high,

around 70 dollars per barrel.

Figure 1：Long-term price shift of crude oil

Stable period

US$1-2/ barrel

Source: Ministry of Economy, Trade and Industry. This chart shows price fluctuations of Saudi Arabian Arabian Light, of which Japan uses a great deal. However, the price determination method differs by period.

1st structural changeResponse to the Oil

Crisis

Stable periodUS$13-19/barrel

2nd structural change

Structural supply - demand pressure

0

510

15

20

2530

35

40

45

50

55

60

6570

1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005

Arabian Light Price

（Unit: US Dollar/Barrel）

'

2003.3.20Attack on Iraq led by the US

2001.9.11Attacks of Sept. 11, 2001

‘90.8.2Iraq’s invasion of Kuwait

Gulf WarHighest price: US$32.9/barrel

Price as of Apr ‘06US$67.20/barrel

2nd oil crisisHighest price: US$34/barrel

‘79.2.11Iran provisional revolutionary government established

‘73.104th Middle East War

‘80.9.9Iran-Iraq war

1st oil crisis Highest price: US$11.65/barrel

Stable period

US$1-2/ barrel

Source: Ministry of Economy, Trade and Industry. This chart shows price fluctuations of Saudi Arabian Arabian Light, of which Japan uses a great deal. However, the price determination method differs by period.

1st structural changeResponse to the Oil

Crisis

Stable periodUS$13-19/barrel

2nd structural change

Structural supply - demand pressure

0

510

15

20

2530

35

40

45

50

55

60

6570

1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005

Arabian Light Price

（Unit: US Dollar/Barrel）

'

2003.3.20Attack on Iraq led by the US

2001.9.11Attacks of Sept. 11, 2001

‘90.8.2Iraq’s invasion of Kuwait

Gulf WarHighest price: US$32.9/barrel

Price as of Apr ‘06US$67.20/barrel

2nd oil crisisHighest price: US$34/barrel

‘79.2.11Iran provisional revolutionary government established

‘73.104th Middle East War

‘80.9.9Iran-Iraq war

1st oil crisis Highest price: US$11.65/barrel

2

② Structural change on the demand side On the demand side, various challenges have becoming obvious the rapid increase and projected

growth continuation of global energy demands especially in Asian countries, strengthened activities of

China, India and other countries resource interests and the expanded influence of those countries on the

international energy market, a possible increase of fuel demand in the transport sector, and lack of supply

capacity in the demand side countries due to insufficiency or maldistribution of the energy distribution

infrastructure or secondary supply facilities.

Figure 2: Perspective of world energy demands

56%45% 42% 39% 36%

15%

10%10%

9%9%

7%

12%

13%

14%15%

12%

18%

19%

20%

21%

4%

4%

5%

5%

6%

1%

4%

4%

5%

5%

4%

5%

5%

6%

7%

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

1971 2002 2010 2020 2030

(Oil conversion 1 mil ton)

5,536

10,345

12,194

14,404

16,487

OECD(excluding Japan and S. Korea)

Former Soviet Union

China

Asia (including Japan and S. Korea)

Central and South Americas

Middle East

Africa

（Source）IEA　World Energy Outlook 2004

56%45% 42% 39% 36%

15%

10%10%

9%9%

7%

12%

13%

14%15%

12%

18%

19%

20%

21%

4%

4%

5%

5%

6%

1%

4%

4%

5%

5%

4%

5%

5%

6%

7%

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

1971 2002 2010 2020 2030

(Oil conversion 1 mil ton)

5,536

10,345

12,194

14,404

16,487

OECD(excluding Japan and S. Korea)

Former Soviet Union

China

Asia (including Japan and S. Korea)

Central and South Americas

Middle East

Africa

（Source）IEA　World Energy Outlook 2004

3

Figure 3:Changes in oil imports to China

0

5,000

10,000

15,000

20,000

25,000

1998 2005

1,000 ton

★★★★★

SudanSudan

RussiaRussia

IranIran

Saudi ArabiaSaudi Arabia

OmanOman

AngolaAngola

Source: Xinhua News Agency China OGP. Oil data monthly report

Total import: 127,100,000 tonsTotal import: 127,100,000 tons＜＜ReferenceReference＞＞JapanJapan’’s import: 211,600,000 tonss import: 211,600,000 tons（（Middle East dependency level: 90.2%Middle East dependency level: 90.2%））

YemenYemen


12 12 -- fold increase fold increase from 98from 98

0

5,000

10,000

15,000

20,000

1998 2005

1,000 ton

AngolaAngola


0

5,000

10,000

15,000

1998 2005

1,000 ton

IranIran

0

5,000

10,000

15,000

1998 2005

1,000 ton

RussiaRussia

0

5,000

10,000

15,000

1998 2005

1,000 ton

OmanOman




0

5,000

10,000

15,000

20,000

25,000

1998 2005

1,000 ton

★★★★★★★★★★

SudanSudan

RussiaRussia

IranIran


OmanOman

AngolaAngola

Source: Xinhua News Agency China OGP. Oil data monthly report

Total import: 127,100,000 tonsTotal import: 127,100,000 tons＜＜ReferenceReference＞＞JapanJapan’’s import: 211,600,000 tonss import: 211,600,000 tons（（Middle East dependency level: 90.2%Middle East dependency level: 90.2%））

YemenYemen



0

5,000

10,000

15,000

20,000

1998 2005

1,000 ton

AngolaAngola


0

5,000

10,000

15,000

1998 2005

1,000 ton

IranIran

0

5,000

10,000

15,000

1998 2005

1,000 ton

RussiaRussia

0

5,000

10,000

15,000

1998 2005

1,000 ton

OmanOman




4

③ Structural change on the supply side On the supply side, following challenges have becoming obvious; strengthened state control over

energy resources and restrictions on foreign capitals in oil/gas-producing countries, lack of large-scale

distribution infrastructure such as pipelines, declining supply power of non-OPEC nations and increasing

dependence on the Middle East, and an increased awareness of the long-term resource constraint as

represented by the ‘Peak Oil’ debate.

Figure 4: Examples of strengthened state control in oil/gas-producing countries

Middle East

Africa

Russia and Central Asia

Central &SouthAmericas

・Saudi Arabia: The state owned Saudi Aramco owns all oil rights. Natural gas is open to foreign capital.

・UAE: The government (state owned ADNOC) participates in oil rights up to 60%. Natural gas is 100% government owned.

・Iran: The government (state owned NIOC) owns the exploration & development rights. Private enterprises can participate only by means of buy-back.・Qatar: The government (state owned QP) develops oil and natural gas through PS agreement with private enterprises (no distribution rate limit). QP participates in over 60% of LNG projects.・Kuwait: The government (state owned KOC) owns the exploration, development and production rights. There is a move to introduce foreign capital through service agreements.

・Azarbaijan: Actively introduces foreign capital. The government (state owned Socar) participates in 10-50% rights.

・Kazakhstan: In ’02, it changed its traditional 100% acceptance of foreign capital, and made it an obligation to participate in over 50% of the rights of the government (state owned Kazmunaigaz) In ’04, granted the preemptive right executive power to the said company by the revision of the underground resources law.・Turkmenistan: Foreign capital can only participate in offshore projects. It is preparing to establish its state owned TNOC, and the said company is to participate in all projects.

・Nigeria: The government withdrew its grant of 16 deep sea mine sites for domestic oil companies in ’99. 24 mine sites for major oil companies’holdings became government holdings in ’05.

・Libya: In ’03, after international reintegration by the lifting of sanctions, it has been active in introducing foreign capital by implementing an exploration mine site auction twice in ’05, and planning a new mine site auction for ’06. ・Algeria: After ’86, foreign capital has been able to participate (elimination of cumulative debt and improvement of recovery rate). In ’05, reduced the rights of state owned oil companies and reinforced the promotion of foreign business participation.

・Angora: Expanded the government’s part in the PS agreement of deep water oil fields (Maximum 90%). There is a case in which it did not approve of the extension of a contract for a foreign company.

Southeast Asia

・Indonesia: While trying to increase production through improving the PS agreement conditions along with the reduction of production volume, it is expected to fulfill its 25% domestic supply obligation of gas production volume in its new PS agreement with the domestic demand increase.

・Russia: In ’05, submitted the underground resources law to the parliament. It stipulated the auction participation restriction for foreign capital in important oil fields, and obligation for Russian businesses to participate in over 51% of the rights.

・Venezuela: Transition to a venture business with state owned oil government corporation for oil, and the government makes over 60% capital participation. Followed back to the past and increased the income tax for oil companies (From 34% to 50%.) As for natural gas, private businesses can participate 100%. ・Bolivia: The government announced the nationalization of hydrocarbon resources in May ’06 (substantial increase of the government’s profit distribution, government acquisition of the majority of the shares of principal enterprises.)

Middle East

Africa

Russia and Central Asia

Central &SouthAmericas

・Saudi Arabia: The state owned Saudi Aramco owns all oil rights. Natural gas is open to foreign capital.

・UAE: The government (state owned ADNOC) participates in oil rights up to 60%. Natural gas is 100% government owned.

・Iran: The government (state owned NIOC) owns the exploration & development rights. Private enterprises can participate only by means of buy-back.・Qatar: The government (state owned QP) develops oil and natural gas through PS agreement with private enterprises (no distribution rate limit). QP participates in over 60% of LNG projects.・Kuwait: The government (state owned KOC) owns the exploration, development and production rights. There is a move to introduce foreign capital through service agreements.

・Azarbaijan: Actively introduces foreign capital. The government (state owned Socar) participates in 10-50% rights.

・Kazakhstan: In ’02, it changed its traditional 100% acceptance of foreign capital, and made it an obligation to participate in over 50% of the rights of the government (state owned Kazmunaigaz) In ’04, granted the preemptive right executive power to the said company by the revision of the underground resources law.・Turkmenistan: Foreign capital can only participate in offshore projects. It is preparing to establish its state owned TNOC, and the said company is to participate in all projects.

・Nigeria: The government withdrew its grant of 16 deep sea mine sites for domestic oil companies in ’99. 24 mine sites for major oil companies’holdings became government holdings in ’05.

・Libya: In ’03, after international reintegration by the lifting of sanctions, it has been active in introducing foreign capital by implementing an exploration mine site auction twice in ’05, and planning a new mine site auction for ’06. ・Algeria: After ’86, foreign capital has been able to participate (elimination of cumulative debt and improvement of recovery rate). In ’05, reduced the rights of state owned oil companies and reinforced the promotion of foreign business participation.

・Angora: Expanded the government’s part in the PS agreement of deep water oil fields (Maximum 90%). There is a case in which it did not approve of the extension of a contract for a foreign company.

Southeast Asia

・Indonesia: While trying to increase production through improving the PS agreement conditions along with the reduction of production volume, it is expected to fulfill its 25% domestic supply obligation of gas production volume in its new PS agreement with the domestic demand increase.

・Russia: In ’05, submitted the underground resources law to the parliament. It stipulated the auction participation restriction for foreign capital in important oil fields, and obligation for Russian businesses to participate in over 51% of the rights.

