Local sustainability in Japan : Iida and Tokyo

2012

ICLEI-Local Governments for Sustainability

1 - Iida: Financing Eco-energy with a Citizen Funded Energy Company

Iida City is an extremely progressive city in terms of renewable energy innovation. A strategic collaboration between the local government and a social business funded by local citizens, Ohisama shinpo Energy Co. Ltd, promoted the installation of ‘citizens’ solar panels with the Ohisama Zero-Yen Program, whereby citizens become investors in the solar installation program. This is an excellent example of citizen participation in the development of sustainable energy at the local level.

City profile

Case Study #143 Iida

Population: 105,000 (2010)

City size: 648 km2

Membership: Iida joined ICLEI in 2009.

Appr. municipal budget per capita: US$ 4,800 GDP per capita: US$ 34,000 (Tageo.com)

1.1 - Collaboration with citizens for renewable energy utilization

Energy security is a serious concern in Japan while energy production and consumption is a major contributor to GHG emissions. While renewable energy technologies are crucial for a clean energy strategy, they can be difficult to implement. The electricity market in Japan is dominated by a small number of companies, even though since 1995 the electricity business market has been partially liberalized. There has been subsequently a strong focus on local governments to formulate long term, sustainable energy policies. With this in mind, the local government of Iida City established a partnership with a local citizen funded energy company – Ohisama shinpo Energy Co. Ltd. This resulted in the development of the ‘Ohisama Zero-Yen Program’.

1.2 - Increased energy savings, reduced emissions

The aim of the Ohisama Zero-Yen Program was the promotion of renewable energy through solar panel installation and distribution. There has been considerable success. The number of Iida’s households with solar power panels has increased from 0.17 per cent in 1997 to 3.61 per cent in 2010, the highest among similarly sized cities in Japan. Approximately 30 per cent (estimation) of the total houses are equipped with lower-priced solar water heaters. Citizens’ solar power stations owned by Ohisama shinpo energy Co. Ltd. accounted for 162 sites in 2010. The total generated output is 1,400,000 kWh in 2010 and CO2 emission reductions have amounted to the equivalent of 777 tons.

Local government buildings were used as site for installation. In a short space of time, solar power panels were installed on almost all available rooftops of city government owned buildings, most of which were purchased and installed by Ohisama shinpo. Co. Ltd. The city government encouraged Chubu Electricity Power Co., Inc. to invest in the « Mega Solar Iida » power plant. Chubu Electricity Power Co,. Inc. is one of the biggest electricity companies in Japan and the new power plant was constructed and operated by the company. It is a large-scale centralized power plant with a generation output of 1,000,000 kWh, equivalent to an estimated 400 tons of CO2 reduction. The solar panel cells were manufactured by a factory in Iida City, therefore, also making a contribution to the local economy.

Crucial to the successful implementation the necessary finance was required. Large amounts of funds were raised and the Ohisama shinpo Energy Co. Ltd. invested in the ‘Ohisama Fund’ whereby ordinary citizens became social investors (people contributed to the initial financing of the project, with an intention to benefit from potential returns). Together with other large and small scale funds, sufficient funds were raised for installing the first solar power panels. The total amount raised was 758,600,000JPY (US$ 9.5 million).

1.3 - Key components of a citizen based approach to solar energy policies

The origins of the initiative go back to its LA21 Action Plan, when Iida City government adopted the ‘21 Iida Environmental Plan’ in 1996. After various revisions, the reduction of GHG emissions and the financing of renewable energy, particularly solar power panel installations became a strong theme. When the city government received funding from the Ministry of the Environment in 2004, it helped establish a private company modeled as a social business funded by local citizens. Ohisama shinpo Energy Co. Ltd was then formed by local citizens in 2004. Its formation lead to the implementation of the solar power panels project. Ohisama shinpo Energy Co. Ltd. is organized as a non-profit company and seeks to encourage local citizens to use solar energy. Furthermore, the central government decided to select Iida City as a one of the ‘Eco Model’ cities thus ensuring Iida’s eco-energy city strategy gained momentum.

The city government and Ohisama shinpo Energy Co. Ltd. created a new social business program. The company financed the costs of panel installation through a social investment fund and raised the required amount of 201.5 million JPY (US$ 2.5 million). The city authorities developed a contract to buy electricity from a private company for 20 years. By 2010, the Ohisama shinpo energy Co. Ltd. owned 162 solar power plants sites in Iida City and the surround environs.

Some citizens, however, could not afford the upfront costs of installation. Therefore, in 2009, Iida City government and Ohisama shinpo energy Co. Ltd. launched a system to install solar power generators at no initial cost on the roofs of ordinary households - the Ohisama Zero-yen Solar Electricity System. Instead of having to pay the large upfront cost for installing a solar power system, households pay a small fixed amount over a nine year period.

Ohisama shinpo energy Co. Ltd. advanced this project through public-private and private-private partnership, with loans from local credit unions and banks. The city government advertised the program and received support from neighboring community organizations, as well as the benefits associated with the electricity purchases by the Chubu Electricity Power Co., Inc.

1.4 - Factors for success

Policy leadership and the promotion of partnerships from the elected mayors, as well as environmental policy experts was vital to this program. This established a solid foundation for local governance in Iida, necessary for the development of the Ohisama Zero Yen Program. Government leadership was also notable when developing public-private and private-private partnerships.

Bottom up approach. Actively engaging local citizens and involving them in the development of the social company was pivotal to the success of the program. It allowed them to take ownership of the project, give them an incentive to increase solar energy utilization and to ensure the program was successful.

The private-private partnership brought a dynamic change to the program. The Ohisama shinpo Energy Co. Ltd. played a key role in the planning and implementation of this project. It succeeded in attracting investors to the funding initiative by mobilizing the national network of nonprofit organizations engaged in renewable energy production.

2 - Tokyo: Energy efficiency in buildings

Tokyo’s Green Building Program and the Cap and Trade Program have been two major progressive initiatives to reduce the carbon footprint of both existing and new commercial buildings in the city through energy efficient building technologies. As Tokyo is the largest metropolitan area in the world, this case sets a powerful precedent of a climate mitigation market instrument in urban areas. The Cap and Trade and Green Building Programs are fundamental to Tokyo Metropolitan Government’s policy goal to reduce CO2 emissions by 25 per cent below 2000 levels by 2020.

City profile

Case Study #144 Tokyo

Population: 13 million (2011)

City size: 2,187 km2

Membership: Tokyo joined ICLEI in 1997.

Appr. municipal budget per capita: US$ 6,900

GDP per capita: US$ 70,759 (Siemens Green cities index)</quote>

2.1 - Importance of Energy Efficient Buildings in cities

Energy consumption in buildings reportedly accounts for as much 40 per cent of total global energy consumption. Although Tokyo occupies only 0.6 per cent of Japan’s total land area, it is home to more than 10 per cent of the country’s population and it accounts for over 4 per cent of Japan’s total GHG emissions, whereby buildings account for 37 per cent in 2006. This volume is comparable to the national emissions of countries such as Denmark or Norway. In an effort to reduce the carbon footprint of buildings and support global climate change mitigation, the Tokyo Metropolitan Government (TMG) established the Cap and Trade (C&T) Program, which deals with existing buildings, and the Green Building Program, which deals with newly built buildings.

2.2 - Results of the CaP and Trade and Green Building Programs

Both programs provide a relevant statutory framework to establish energy efficiency in buildings. Approximately 1,340 facilities are covered by the C&T Program and a 6 to 8 per cent reduction requirement applies during the first compliance period 2010