・Venezuela: Transition to a venture business with state owned oil government corporation for oil, and the government makes over 60% capital participation. Followed back to the past and increased the income tax for oil companies (From 34% to 50%.) As for natural gas, private businesses can participate 100%. ・Bolivia: The government announced the nationalization of hydrocarbon resources in May ’06 (substantial increase of the government’s profit distribution, government acquisition of the majority of the shares of principal enterprises.)

5

Figure 5: Perspective concerning the world energy supply structure in terms of dependence on the

Middle East and OPEC nations

Figure 6: Perspective concerning presumed peak of oil production

China4%

Asia3%

Former Soviet Union

12%OECD

28%

Other16%

Middle East OPEC

25%

Other OPEC12%

2002

Total supply:77 million barrels / day

Asia1%

Other20%

China2%

13%

OtherOPEC

11%

OECD10%

Middle East OPEC

43%

2030


37% 54%

（Source）IEA / World Energy Outlook 2004

Former Soviet Union

China4%

Asia3%

Former Soviet Union

12%OECD

28%

Other16%

Middle East OPEC

25%

Other OPEC12%

2002


Asia1%

Other20%

China2%

13%

OtherOPEC

11%

OECD10%

Middle East OPEC

43%

2030


37% 54%


Former Soviet Union

China4%

Asia3%

Former Soviet Union

12%OECD

28%

Other16%

Middle East OPEC

25%

Other OPEC12%

2002


Asia1%

Other20%

China2%

13%

OtherOPEC

11%

OECD10%

Middle East OPEC

43%

2030


37% 54%


Former Soviet Union

83710

14296121

320017002626(billion barrels)

83710

14296121

320017002626

83710

14296121

2033-20372013-20172028-2032

320017002626

Remaining net recoverable reserve of conventional oil as of Jan 96

83710Production volume (mb/d)of 2030 of unconventional oil

14296121Worldwide demand (mb/d ) during the peak of conventional oil

Peak of conventional oil production volume

320017002626

Over-optimisticscenario

Pessimisticscenario

Standard scenario

(Source ）IEA/World Energy Outlook (2004)

6

④ Trend of debate over the international framework There has been an increasing debate over the international framework to address climate change,

nuclear nonproliferation and other issues influential to energy supply-demand structure. It becomes more

and more important for our country to be highly committed to those issues through international

cooperation and to contribute to establishing new frameworks.

Figure 7: Examples of recent international movements

Planned framework to address global climate change

[United Nations Framework Convention on Climate Change and the Kyoto Protocol]

○ The ultimate goal of the Convention is to stabilize the concentration of greenhouse gas in the atmosphere.

○ The Kyoto Protocol aims at the reduction of greenhouse gas generated from advanced countries during the first commitment period (2008 to 2012).

- In comparison with the level of 1990, there has been a 6% reduction for Japan, 8% reduction for EU countries, and 0% reduction for Russia.

- It is anticipated that the U.S. and Australia might secede from the Protocol, resulting in increased emission from those countries. There is no cap set for China, India and developing countries.

○ During the COP11/MOP1 held at the end of last year, the following three agreements were made.

- Dialogue under the Convention: Dialogue for long-term cooperation involving all nations including the United States and developing countries

- Setting next targets to be attained by advanced countries: Reduction targets of advanced countries for the second commitment period will be set.

- Reviewing the entire Protocol: Reviewing the entire framework of the Protocol

[G8/APP, etc.]

○ During the G8 last July, the Gleneagles Plan of Action was adopted.

- The role of IEA in the climate change issue has been strengthened. IEA is required to make energy efficiency evaluation, etc.

- The results of the Action Plan will be reported in 2008 during the Japan Summit.

○ In July last year, the Asia-Pacific Partnership (APP) for Clean Development and Climate was established.

- The six participating nations including Japan, the U.S., Australia, China, India and South Korea

- APP intends to promote regional cooperation for the development, expanded use and transfer of clean, efficient technologies.

Global Nuclear Energy Partnership (GNEP)

Bipolarization into “nuclear fuel cycle states” and “nations merely having nuclear power plants”

① Nuclear Fuel Cycle States (U.S., Japan, France, England, Russia, China, etc. are assumed to participate in this scheme) will develop and utilize advanced reprocessing technologies and fast reactors.

② Developing countries and other Reactor States will be able to obtain nuclear fuels for their power plants at a reasonable price from Nuclear Fuel Cycle States on condition that they give up the acquisition of concentration/reprocessing technologies and that they agree to use the fuels for power generation only.

③ Developing countries and other Reactor States will be required to return to GNEP Partnership nations used fuels generated during the process of power generation.

④ Nuclear Fuel Cycle States will take into consideration needs ofdeveloping countries in pursuing the research and development of reactors and will assist them in installing a reactor if possible.

Planned framework to address global climate change

[United Nations Framework Convention on Climate Change and the Kyoto Protocol]

○ The ultimate goal of the Convention is to stabilize the concentration of greenhouse gas in the atmosphere.

○ The Kyoto Protocol aims at the reduction of greenhouse gas generated from advanced countries during the first commitment period (2008 to 2012).

- In comparison with the level of 1990, there has been a 6% reduction for Japan, 8% reduction for EU countries, and 0% reduction for Russia.

- It is anticipated that the U.S. and Australia might secede from the Protocol, resulting in increased emission from those countries. There is no cap set for China, India and developing countries.

○ During the COP11/MOP1 held at the end of last year, the following three agreements were made.

- Dialogue under the Convention: Dialogue for long-term cooperation involving all nations including the United States and developing countries

- Setting next targets to be attained by advanced countries: Reduction targets of advanced countries for the second commitment period will be set.

- Reviewing the entire Protocol: Reviewing the entire framework of the Protocol

[G8/APP, etc.]

○ During the G8 last July, the Gleneagles Plan of Action was adopted.

- The role of IEA in the climate change issue has been strengthened. IEA is required to make energy efficiency evaluation, etc.

- The results of the Action Plan will be reported in 2008 during the Japan Summit.

○ In July last year, the Asia-Pacific Partnership (APP) for Clean Development and Climate was established.

- The six participating nations including Japan, the U.S., Australia, China, India and South Korea

- APP intends to promote regional cooperation for the development, expanded use and transfer of clean, efficient technologies.

Global Nuclear Energy Partnership (GNEP)

Bipolarization into “nuclear fuel cycle states” and “nations merely having nuclear power plants”

① Nuclear Fuel Cycle States (U.S., Japan, France, England, Russia, China, etc. are assumed to participate in this scheme) will develop and utilize advanced reprocessing technologies and fast reactors.

② Developing countries and other Reactor States will be able to obtain nuclear fuels for their power plants at a reasonable price from Nuclear Fuel Cycle States on condition that they give up the acquisition of concentration/reprocessing technologies and that they agree to use the fuels for power generation only.

③ Developing countries and other Reactor States will be required to return to GNEP Partnership nations used fuels generated during the process of power generation.

④ Nuclear Fuel Cycle States will take into consideration needs ofdeveloping countries in pursuing the research and development of reactors and will assist them in installing a reactor if possible.

7

⑤ Domestic changes We are facing new challenges such as the decreasing capability to secure energy resources

because of the anticipated relatively weakened buying power of our country in the international energy

market and the necessity of securing investments to maintain appropriate supply capacity under the

progress of liberalization.

Figure 8: Positioning of our country in the international energy market

Petroleum

LNG (Liquefied natural gas)

1985 2002 2030*（Figures for LNG are as of 2020)

North America

32%

Europe

23%

Former Soviet Union

15%

South and Central America

5%

Middle East 5%

India 1%Africa 3%

Oceania1%

Other Asian countries

4%

China3%

Japan and South Korea

8%

North America28%

Europe

19%

6%


6%

10%7%

7%

Other4%

Oceania1%Africa 3%

India 3%

Middle East 6% North America26%

Europe

14%6%

7%

Middle East 6%

Africa5%

9%11%

7%

Other3%

Oceania1%

India 5%

North America

5%

Europe28%

South Korea

17%

Japan50%

North America 1%

Europe26%

Japan73%

North America27%

Europe28%

Taiwan 4%

India4%

South and Central America 1%1%

Other 3%

3%

South Korea 10%

Japan19%

South and Central AmericaFormer Soviet

UnionFormer Soviet Union

Middle East


Other Asian countriesChina

China

China



(Source ）IEA OMR2005.6, IEA WEO2004

Petroleum



North America

32%

Europe

23%

Former Soviet Union

15%


5%

Middle East 5%

India 1%Africa 3%

Oceania1%


4%

China3%


8%

North America28%

Europe

19%

6%


6%

10%7%

7%

Other4%

Oceania1%Africa 3%

India 3%


Europe

14%6%

7%

Middle East 6%

Africa5%

9%11%

7%

Other3%

Oceania1%

India 5%

North America

5%

Europe28%

South Korea

17%

Japan50%

North America 1%

Europe26%

Japan73%

North America27%

Europe28%

Taiwan 4%

India4%


Other 3%

3%

South Korea 10%

Japan19%



Middle East



China

China



Petroleum



North America

32%

Europe

23%

Former Soviet Union

15%


5%

Middle East 5%

India 1%Africa 3%

Oceania1%


4%

China3%


8%

North America28%

Europe

19%

6%


6%

10%7%

7%

Other4%

Oceania1%Africa 3%

India 3%


Europe

14%6%

7%

Middle East 6%

Africa5%

9%11%

7%

Other3%

Oceania1%

India 5%

North America

5%

Europe28%

South Korea

17%

Japan50%

North America 1%

Europe26%

Japan73%

North America27%

Europe28%

Taiwan 4%

India4%


Other 3%

3%

South Korea 10%

Japan19%



Middle East



China

China



(Source ）IEA OMR2005.6, IEA WEO2004

8

(2) Diversification of factors which cause and amplify market disruption including political uncertainly

We are facing not only structural changes causing medium- or long-term tight supply-demand

conditions, but also diversification of factors which may temporary cause an adverse effect on the energy

supply, and factors which may amplify market disruption.

Figure 9: Examples of diversified or multipolarized risk elements

Figure 10：Marine transport routes of crude oils and LNG produced in the Middle East

Unstable political conditions, accidents, natural disasters and terrorism in foreign countries Ex.) Geopolitical risks in the Middle East area, sea-lane safety issue and impacts of hurricane, etc.Accidents, natural disasters and terrorism within JapanEx.) Impacts of earthquake, typhoon, snow damage, etc.

Structural changes on the demand sideWorldwide increase of demands and competitions to acquire natural resourcesWorldwide increase of demands for transport fuelsInsufficient supply infrastructure such as refineries and maldistribution by such infrastructureTendency to return to coal and delayed measures against global warming gasStructural changes on the supply sideRestrictions on foreign investments imposed by governments of oil/gas-producing countries and strengthened state controlStagnant investments in upstream development projects and presumed peak of oil productionInsufficient distribution infrastructure including pipelinesTrend of discussions concerning the international frameworkIssue of climate change Debate on nuclear nonproliferationChanges of market environment affecting our country Lowering relative buying power of our countryReduced strength to secure reserve energy by promoting liberalization

[Elements to create tight supply-demand conditions] Market-disturbing elements

Weakened risk management capability within JapanLowered strength of power generation facilities, tankers, power transmission/distribution networks, etc. to secure reserve energy Elements to deteriorate market functionsExpanded venture capitalPanic behavior of Asian countries which ave never experienced crisis

Risk elements to amplify market confusion

Unstable political conditions, accidents, natural disasters and terrorism in foreign countries Ex.) Geopolitical risks in the Middle East area, sea-lane safety issue and impacts of hurricane, etc.Accidents, natural disasters and terrorism within JapanEx.) Impacts of earthquake, typhoon, snow damage, etc.

Structural changes on the demand sideWorldwide increase of demands and competitions to acquire natural resourcesWorldwide increase of demands for transport fuelsInsufficient supply infrastructure such as refineries and maldistribution by such infrastructureTendency to return to coal and delayed measures against global warming gasStructural changes on the supply sideRestrictions on foreign investments imposed by governments of oil/gas-producing countries and strengthened state controlStagnant investments in upstream development projects and presumed peak of oil productionInsufficient distribution infrastructure including pipelinesTrend of discussions concerning the international frameworkIssue of climate change Debate on nuclear nonproliferationChanges of market environment affecting our country Lowering relative buying power of our countryReduced strength to secure reserve energy by promoting liberalization

[Elements to create tight supply-demand conditions] Market-disturbing elements

Weakened risk management capability within JapanLowered strength of power generation facilities, tankers, power transmission/distribution networks, etc. to secure reserve energy Elements to deteriorate market functionsExpanded venture capitalPanic behavior of Asian countries which ave never experienced crisis

Risk elements to amplify market confusion

(Note) Red line indicates a regular cruise route via the Malacca and Singapore Straits. Green line indicates a route for ULCC tankers (ultra-large crude carriers) or detour

(Source) The Agency for Natural Resources and Energy of Japan prepared this map by referring to a report by JETRO Singapore

（出典）シンガーポールＪＥＴＲＯの報告書を元に資源エネルギー庁にて作成。

Strait of Hormuz

Lombok Strait

MakassarStraitMalacca and Singapore Straits

Bashi Channel

Marine transportation route between the Marine transportation route between the Middle East and JapanMiddle East and Japan

Number of days required for VLCC tankers:To cruise from Japan to the Middle East: 18 daysTo cruise from the Middle East to Japan: 21 days

325Total of all over the world

９Malaysia

93Indonesia

45Malacca and Singapore Straits

325Total of all over the world

９Malaysia

93Indonesia

45Malacca and Singapore Straits

Number of pirate attacks in 2004

Persian Gulf

Malaysia

Singapore

9

(3) World-wide trend of restructuring national energy strategies Under the above-mentioned circumstances of the energy market, countries around the world have

again started to pay close attention to energy issues as one of the most important national challenges. The

demand side countries have been making efforts to strengthen their domestic energy supply-demand

structure and have been promoting measures to secure resource interests, while supply side countries tend

to strengthen the state control over energy resources. Thus, every country has been promoting the

restructuring of national energy strategies to protect national interests.

Figure 11：Examples of state measures to address energy issues

○Reducing dependence on foreign countries　The Advanced Energy Initiative was established focusing on two goals: diversification of energy sources and

diversification of the way of fueling vehicles（State of the Union Address in January 2006）○Changeover to introduce a positive attitude toward the nuclear fuel cycle　New plan was released on the development of advanced reprocessing technologies and fast reactors, etc. with

the aim to unite the policy of expanding nuclear power generation and nuclear nonproliferation (February 2006)

Energy Strategy of the United States

○Full-scale implementation of energy saving measuresTarget is to attain a 20% improvement of energy consumption efficiency per GDP by 2010.○Accelerating the introduction of nuclear power generation　It is planned that the current nuclear power capacity of 9 million kW will be raised to about 40 million kW

by 2020 (by newly building about 30 1-mllion-kW nuclear power plants).○Promoting the development and clean utilization of coal○Aggressive attitude to secure rights and interests in foreign countriesMore than 12.5 billion dollars have been invested in upstream projects in about 30 countries for the past five

years. (In an unsuccessful attempt to purchase Unocal, China offered 18.5 billion dollars.)

Energy Strategy of China

Energy Strategy of Europe

○Strengthening energy saving measures-EU Committee declared its target of attaining a 20% reduction of energy consumption by 2020 (June 2005)-France established the law concerning the guidelines of energy strategy which clarifies the policy to maintain nuclear power plants and promote measures to restrain energy demands and specifies targets in numerical values including the target proportion of recyclable energy sources (July 2005)○Movement toward the establishment of a common energy strategy shared by EU nations-The EU Committee released its strategy of strengthening energy security including the plan to review the supply structure of primary energy refocusing on nuclear energy (March 2006)-In response to the EU Committee’s release of the strategy, EU leaders agreed, during the EU Summit (March 2006), to establish the common energy strategy to be shared by EU nations.

○Strengthening state commitment to the energy industry　The government is making efforts to expand the country’s supply power with the aim to become the world

most powerful exporting country of petroleum and natural gas. Russia is planning to strengthen the government commitment to the energy industry by revising the law concerning underground natural resources, and addressing the issue involving YUKOS Oil Company. (Revision of the law concerning underground natural resources is currently under deliberation at the Russian Assembly.)　

Energy Strategy of Russia

○Reducing dependence on foreign countries　The Advanced Energy Initiative was established focusing on two goals: diversification of energy sources and

diversification of the way of fueling vehicles（State of the Union Address in January 2006）○Changeover to introduce a positive attitude toward the nuclear fuel cycle　New plan was released on the development of advanced reprocessing technologies and fast reactors, etc. with

the aim to unite the policy of expanding nuclear power generation and nuclear nonproliferation (February 2006)

Energy Strategy of the United States

○Full-scale implementation of energy saving measuresTarget is to attain a 20% improvement of energy consumption efficiency per GDP by 2010.○Accelerating the introduction of nuclear power generation　It is planned that the current nuclear power capacity of 9 million kW will be raised to about 40 million kW

by 2020 (by newly building about 30 1-mllion-kW nuclear power plants).○Promoting the development and clean utilization of coal○Aggressive attitude to secure rights and interests in foreign countriesMore than 12.5 billion dollars have been invested in upstream projects in about 30 countries for the past five

years. (In an unsuccessful attempt to purchase Unocal, China offered 18.5 billion dollars.)

Energy Strategy of China

Energy Strategy of Europe

○Strengthening energy saving measures-EU Committee declared its target of attaining a 20% reduction of energy consumption by 2020 (June 2005)-France established the law concerning the guidelines of energy strategy which clarifies the policy to maintain nuclear power plants and promote measures to restrain energy demands and specifies targets in numerical values including the target proportion of recyclable energy sources (July 2005)○Movement toward the establishment of a common energy strategy shared by EU nations-The EU Committee released its strategy of strengthening energy security including the plan to review the supply structure of primary energy refocusing on nuclear energy (March 2006)-In response to the EU Committee’s release of the strategy, EU leaders agreed, during the EU Summit (March 2006), to establish the common energy strategy to be shared by EU nations.

○Strengthening state commitment to the energy industry　The government is making efforts to expand the country’s supply power with the aim to become the world

most powerful exporting country of petroleum and natural gas. Russia is planning to strengthen the government commitment to the energy industry by revising the law concerning underground natural resources, and addressing the issue involving YUKOS Oil Company. (Revision of the law concerning underground natural resources is currently under deliberation at the Russian Assembly.)　

Energy Strategy of Russia

10

2. Formulation of the ‘New National Energy Strategy’ In light of the comprehension of the aforementioned domestic and international changes of the

energy market environment, it is essential for our country to establish the new national energy strategy with

focus on the energy security.

(1) Objectives of the Strategy The New National Energy Strategy intends to attain the following three objectives.

① Establishment of energy security measures that our people can trust and rely on The current trend of soaring oil prices has not yet caused material damage to the overall domestic

economy of our country, and we do not see such confusion as seen in the past oil crises. However, it can

be judged that we are at high risk mainly owing to the following three aspects of energy supply and demand

conditions.

i） Possibility of expanding adverse influences because of anticipated long-lasting tight supply-demand

condition and continuing high oil prices

ii） Anticipated medium- or long-term instability concerning the security of oil and natural gas

iii） Diversification and multipolarization of risk elements surrounding the energy market

Therefore, our energy security measures will focus on the promotion of efforts to establish a

state-of-the-art energy supply-demand structure, attempts to avoid various diversified or multipolarized risk

elements through strengthening strategies to address foreign issues, and reinforcement of measures to

minimize market confusion even in a time of emergency.

Establishment of energy security measures that our people can trust and rely on

Establishment of the foundation for sustainable development through a comprehensive approach for energy

issues and environmental issues all together

Commitment to assist Asian and world nations in addressing energy problems

11

② Establishment of the foundation for sustainable development through a comprehensive approach for energy and environmental issues

At the Gleneagles Summit held in England in July 2005, leaders reached an agreement on the

significance of comprehensive and unified approach to address energy issues and climate change issues

together. As a result, the Gleneagles Plan of Action-Climate Change, Clean Energy and Sustainable

Development was adopted. As shown by this agreement, there has been a growing recognition that the

environmental issues are inextricably linked with the energy strategy.

In the course of promoting energy security by addressing diversified or multipolarized energy

supply restraints, it is necessary to pay attention to environmental issues including climate change so that

both issues can be addressed integrally. Also, such comprehensive solution requires the implementation

of medium- or long-term projects to develop advanced technologies (such as decarbonization technology)

that make it possible to reduce dependence on fossil fuels.

Furthermore, as one of the worlds most environmentally and technologically advances nations,

our country should take the initiative in building various international frameworks to address the global

environmental issues.

③ Commitment to assist Asian and world nations in addressing energy problems The international energy market is interlinked with the overall trend of the world economy

including capital market. In addition, our industries and economy, especially frontier industries, already

depend on Asian-based elaborately-organized international specialization networks.

In light of those circumstances, we have to be careful not to stir up international competitions for

natural resources as a result of implementing our national energy security measures, while the primary

objective is to secure the stable supply of energy for our country through country-wide efforts to address

both domestic and foreign issues. For this reason, we should introduce global viewpoints and world-level

visions to our New National Energy Strategy under the fundamental policy to maintain a symbiotic

relationship with the Asian and world economy, so that our technological strengths and experiences in the

field of energy issues can be utilized internationally to assist Asian and world nations in addressing various

problems and forming the foundation for future development.

12

(2) Basic perspectives of the Strategy The following three points constitute the fundamental viewpoints for attaining the objectives of

the New National Energy Strategy.

① Establishing a state-of-the-art energy supply-demand structure For Japan, with poor energy resources but with high level of consumption of resources, the most

effective measure to address diversified and multipolarized risk elements affecting energy supply would be

to establish a state-of-the-art energy supply-demand structure by improving energy efficiency, diversifying

and decentralizing energy resources, and retaining the strength to secure reserve energy.

It is especially essential to maintain a certain level of dependence on nuclear energy which can be

produced stably and generates no carbon dioxide. In promoting the utilization of nuclear power, it is

important to take all possible measures to ensure safety, focusing on quality assurance.

② Comprehensive strengthening of Resource Diplomacy and, Energy and Environment Cooperation

It is necessary to strengthen diplomatic efforts as well as energy and environmental cooperation

together in order to overcome tight energy supply-demand structure, and to prevent the occurrence of

diversified or multipolarized risk elements or to minimize the adverse influence of such elements.

③ Enhancement of emergency response measures In order to strengthen our country’s energy security drastically, it is essential to examine our

emergency response ability.

Figure 12: Basic perspectives of the Strategy

Strengthening multilateral connections with oil/gas-producing countries

Strengthening mutual exchanges and cooperation in various fields in addition to the energy fieldStrengthening the relationship with Asian countries

Making commitment to the improvement of their energy supply-demand conditions through cooperation in energy saving programsStrengthening overseas activities of prospecting projects for diversifying supply sourcesImproving Japanese companies’ procurement capabilityContributing to global issuesClimate change, nuclear nonproliferation, etc.

Improving efficiency in energy utilizationMaintaining or upgrading our status as the world’s

most advanced energy-saving-conscious country by taking advantage of our technological strengthsDiversifying energy sources for increasing options

Developing the advanced next-generation scheme in the transport sectorRetaining the strength to secure reserve energy

Securing appropriate reserve energy to survive tight supply-demand conditions

Realizing the state-of-the-art energy supply-demand structure

Strengthening the maneuverability of energy stock systems

Reviewing and strengthening emergency measures

Enhancement of emergency response measures

Comprehensive strengthening of Resource Diplomacy and, Energy and Environment Cooperation

13

(3) Points of concern in implementing the Strategy In establishing specific contents of the New National Energy Strategy, it is necessary to pay

attention to the special characteristics of energy issues, and especially the following three points should be

taken into consideration when implementing the Strategy.

① Medium- or long-term visions toward the specific direction, with specific numerical targets as a milestone

In order to improve energy security, it is essential to have a long-term strategy and to clarify the

direction toward which both public and private organizations should coordinate their efforts. Therefore, it

is effective to set specific targets in numerical values so that both government and private organizations can

share understanding and be sure that they are moving in the right direction.

② Breakthrough by the world’s most advanced technologies Unified efforts of the government and private organizations would be necessary to develop and

introduce innovative energy technologies, aiming at the establishment of the next-generation energy

utilization society ahead of other countries.

③ Strategic collaboration between the government and private organizations and government-wide efforts to strengthen the scheme of carrying out the Strategy

Implementation of energy security measures would be an important national task influential to

national interests. In the course of establishing specific strategies for implementation, both public and

private organizations should make sure of their own responsibilities and at the same time unify their efforts

in addressing foreign issues by assisting each other. In addition, all relevant public organizations should

share objectives to ensure government-wide efforts.

14

(4) Establishment of numerical targets In an effort for establishing energy security measures through coordinating public and private

organizations toward the same direction, the following five specific targets have been set as common

long-term goals to be attained jointly by the government and private entities.

① Target of energy conservation Joint efforts of the government and private companies to promote energy conservation, which

started after the oil crises, resulted in about a 37% improvement of energy efficiency in the past 30 years.

This is one of the best efficiency rates in the world.

→ At least another 30% improvement of efficiency will be attained by 2030.

② Target of reducing oil dependence Our oil dependence has been decreasing since the first oil shock, to register about 50% at the

present in terms of the ratio of oil to the entire supply of primary energy.

→ The ratio will be reduced to be lower than 40% by 2030.

③ Target of reducing oil dependence in the transport sector Currently, dependence on petroleum in the transport sector is as high as almost 100%.

→ The percentage will be reduced to around 80% by 2030.

④ Target on nuclear power generation Nuclear power is now the key basic energy source in our country, occupying about one third of

all power production. Nuclear power can be supplied stably and can be regarded as a clean energy

because there is no carbon dioxide emission in operation.

→ The ratio of nuclear power to all power production will be maintained or increased at

the level of 30 to 40% or more up to 2030 or later.

⑤ Target of overseas natural resources development The ratio of crude oil in which Japanese companies have rights and interests to the entire imports

of crude oil to Japan (oil volume ratio on exploration and development by Japanese companies) has been

gradually increasing from 8% to around 15% at the present in terms of oil volume exploration and

development by Japanese companies..

Under the circumstances of intensifying global competitions for natural resources,

→ Oil volume ratio on ratio will be increased to around 40% by 2030.

15

II．Efforts towards implementation 1. Specific programs that constitute the Strategy and their characterization

For the energy security of our limited-resource country, securing a stable supply of petroleum and

natural gas which are the main sources of our energy supply is a vital task, and the government must

actively engage in reinforcing its resource diplomacy for comprehensively strengthening the acquisition of

our interests and the procurement of resources.

At the same time domestically, the government and the private sector must work together

hand-in-hand on a medium to long term basis on reforming the supply-demand structure, such as the further

improvement of energy use efficiency, the diversification and decentralization of energy sources such as the

promotion of nuclear power generation, and the promotion of the effective use of fossil resources by

utilizing our country’s superior technical capabilities.

Furthermore, the government is required to contribute to establishing the basis for the growth of

the Asian economy and consequently the global economy through the overseas development of the

expertise and knowledge that it has gained.

The government is to actively engage in specific programs shown below for the various national

challenges based on these, and manifest initiative so that the positive cycle of government-private sector

efforts can be established at all levels of society.

(1) Realizing the state-of-the art energy supply-demand structure We will build the state-of-the art energy supply-demand structure under the new energy price

system which is expected to continue on a medium and long term basis due to the structural tightness of the

global energy supply and demand. Specifically, as well as thoroughly promoting energy conservation, we

will engage in realizing the optimum mixture of energy including the reduction of oil dependence through

the evolvement of energy used in the transport sector which is nearly 100% dependent on oil, the wider

introduction of new energy, and the promotion of nuclear power generation that responds well to the issues

of supply stability and global warming, and is essential to ongoing growth.

As our target, we will reduce our oil dependency to a level below 40% by 2030.

○ Energy conservation Frontrunner Plan

○ Transport Energy for the Next Generation Plan

○ New Energy Innovation Plan

○ Nuclear Power Nation Plan

(2) Comprehensive Strengthening of Resource Diplomacy and, Energy and Environment Cooperation

In order to secure a stable supply of petroleum and natural gas which are the main resources of

our energy supply and to promote their effective use, the government will actively contribute to stabilizing

the energy supply and demand of the world including Asia by strengthening the comprehensive resource

securing strategy, and reinforcing foreign relations and international contribution from various aspects by

16

utilizing the experience and knowledge it has accumulated since the first Oil Shock. Moreover, the

government will strive to comprehensively reinforce the securing strategy of metal resources, of which

supply and demand have become tighter in recent years and are feared to become the bottleneck of all

industrial activities.

○ Comprehensive Strategy for Securing Resources

○ Asia Energy and Environment Cooperation Strategy

(3) Enhancement of emergency response measures The government will reinforce its preparations for the unlikely event of critical situations while

fully engaging in the abovementioned tasks.

○ Enhancement of the Emergency Response

(4) Common Challenges

The government will develop strong private enterprises that will be in charge of energy security

through the realization of a tough demand-supply structure as mentioned above, and the efforts towards the

strengthening of a comprehensive foreign strategy. Among them, since most of the technologies that are

one of the nuclei of those efforts, including nuclear power, require long-term efforts, and particularly need a

public-private sector cooperative approach that stays on course, the government will concurrently formulate

a comprehensive energy technology strategy with a medium and long term view.

○ Energy Technology Strategy

17

2. ‘Energy Conservation Frontrunner Plan’

(1) Target Our country’s economy has been achieving an energy consumption efficiency of over 30% since

the Oil Shock of the 1970’s. By establishing a positive cycle of technical innovation and social system

reforms in the future, we aim to improve the energy consumption efficiency by at least another 30% by

2030.

Figure 13: Basic Concept of the Energy Conservation Policy

(2) Specific Activities Through the following activities, we will establish a positive cycle between the innovation of the

energy conservation technology and the reforms of the social system which enable the system to utilize

actively results of such innovations.

⊳ Formulate an energy conservation technology strategy that clearly indicates the technical sectors in which a cross-sectoral and mid-long term breakthrough is required, and present the first edition of the

strategy in 2006. Subsequently, carry out a regular progress evaluation and revision.

⊳ Prepare top-runner type standards for various sectors, and selectively reinforce support for those who meet the standards. In the housing sector, develop a method for comprehensive energy-conservation

assessment of frame and appliances, and accelerate the dissemination of high-performance housing and

facilities, by improving the policy frameworks for information provision and financial support.

⊳ By 2008, develop a business value assessment method with which companies engaged in energy conservation investment are evaluated by the market (investors), and try to disseminate and establish it.

In order to expand such efforts internationally, aim for the global preparation of the energy

conservation standards and assessment system by sectors, and aim for a full-scale international

dialogue by 2008 when the G8 summit is to be held in our country.

⊳ Carry out medium and long term examinations of the challenges of the social system or urban structure that require change such as the improvement of the road networks that contribute to the smooth flow of

traffic, the development and dissemination of a system that utilizes IT, the promotion of utilization of

public traffic in cities, and the effective use of hot exhaust heat in cities and provinces.

100

159

７０

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

1973 2003 2030

Fina

l ene

rgy

cons

umpt

ion

inde

x p

er G

DP

unit

quan

tity

Approx. 37% improvement


100

159

７０

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

100

159

７０

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

1973 2003 2030

Fina

l ene

rgy

cons

umpt

ion

inde

x p

er G

DP

unit

quan

tity



18

Figure 14: Basic Concept of the Energy Conservation Policy

Figure 15: Direction of Energy Conservation Technological Development expected to realize by 2030

Release of cutting-edge energy conserving equipment and technologies created by technical developments.

Sustaining and developing the world’s most advanced energy conserving nation through ongoing energy efficiency improvements

Encouraging the motivation to invest in strategic energy conserving technical developments through dissemination of the development results and appropriate market valuation.

Strategic promotion of innovative technicaldevelopment- Formulation of energy conservation technology strategy

Improvement of the socioeconomic system for the appropriate valuation and promotion of technical development results. - Introduction of benchmark approach Introduction of benchmark approach by sectors and active creation of initial by sectors and active creation of initial demand.demand.

• Large energy-consuming Industry have already introduced known countermeasures.

• Industry that make investment frequently timely introduce the latest energy conservation technologies every time they make capital investment.

• Emphasize innovative technical developments

• Accelerated introduction of technical development results through benchmarking and effective support .

Industry Commercial & Residential

• Little incentives for energy conservation due to small energy costs.

• Limited cost reduction effect through energy conservation. Long term payout is inevitable.

Household

• Chances of consuming energy in pursuit of affluence and convenience are increasing.

• Greatly influenced by changing lifestyles.

• Further improvement of energy conservation awareness of ordinary citizens through information provision and education.

• Improvement of the performance of energy consuming appliances.• Promotion of energy conserving businesses, I.e., ESCO.• Diversification of the utilization of policy methods such as benchmarking and labeling. • Effective support system for introduction of innovative measures for energy conservation.• Reforms of socioeconomics systems as cities.

Transportation

• Convenience-oriented selection of transport mode.

• Cooperation by several different participants such as cargo owners, transport services and arrived goods owners is necessary for promoting energy conservation.

• Further propagation of understanding of energy conservation is required.

• Promotion of understanding towards energy management through the revised energy conservation law.

• Improvement of the performance of transport machineries such as automobiles.

• Utilization of benchmark and label.• Effective support system for introduction of

innovative measures for energy conservation.• Reforms of socioeconomic systems such as

cities and transport.

【Challenges

】

【Direction

】

Technology of energy utilization beyond spaceTechnology of energy utilization beyond space--time restrictiontime restriction

Technology that established the advanced transport societyTechnology that established the advanced transport societyDissemination of hybrid cars

Energy conserving information living space creation technologyEnergy conserving information living space creation technology

Super combustion system technologySuper combustion system technology

Future energy conserving device technologyFuture energy conserving device technology

High-efficiency boiler, refrigerator, air conditioner (high-efficiency heat pump, thermal storage air conditioner) High-efficiency LED lighting※４Super insulation (Vacuum insulation)

Energy management (monitoring, etc.)

20302010 2015 2020 2025

Industry

Fuel cost improvements such as automotive lightening

Promotion of ITS （Intelligent Transport System)※６

Production process technologies such as steel-chemical that substantially reduce combustion

Modal shiftEfficiency improvement of motor, electricity modification and storage

Development and dissemination of the TDM (Transport Demand Management) ※７ method

Practical application of organic EL lighting※５

20302010 2015 2020 2025

Consumer

Transport

Establishm

ent of energy E

stablishment of energy

conserving housing environment


comm

unity, city, transport and com

munity, city, transport and

distribution systems


Cross sectoral

Dissemination of high-performance industrial furnace and high-performance boilers

Thermal energy storage and transport technologies

High-efficiency of thermoelectric transducer

Technical advancement of future power semiconductors※１

Technical advancement of the combustion system

Technical advancement of existing power semiconductors

Unused heat recovery and storage

Optimization of the energy network※３

Controlled ties through networking

Establishm

ent of innovative E

stablishment of innovative

systems in industrial activities


Efficiency improvement of fuel cell, establishment of hydrogen storage and transport technologies, high-efficiency of secondary battery

※1 Power semiconductors that use materials such as SiC with excellent attributes such as power loss reduction and being high-pressure proof, which replace the current mainstream Si power semiconductors.

※2 Technology that separates and recovers hydrogen while producing gas that contains hydrogen by gasifying fuel, and producing electricity using part of that gas as gas turbine fuel.※3 Effective use of energy through the most appropriate recovery technique for emitted energy substances and transporting technology for the most appropriate market of recovered energy.※4 Point light source lighting that uses semiconductors that emit light when current is applied. Compared to existing lightings, high energy efficiency can be achieved. ※5 Surface light source lighting that uses organic substances that emit light when current is applied. Compared to existing lightings, high energy efficiency can be achieved.※6 For the improvement of transport efficiency and road traffic improvement using IT to advance the navigation system, optimize traffic control such as traffic lights, and support safe driving.※7 A method of easing traffic congestion by promoting the change of the usage of time, route, transportation mode and automobile to road users.

Co-production technology of materials and energy※２

Technology of energy utilization beyond spaceTechnology of energy utilization beyond space--time restrictiontime restriction

Technology that established the advanced transport societyTechnology that established the advanced transport societyDissemination of hybrid cars

Energy conserving information living space creation technologyEnergy conserving information living space creation technology

Super combustion system technologySuper combustion system technology

Future energy conserving device technologyFuture energy conserving device technology

High-efficiency boiler, refrigerator, air conditioner (high-efficiency heat pump, thermal storage air conditioner) High-efficiency LED lighting※４Super insulation (Vacuum insulation)

Energy management (monitoring, etc.)

20302010 2015 2020 2025

Industry

Fuel cost improvements such as automotive lightening

Promotion of ITS （Intelligent Transport System)※６

Production process technologies such as steel-chemical that substantially reduce combustion

Modal shiftEfficiency improvement of motor, electricity modification and storage

Development and dissemination of the TDM (Transport Demand Management) ※７ method

Practical application of organic EL lighting※５

20302010 2015 2020 2025

Consumer

Transport

Establishm

ent of energy E

stablishment of energy



comm

unity, city, transport and com

munity, city, transport and



Cross sectoral

Dissemination of high-performance industrial furnace and high-performance boilers

Thermal energy storage and transport technologies

High-efficiency of thermoelectric transducer

Technical advancement of future power semiconductors※１

Technical advancement of the combustion system

Technical advancement of existing power semiconductors

Unused heat recovery and storage

Optimization of the energy network※３

Controlled ties through networking

Establishm

ent of innovative E

stablishment of innovative



Efficiency improvement of fuel cell, establishment of hydrogen storage and transport technologies, high-efficiency of secondary battery

※1 Power semiconductors that use materials such as SiC with excellent attributes such as power loss reduction and being high-pressure proof, which replace the current mainstream Si power semiconductors.

※2 Technology that separates and recovers hydrogen while producing gas that contains hydrogen by gasifying fuel, and producing electricity using part of that gas as gas turbine fuel.※3 Effective use of energy through the most appropriate recovery technique for emitted energy substances and transporting technology for the most appropriate market of recovered energy.※4 Point light source lighting that uses semiconductors that emit light when current is applied. Compared to existing lightings, high energy efficiency can be achieved. ※5 Surface light source lighting that uses organic substances that emit light when current is applied. Compared to existing lightings, high energy efficiency can be achieved.※6 For the improvement of transport efficiency and road traffic improvement using IT to advance the navigation system, optimize traffic control such as traffic lights, and support safe driving.※7 A method of easing traffic congestion by promoting the change of the usage of time, route, transportation mode and automobile to road users.

Co-production technology of materials and energy※２

19

3. Transport Energy for the Next Generation Plan’ (1) Target

In order to establish a highly efficient transport infrastructure that could respond flexibly to the

changes of the energy market such as the demand-supply pressure in the oil market, prepare the necessary

environment in an aim to bring the oil dependency of the transport sector to about 80% by 2030.

Figure 16:Oil dependency in our country’s transport sector and the target value

(2) Specific Activities

Carry out the private sector activities on both vehicles and fuel, and the government activities on

environmental improvements comprehensively by uniting economy, environment and energy, and prepare

an environment in which the oil dependency of transport energy is brought down from 100% to 80%.

⊳ Establish new fuel efficiency standards that promote fuel efficiency of passenger vehicles by 2006, and make steady improvements of automobile fuel consumption. Also examine the octane value

improvement of regular gasoline, which has a certain effect on fuel consumption improvement, and

draw a conclusion as early as possible by 2008.

⊳ Reexamine the upper blending limit regulation of oxygenated compounds that contain ethanol by around 2020 by speeding up the improvements of the biomass derived fuel supply infrastructure

through the environmental and safety countermeasures of gas stations, and by prompting the

automobile industry to accept 10% ethanol mixed gasoline. Moreover, strive to spread the use of diesel

cars that have exhaust gas performance equal to gasoline cars, which is also important for the

utilization of GTL, and promote the use of GTL by the middle of 2010.

⊳ Examine the support for regional efforts toward the expansion of domestic bio ethanol production, and the modalities of development import support of biomass derived fuels such as bio ethanol. Promote

the supply of new fuels such as biomass derived fuels and improve economic efficiency by promoting

the development of high efficiency ethanol production technology and GTL technology.

⊳ As well as promoting the dissemination of electric vehicle and fuel cell vehicles, which are already about to be put to practical use, work on the intensive technical development of next-generation

batteries and fuel cell vehicles, establish a safe, simple, efficient and low-cost hydrogen storage

technology, and promote the development and practical application of next-generation vehicles.

97% 98%

80%

0%

20%

40%

60%

80%

100%

120%

1973 2000 2030

97% 98%

80%

0%

20%

40%

60%

80%

100%

120%

1973 2000 2030

20

Figure 17:Trends and for the evolvement of transport energy and its challenges

1 The Kyoto Protocol Target Achievement Plan aims at the introduction of biomass-derived fuel which is the equivalent of 500,000 kiloliters crude oil as a whole, including ETBE equivalent of 210,000 kiloliters crude oil. 2 HCCI (Homogeneous Charge Compression Ignition) is an engine which has the merits of both gasoline and diesel engines. There is little generation of NOx and particulates, and it is anticipated that it will help realize an engine with high thermal efficiency.

Trend surrounding GTL

2006 20202008 2010 2015 2030-2050

Supply-demand environment of crude oil

Crude oil price is expected to continue to remain at a high level due to the increased demand of the US and Middle East, and the increase of production costs of producing areas

1st commitment period (2008～2012） 2nd commitment period (2013～）？

Light oil demand has already lowered and is expected to continueto lower.

Our country’s overall energy demand is expected to peak-out by the early ’20s.

Decision on the next fuel cost standards

New long term regulations (Oct. 2005 ～） Post new long term regulations (2009 ～）

GTL and diesel cars

Commercial production is expected to begin in Qatar in 2006

Gasoline demand is expected to lower

Peaking-out of crude oil production?

Certain size is expected to be supplied in the 2010s

Bio Ethanol (including ETBE)

Progression of crude oil, and increase in weight differences?

More severe CO2 emission control？

Further decline in diesel car dissemination?

Further promotion of fuel cost improvements

Introduction of the commuter type electric vehicle?

Introduce crude oil equivalent of

210,000KL ETBE in 2010 *1

Introduction of the fuel cell vehicle?

Is further increase possible?

Aim for a further increase under the current regulations

Product demand trend

Global warming countermeasures

Consider the necessity of increasing the price of

regular octaneReview of fuel

standards?

Promote the shift to diesel （Consider the use of GTL)

Movements surrounding oil

Preparation of a social infrastructure that enables for an over 3% bio ethanol mixture (contains 1.3% oxygen)

（Due to the increase in the demand for light oil, the dissemination of GTL is expected to increase)

Trend towards exhaust gas regulation

Trend towards diesel car

Fuel quality regulations

＜Trends and challenges surrounding automobiles>

Fuel cost improvements for automobiles

Trend towards future automobiles that do not use

Internal combustion

Aim to increase the demand for diesel cars

Promotion of bio ethanol dissemination

Clarify the significance of diesel cars in terms of

energy policies

Fuel efficient cars become mainstream?

Technical development support for GTL, CTL, BTL, etc.

Practical application of new internal combustion technologies such as HCCI (*2)?

Dissemination and promotion of fuel efficient vehicles

Support for technical development of fuel cell and electric vehicles Technical development and support for the dissemination and promotion of fuel cell and electric vehicles

Implementation of the next new fuel cost standards?

Introduction of hybrid cars that use lithium ion cell?

Introduction of the electric vehicle?

Introduction of the plug-in hybrid vehicle?

Preparation of the hydrogen infrastructure

Experimental proof of direct blending of domestic bio ethanol in the region Full scale efforts

（Also engage in a more concentrated utilization）

Trend surrounding GTL

2006 20202008 2010 2015 2030-2050

Supply-demand environment of crude oil

Crude oil price is expected to continue to remain at a high level due to the increased demand of the US and Middle East, and the increase of production costs of producing areas

1st commitment period (2008～2012） 2nd commitment period (2013～）？

Light oil demand has already lowered and is expected to continueto lower.

Our country’s overall energy demand is expected to peak-out by the early ’20s.

Decision on the next fuel cost standards

New long term regulations (Oct. 2005 ～） Post new long term regulations (2009 ～）

GTL and diesel cars

Commercial production is expected to begin in Qatar in 2006

Gasoline demand is expected to lower

Peaking-out of crude oil production?

Certain size is expected to be supplied in the 2010s

Bio Ethanol (including ETBE)

Progression of crude oil, and increase in weight differences?

More severe CO2 emission control？

Further decline in diesel car dissemination?

Further promotion of fuel cost improvements

Introduction of the commuter type electric vehicle?

Introduce crude oil equivalent of

210,000KL ETBE in 2010 *1

Introduction of the fuel cell vehicle?

Is further increase possible?

Aim for a further increase under the current regulations

Product demand trend

Global warming countermeasures

Consider the necessity of increasing the price of

regular octaneReview of fuel

standards?

Promote the shift to diesel （Consider the use of GTL)

Movements surrounding oil

Preparation of a social infrastructure that enables for an over 3% bio ethanol mixture (contains 1.3% oxygen)

（Due to the increase in the demand for light oil, the dissemination of GTL is expected to increase)

Trend towards exhaust gas regulation

Trend towards diesel car

Fuel quality regulations

＜Trends and challenges surrounding automobiles>

Fuel cost improvements for automobiles

Trend towards future automobiles that do not use

Internal combustion

Aim to increase the demand for diesel cars

Promotion of bio ethanol dissemination

Clarify the significance of diesel cars in terms of

energy policies

Fuel efficient cars become mainstream?

Technical development support for GTL, CTL, BTL, etc.

Practical application of new internal combustion technologies such as HCCI (*2)?

Dissemination and promotion of fuel efficient vehicles

Support for technical development of fuel cell and electric vehicles Technical development and support for the dissemination and promotion of fuel cell and electric vehicles

Implementation of the next new fuel cost standards?

Introduction of hybrid cars that use lithium ion cell?

Introduction of the electric vehicle?

Introduction of the plug-in hybrid vehicle?

Preparation of the hydrogen infrastructure

Experimental proof of direct blending of domestic bio ethanol in the region Full scale efforts

（Also engage in a more concentrated utilization）

21

4. ‘New Energy Innovation Plan’ (1) Targets

By striving for independence as an industry and expanding its introduction, engage in

dissemination in the following direction by 2030.

⊳ Bring the cost required for solar energy generation down to the same level as thermal power generation.

⊳ Promote the efforts of local-production for local-consumption through biomass energy and wind-powered electricity to improve the self-sufficiency ratio of the energy supply in the region.

⊳ As well as turning many of the new vehicles sold on the market into hybrid vehicles, promote the introduction of electric vehicles and fuel cell vehicles.

(2) Specific Activities

Engage in the reinforcement of promotion measures according to the attributes and dissemination

stages of each energy source, the development of supporting industries, and the support of the development

of innovative energy technology and venture businesses. In so doing, the supplier side is to focus on

renewable energy, and also promote the intensive use of innovative energy including the efficient usage

technology of fossil fuel. ⊳ Expand the supply and demand through introduction support measures according to the attributes and

growth stages of each energy source.

レ For new energies such as solar energy generation, wind-powered generation and biomass

energy, which are moving into their dissemination period, implement a proactive introduction

of the new energy related facilities in public establishments, apply the RPS law, and provide

necessary market expansion support such as the application of assistance and taxation systems.

レ For innovative technologies that are in the stage of being prepared for launch such as solar

batteries made of new materials, secondary cells that contributes to controlling the output

fluctuation of wind power, and fuel cells that aim to realize a hydrogen-society, promote

technological development and experimental proof strategically and intensively.

⊳ Form a substantial industrial structure for the new energy industry by developing a group of solar energy generation industries, developing a group of fuel cell and secondary cell industries, and promote

regional businesses based on the local-production and local-consumption of wind-power and biomass.

Also prepare a next-generation park where people could view, touch and understand the new energy

supply and usage formats such as new energy.

⊳ Strategically develop critical technologies that support the new energy economy, i.e., high efficiency production technology of bio ethanol that utilizes the next-generation secondary cell and bio

technology, and the low-pricing of fuel cells, using super combustion and energy storing as keys.

⊳ As well as the effective use of fossil fuels, also promote the development and dissemination of innovative technologies that promote the intensive use of energy.

⊳ Expand the support for new energy ventures that challenge innovative technologies.

22

Figure 18:Expansion of the introduction of new energy

Full scale dissemination periodLaunch period2010

Dissemination period2020 2030

Increased government demand

Import of bio ethanol from Brazil, etc.

Use of sewage sludge and thinned woodEstablishment of a Regional Energy consortiumIncreased production of resource crops

Increased supply of silicon materials

Participation of existing energy industries and non-energy industries in new energy

Formation of the base of related periphery measures

Drastic cost reduction of members

Efficient production of bio ethanol

Full scale dissemination of fixed fuel cell

Release of new material (pigment, etc.) solar battery

Dissemination of non-silicon solar batteriesThinning of silicon

New technology option

Initial demand

④

③

②

①

Japanese style wind-power generation system

Frontier development of venture businesses

Technical development

Formation of the new energy Industry Structure

Increased supply and demand of new energy

Production of domestic bio ethanol

Launch preparation

Accelerated dissemination

Autonomous dissemination

Marketing of fixed fuel cells

Marketing of fuel cell vehicles

Full scale dissemination of

fuel cell vehicles

Improvement of secondary battery performanceDisseminationSubstantial drop in hybrid vehicle pricesDissemination of electric vehiclesOutput stability of solar and wind-power generation through the parallel establishment of secondary batteries

Full scale dissemination periodLaunch period2010

Dissemination period2020 2030

Increased government demand

Import of bio ethanol from Brazil, etc.

Use of sewage sludge and thinned woodEstablishment of a Regional Energy consortiumIncreased production of resource crops

Increased supply of silicon materials

Participation of existing energy industries and non-energy industries in new energy

Formation of the base of related periphery measures

Drastic cost reduction of members

Efficient production of bio ethanol

Full scale dissemination of fixed fuel cell

Release of new material (pigment, etc.) solar battery

Dissemination of non-silicon solar batteriesThinning of silicon

New technology option

Initial demand

④

③

②

①

Japanese style wind-power generation system

Frontier development of venture businesses

Technical development

Formation of the new energy Industry Structure

Increased supply and demand of new energy

Production of domestic bio ethanol

Launch preparation

Accelerated dissemination

Autonomous dissemination

Marketing of fixed fuel cells

Marketing of fuel cell vehicles

Full scale dissemination of

fuel cell vehicles

Improvement of secondary battery performanceDisseminationSubstantial drop in hybrid vehicle pricesDissemination of electric vehiclesOutput stability of solar and wind-power generation through the parallel establishment of secondary batteries

23

5. ‘Nuclear Power Nation Plan’ (1) Target

Nuclear power that has excellent supply stability and is a clean energy source that does not emit

CO2 in operation is pivotal to establishing energy security and solving the global environment issues

integrally. Even after 2030, we will aim to bring its usage ratio to above 30 to 40% of the power energy

volume. As well as systematically and comprehensively tackling various issues such as the steady

promotion of nuclear fuel cycle based on the current light-water reactor, and the early practical application

of the fast-breeder reactor, promote the research and development of fusion energy technology.

Figure 19:Our country’s nuclear power generation ratio and target value

(2) Specific Activities For the achievement of the above target, implement the following activities to expand all possible

means to ensure the security of nuclear power.

⊳ So that the construction of new, additional nuclear power plants and the replacement of existing plants can be realized smoothly in the context of the electricity liberalization and of the stagnated

development of the deregulation of electric utilities and growth demand, prepare the business

environment including the leveling of load such as initial investment (corporate accounting allowance

during 2006 for the promotion of new and additional construction, and replacement of existing

facilities), and the reduction and dispersal of investment risks specific to nuclear power generation

(corporate accounting allowance for the second reprocessing facility during 2006). Furthermore, in

considering the modality of the future electricity business system, carefully discuss the matter by

taking full note of the impact on nuclear power investment.

⊳ For the early establishment of nuclear fuel cycle for present LWRs in Japan, support and proceed various activities such as starting full operation of Rokkasho Reprocessing Plant, implementation of

pluthermal (plutonium utilization for LWRs) at about 16 to 18 reactors, introduction of Rokkasho

【我が国原子力発電比率と目標値】

0% 0% 3%

14%27% 29%

0% 0%2%

14%

22%26%

29% 26%5%

4%

10%

25%

19%31%

73%

53%

29%

10%

52%42%

17% 16% 12% 11%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1960 1965 1973 1979 1990 2004 2030

Renewable, new energy

Petroleum

Coal

LNG

Nuclear power

30

40%

～

【我が国原子力発電比率と目標値】

0% 0% 3%

14%27% 29%

0% 0%2%

14%

22%26%

29% 26%5%

4%

10%

25%

19%31%

73%

53%

29%

10%

52%42%

17% 16% 12% 11%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1960 1965 1973 1979 1990 2004 2030

Renewable, new energy

Petroleum

Coal

LNG

Nuclear power

30

40%

～

24

Advanced centrifuge around 2010FY and starting full operation of the commercial MOX fuel

fabrication plant for LWRs in 2012.

⊳ For the practical application of the fast-breeder reactor cycle, establish the transition process including the clarification of the government’s role at an early date, and promptly begin the discussions between

researchers/developers and adopters. As well as recommencing the operation of Monju at an early date,

and establishing sodium handling technology, promote necessary technological developments such as

the mixed extraction of Minor Actinide. Aim to realize the demonstration reactor and related cycle

facilities by 2025, and develop the commercial reactor before 2050. Through these, aim for the

frontrunner of the fast-breeder reactor cycle.

⊳ Clarify the government country’s role in the transition scenario by making it a general rule to have the private sector bear the costs and risks equivalent to the output of light-water reactors in the

demonstration process of the fast-breeder reactor cycle, and to have the government bear any excess

costs or risks.

⊳ Utilize our country’s experience and technologies to the full and actively cooperate and contribute towards the movement of creating the global framework for the establishment of both nuclear power

expansion and non-proliferation such as the GNEP initiative and the strengthening of export controls of

nuclear-related materials, equipment and technology by Nuclear Suppliers Group guidelines.

⊳ Maintain and strengthen the technology and personnel of the nuclear power industry by starting the first national project of developing a next-generation light-water reactor in 20 years, and by

supporting to regard on-site personal development and to pass down of skills from 2006. Moreover,

carry out a steady research and development of fusion energy technology (ITER plan), hydrogen

production technologies using a high-temperature reactor, and the nuclear transformation technologies

that reduce the load of radioactive waste treatment from a long-term perspective.

⊳ As well as commencing knowledge support of institutional infrastructure arrangements for Vietnam and Indonesia from FY2006, actively support the global development of the Japanese nuclear industry

by providing human resource development and financial support for China, and reinforce the approach

for the international framework for adding nuclear power to the CDM scheme.

⊳ As well as strengthen the efforts for selecting the possible location of final disposal site including improvement of regional support for the commencement of final disposal in the mid 2030’s, steadily

promote the efforts for radioactive waste management such as early institutionalization of the

geological disposal of TRU waste, the establishment of the R&D programs about geological disposal

and the promotion of R&D based on the program. Moreover, promote an early institutionalization of

the disposal of low level radioactive wastes generated from R&D activities and so on that has never

been disposed yet.

⊳ As well as trying to introduce and establish effective safety regulations based on the establishment of quality assurance, improve aging management measures, quake-proof safety measures, and physical

protection measures.

⊳ To strengthen the relationship of trust between the government and the localities where the nuclear facilities are located, reinforce direct dialogue with the residents, strengthen the relationship of trust on

each level of the government and the localities, constantly support regional promotions and provide

25

attentive public hearings and public relations.

Figure 20:Movements and challenges surrounding the nuclear power nation plan

2010 2020 2030

Establishment of light-water reactor cycle

Introduction of 16 to 18 pluthermal unitsOperation of Rokkasho reprocessing facility

Introduction of the new centrifuge

Operation of the light-water reactor MOX fuel processing

facility

Activities of promoting understanding towards necessity and safety

Promotion of necessary technical developments

Preparation of new and expanded investment environment

・Corporate accounting allowance for leveling initial investment load・Corporate accounting allowance for the second reprocessing facility.・Unification of the calculation method of CO2 emission factor・Implement flexible handing of service provider cost burden rules for the smooth construction and enhancement of the interconnected line.・Consider countermeasures of risk dispersion by the government

Make further considerations according to subsequent change in the business environment

Establishment of the transition

scenario

Practical application of fast breeder reactor cycle

Operation of the demonstration reactor and cycle facilities

Discussion with R&D and innovators

Select and develop the technologies to be introduced

Implement design and constructionConsideration of the responsible organization for the experimental proof process and system improvement

Commercialization survey for the next-

generation light-water reactor development

project

Technical development & human resource training Support for the training and skills transfer of on-site technicians

Specific development based on the commercialization survey outcome

Next-generation light-water reactor commerce based introduction

Active contribution towards the building of an international framework for the establishment of both nuclear power generation expansion and nonproliferation.

Support for the international development of our country’s nuclear power industry

Introduction and establishment of effective safety regulations focusing on the establishment of quality assurance, and the improvement of aging countermeasures

Strengthening of the relationship of trust between the government and provinces

Radioactive waste countermeasures

Decision on the disposal site Start disposalOperation of the disposal center

Technical development for improving the reliability and safety of geological disposal techniques

Improvement of regional support and reinforcement of public relations

Construction of the disposal facilityCandidate site survey

20102010 20202020 20302030

Establishment of light-water reactor cycle

Introduction of 16 to 18 pluthermal unitsOperation of Rokkasho reprocessing facility

Introduction of the new centrifuge

Operation of the light-water reactor MOX fuel processing

facility

Activities of promoting understanding towards necessity and safety

Promotion of necessary technical developments

Preparation of new and expanded investment environment

・Corporate accounting allowance for leveling initial investment load・Corporate accounting allowance for the second reprocessing facility.・Unification of the calculation method of CO2 emission factor・Implement flexible handing of service provider cost burden rules for the smooth construction and enhancement of the interconnected line.・Consider countermeasures of risk dispersion by the government

Make further considerations according to subsequent change in the business environment

Establishment of the transition

scenario

Practical application of fast breeder reactor cycle

Operation of the demonstration reactor and cycle facilities

Discussion with R&D and innovators

Select and develop the technologies to be introduced

Implement design and constructionConsideration of the responsible organization for the experimental proof process and system improvement

Commercialization survey for the next-

generation light-water reactor development

project

Technical development & human resource training Support for the training and skills transfer of on-site technicians

Specific development based on the commercialization survey outcome

Next-generation light-water reactor commerce based introduction

Active contribution towards the building of an international framework for the establishment of both nuclear power generation expansion and nonproliferation.

Support for the international development of our country’s nuclear power industrySupport for the international development of our country’s nuclear power industry

Introduction and establishment of effective safety regulations focusing on the establishment of quality assurance, and the improvement of aging countermeasuresIntroduction and establishment of effective safety regulations focusing on the establishment of quality assurance, and the improvement of aging countermeasures

Strengthening of the relationship of trust between the government and provincesStrengthening of the relationship of trust between the government and provinces

Radioactive waste countermeasures

Decision on the disposal site Start disposalOperation of the disposal center

Technical development for improving the reliability and safety of geological disposal techniques

Improvement of regional support and reinforcement of public relations

Construction of the disposal facilityCandidate site survey

26

6. Comprehensive Strategy for Securing Resources (1) Target

As well as further expanding the percentage (oil volume ratio on exploration and development by

Japanese companies) of the crude oil acceptance volume that is under our country’s corporate interests,

which occupy our country’s crude oil import, and aiming to bring the oil volume ratio on exploration and

development by Japanese companies to 40% by 2030, through reinforcing our overall relationship with the

sources and through having our country’s businesses strengthen their support for research development,

promote the diversification of supply sources.

Figure 21:Oil volume ratio on exploration and development by Japanese companies

(2) Specific Activities Strategically and comprehensively promote measures such as the strengthening of our country’s

extensive relationship with the source, the resource development in source countries through the support for

our country’s businesses, and the diversification of supply sources in an aim to secure a stable supply of oil

and natural gas for our country. As well as strengthening natural gas procurement capability through the

intensification of procurement, reinforce international contribution for the stabilization of the whole world’s

energy market. Furthermore, comprehensively strengthen the measures for mineral resources such as

uranium resources and rare metal resources, of which supply and demand is becoming tighter.

⊳ In an aim to strengthen the overall relationship with the sources, provide extensive cooperation that is not limited to the resource energy sector through the form of accurately responding to the needs of the

sources that are aiming to diversify and advance their economy that does not rely solely on their

resources. Specifically, position and actively promote the R&D cooperation of the advanced S&T

sector as an important tool for economic assistance. Furthermore, engage in strengthening the

economic relationship through cooperation in a wide range of sectors such as the medium and small

0

5

10

15

20

25

30

35

40

73 77 81 85 89 93 97 01

oil volume ratio on exploration and development by Japanese companies (%)

2030

40%

27

sized enterprise promotion and social infrastructure improvements such as education and healthcare,

personnel exchanges, investment exchanges, the strategic utilization of ODA, and the conclusion of

EPA.

⊳ As well as drastically strengthening the supply of risk money related to the exploration development of oil and natural gas development companies including core companies responsible for the resource

development of our country, consider all environmental improvements by reexamining the evaluation

method of such institutions so that the risk money supply function is exhibited effectively in the Japan

Oil, Natural Gas and Metals Corporation.

⊳ Actively develop the efforts of oil supply source diversification in the African nations including Libya and Nigeria, South Americas and Canada in addition to Russia and the Caspian Sea region. Since the

Pacific Pipeline Project is strategically important for both Japan and Russia, Japan and Russia are to

work together in a way that would enable both countries to benefit.

⊳ By formulating a resource securing policy by 2007 and strengthening the strategic ties with the policy-based finance and economic assistance activities at large, support the acquisition of overseas

rights by our country’s resource development companies led by core enterprises.

⊳ Strengthen the support for the development import of bio ethanol.

⊳ Promote technical developments that also contribute to strengthening resource acquisition ability by utilizing our country’s advanced technical capabilities, i.e., GTL production technology, methane

hydrate production technology, DME development application technology, lightening technology,

refinement technology and carbon storing technology of heavy oils such as non-native oils.

⊳ In order to maintain and strengthen LNG procurement ability, reinforce the support for a strategic inter-enterprise tie-up, and technical development to facilitate comparative advantage in negotiations

for resource countries, and the support by policy-based finance for related investment opportunities.

⊳ Proceed with the clean and advanced use of fossil fuels and become the world’s most advanced fossil fuel using country. Specifically, promote the use of natural gas in the boiler demand of the thermal

power and industry sector, promote the development and dissemination of clean coal usage

technologies such as the coal gasification combined cycle and the coal gasification fuel cell combined

cycle, develop and use the effective usage technology of residual oil, and develop and disseminate

carbon recovery and retention technologies. In addition, continue to promote the improvement of the

pipeline network through multifaceted support including the granting of investment incentives.

⊳ Provide the support for exploration and development of uranium resources, for which the tightness of their supply and demand is becoming a great problem, and rare metals vital in improving our country’s

industrial competitiveness, and the support for related investment activities, discover and reinforce

deeply related economic assistance opportunities, and make improvements such as the necessary

bilateral agreement, as well as strengthening overall measures such as promotion of the recycling of

mineral resources and development of alternative materials.

28

Figure 22:Comprehensive reinforcement of the resource development system

Strategic risk money supply and

R&D support

Japan Oil, Gas and Metals Japan Oil, Gas and Metals National CorporationNational Corporation

Realization of efficient overseas

interests

Oil development businesses Oil development businesses such as core enterprisessuch as core enterprises

Burdens such as country risks

Fund supply in the international

finance sector

Strategic Partnership

Resource Securing Policy based on the basic energy plan

Investment exchange and technical

development assistance with resource countries

Investing firms for resource Investing firms for resource countriescountries

Economic assistance with resource countries such as infrastructure

improvement and cultural exchange

Organizations responsible Organizations responsible for economic assistance for economic assistance

projects, etc.projects, etc.

Active resource diplomacyPartnership with ODA,

FTA with GCC, etc.

GovernmentGovernment

Implementation of yen loans, grant aid

and technical aid

New Japan International New Japan International Corporation AgencyCorporation Agency

Nippon Export and Nippon Export and Investment InsuranceInvestment Insurance

New policy finance institutionsNew policy finance institutions（（Integrated institutions such as the new Integrated institutions such as the new

Japan Bank for International Corporations)Japan Bank for International Corporations)

Strategic risk money supply and

R&D support

Japan Oil, Gas and Metals Japan Oil, Gas and Metals National CorporationNational Corporation

Realization of efficient overseas

interests

Oil development businesses Oil development businesses such as core enterprisessuch as core enterprises

Burdens such as country risks

Fund supply in the international

finance sector

Strategic Partnership

Resource Securing Policy based on the basic energy plan

Investment exchange and technical

development assistance with resource countries

Investing firms for resource Investing firms for resource countriescountries

Economic assistance with resource countries such as infrastructure

improvement and cultural exchange

Organizations responsible Organizations responsible for economic assistance for economic assistance

projects, etc.projects, etc.

Active resource diplomacyPartnership with ODA,

FTA with GCC, etc.

GovernmentGovernment

Implementation of yen loans, grant aid

and technical aid

New Japan International New Japan International Corporation AgencyCorporation Agency

Nippon Export and Nippon Export and Investment InsuranceInvestment Insurance

New policy finance institutionsNew policy finance institutions（（Integrated institutions such as the new Integrated institutions such as the new

Japan Bank for International Corporations)Japan Bank for International Corporations)

29

7. Asia Energy and Environment Cooperation Strategy Strategically develop energy environment cooperation including the energy conservation sector,

which is our country’s strength, with Asian nations such as China and India where the energy demand is

rapidly increasing in order to establish symbiosis with Asia.

In so doing, keep in view the preparation of an international framework for securing the effectiveness of

cooperation, i.e., active utilization and development of the multilateral framework of the Asian region such

as ASEAN + 3.

(1) Promotion of Energy Conservation based on the Asia Energy Conservation Program ⊳ Establish the Asia Energy Conservation Program. Based on the program, support the establishment and

implementation of an energy conservation system based on the program, and support the technical

transfer by companies with technical capabilities.

✧ Support the establishment and implementation of the energy conservation system of Asian nations through the long-term dispatch of experts and acceptance trainees.

✧ Promote energy conservation cooperation in the consumer, transport and electricity sectors through ESCO sector cooperation and support in setting energy efficiency standards and labeling

system.

✧ Expand the energy conservation cooperation through business activities such as the promotion of inter-industry dialogue, the utilization of policy-based finance and the utilization of the CDM

scheme.

✧ Strengthen the ties with IEA and international institutions. Support international NPOs that establish energy efficiency standards.

✧ To promote energy conservation through benchmark approach, utilizing the international frameworks such as the Asia-Pacific Partnership, APEC and ASEAN+3.

(2) New Energy Cooperation in Asia ✧ Promote support for establishing systems for introducing new energies in Asian countries.

✧ Support the building of the system through trainee acceptance and the dispatch of experts.

✧ Support the introduction of technologies through technical development and experimental proof development.

✧ Support business activities of our country’s enterprises in Asia through FS survey, support of business exchange and policy-based finance and the utilization of the CDM scheme.

(3) Dissemination of clean use, production and safety technologies of coal in Asia ⊳ Promote dissemination of the clean utilization, production and safety technologies of coal in Asia

through accepting trainees, dispatching experts and supporting the technical development and

experimental proof.

✧ Dissemination of our country’s clean utilization technologies of coal through human resource development and seminars such as trainee acceptance, and business based development utilizing

30

the CDM scheme.

✧ Cooperation on coal liquefaction technologies through demonstration experiments and human resource development.

✧ Dissemination of coal production and safety technologies through trainee acceptance and the dispatch of experts.

(4) Building the stockpiling system in Asia ⊳ Build an effective stockpiling scheme in Asia through the building of regional frameworks such as

cooperation and facility in aspects of expertise and system for building the system of stockpiling.

(5) Promotion of regional cooperation on nuclear power in Asia ⊳ To strengthen the ties of nuclear power safety regulatory institutions in nuclear power generating

countries in Northeast Asia, start considering the building of regional frameworks. As well as

providing support so that the superb technologies of our country’s nuclear power industry is utilized in

Asia, the government is to engage in promoting the peaceful use of nuclear power such as the building

of a framework for resource and equipment transfer through human resource development support and

bilateral agreement.

Figure 23:Candidates for the Priority Countries of the Asia Energy Conservation Program

8. Enhancement of the Emergency Response

Political uncertainty, factors that trigger market confusion such as safety issues in associated

・China is the world’s 2nd largest energy consumer, and has a great energy conservation potential. Although the weight of the industry and consumer sectors are great, the expansion of the transport sector is also expected with the progress of motorization.

・20% improvement of unit energy consumption is the target in the 11th five-year plan. Although it has an energy conservation law (enacted in ’97), the challenge is the enforcement of that law.

China

・India is the world’s 4th largest energy consumer, and has a great energy conservation potential. Although the weight of industry is great, expansion of the transport sector is also expected with the progress of motorization.

・Although it has established its energy conservation law (’01) and the government’s efforts are positive towards energy conservation promotion, organizational improvement for implementing the energy conservation law is its challenge.

India

・Energy consumption is nearly 30% of that of Japan. It is already a net importer of oil against the backdrop of the growth of energy consumption.

・Although energy conservation awareness is increasing against the backdrop of high crude oil price and the reduction of fuel price subsidy, energy conservation improvement is still its challenge.

・Energy consumption is nearly 20% of that of Japan.

・It has an energy conservation law similar to that of Japan, and it is an advanced nation of energy conservation of ASEAN with an energy manager system.

・It also has a labeling system for consumer equipment, and has consumer sector activities such as energy conservation equipment dissemination programs by power generation corporations.

Indonesia

Thailand

Most important country for energy conservation cooperation

Starting up Energy Conservation Cooperation

Supports the system operation of energy conservation for industries and consumers

Supports the start up of industry-centered energy conservation system


・Although it has an energy conservation protocol similar to that of Japan, the energy price is low and does not induce energy conservation incentives.

Vietnam Supports an industry-centered operation of the energy conservation system

Other

・China is the world’s 2nd largest energy consumer, and has a great energy conservation potential. Although the weight of the industry and consumer sectors are great, the expansion of the transport sector is also expected with the progress of motorization.

・20% improvement of unit energy consumption is the target in the 11th five-year plan. Although it has an energy conservation law (enacted in ’97), the challenge is the enforcement of that law.

China

・India is the world’s 4th largest energy consumer, and has a great energy conservation potential. Although the weight of industry is great, expansion of the transport sector is also expected with the progress of motorization.

・Although it has established its energy conservation law (’01) and the government’s efforts are positive towards energy conservation promotion, organizational improvement for implementing the energy conservation law is its challenge.

India

・Energy consumption is nearly 30% of that of Japan. It is already a net importer of oil against the backdrop of the growth of energy consumption.

・Although energy conservation awareness is increasing against the backdrop of high crude oil price and the reduction of fuel price subsidy, energy conservation improvement is still its challenge.


・It has an energy conservation law similar to that of Japan, and it is an advanced nation of energy conservation of ASEAN with an energy manager system.

・It also has a labeling system for consumer equipment, and has consumer sector activities such as energy conservation equipment dissemination programs by power generation corporations.

Indonesia

Thailand

Most important country for energy conservation cooperation

Starting up Energy Conservation Cooperation

Supports the system operation of energy conservation for industries and consumers

Supports the start up of industry-centered energy conservation system


・Although it has an energy conservation protocol similar to that of Japan, the energy price is low and does not induce energy conservation incentives.

Vietnam Supports an industry-centered operation of the energy conservation system

Other

31

waters, accidents and terrorism, and factors that increase confusion such as the influx of speculative money

in the energy market are increasing more than ever. Make a full check of the emergency response measures

including the stockpiling system that was built when oil dependency was nearly 80%, and improve and

reinforce the emergency response measures in readiness for unlikely situations.

⊳ As well as strengthening the system of oil stockpiling such as the introduction of petroleum product stockpiling and the realization of flexible release through the introduction of rental system as soon as

possible and promote the LPG stockpiling steadily.

⊳ Carry out medium and long term considerations by implementing a feasibility survey for the preparation of the emergency response system for natural gas such as the improvement of underground

gas storing facilities that utilize the depleted natural gas fields, while promoting the improvement of

the domestic gas distribution network and discerning its improvement progress.

⊳ Carry out an overall inspection of the emergency response scenario that was built around oil stockpiling from a business and energy cross-sectional perspective within 2008. Also promote the

building of a risk management system of individual companies such as the formulation of a business

continuity plan in energy companies against such situations as terrorism, natural disasters and

accidents.

9. Formulation of the ‘Energy Technology Strategy’

By presenting the technology development strategy required on a medium to long-term basis

and realizing coordinated activities by the government and the private sector working hand-in-hand, our country becomes the world’s top runner in many of the energy related technology sectors including energy

efficiency . This aim will be realized by strategically supporting technology development of companies that could powerfully lead the development and preeminence of such innovative technologies, as well as

being in charge of the stable supply of energy.

⊳ Extract the technological challenges that should be developed by 2030, while keeping in mind the mode of technology that would be required from a super long term perspective (i.e., 2100, 2050), and

present its development strategy in the form of a roadmap. Establish and publish its first edition within

2006 and revise the strategy regularly.

⊳ Consider the adequate of a development system that could promote multidisciplinary energy technology development including industry-academia cooperation.

32

10. Toward implementing the ‘New National Energy Strategy’

(1) Challenges common to the eight programs In implementing the eight programs, the cooperation between three bodies, is essential; a

powerful leading company, a tough and efficient government that supports company’s activities, and the

nation with profound understanding of the energy issues. For this, the government will carry out

environmental improvements for realizing such ties between the three bodies.

① Promoting the creation of powerful enterprises Energy companies that are responsible for securing a stable supply are not only required to be

efficient under an environment with increasingly advanced liberalization, but are also required to secure

supplying facilities with sufficient spare capacity, and secure their rights and strengthen their procurement

capabilities in international competition. For this, the government will promote the creation of powerful

energy companies with outstanding funding ability, technical capability and management ability through

market environment improvements and support for companies engaged in national challenges.

② Efficient and effective use of policy tool such as budget and taxes In implementing each program, it is vital that the government and the private sector work

together with a certain orientation. For this, the government will comprehensively promote each program

that could build and establish a mechanism operated by the PDCA cycle for realizing the targets by

daringly and effectively combining budget, taxes and law systems based on the establishment of clear

targets (numerical targets) and evaluation of the achievement level. In reforming the special account system,

the government is to also engage in designing that system so that the country’s role can be fulfilled

sufficiently.

③ Implementing public hearings and public relations on energy and energy education In promoting energy measures, it is necessary to evaluate actively the extensive efforts of users

and new efforts through the market. Thus, to gain broader and deeper understanding of our country,

improve energy-related public relations and education based on public hearings with the principle of mutual

understanding.

33

(2) Conclusion In the ‘New National Energy Strategy’, based on the 2030 Energy Supply and demand Outlook

(March 2005 Report of Advisory Committee for Natural Resources and Energy) and subsequent changes,

programs that are particularly deemed important were selectively presented so that the government and the

private sector’ can implement strategic cooperation and steady efforts in the long-term time setting of

2030 ,. We look forward to the cooperation of interested parties in both the government and the private

sector for their realization implementation.

The contents of this strategy require constant review based on the progress of the activities and

the changes in market environment, and furthermore, the result of internal and external considerations

related to the reduction of greenhouse gas. In conjunction with the revision of Basic Energy Plan based on

Basic Energy Policy Act every three years, we would like to evaluate respective policies, review constantly

and keep checking the direction indicated by the ‘New National Energy Strategy’ , while revising the

medium and long term ’Energy Supply and Demand outlook’.

may 2006 ministry of economy, trade and industry

Documents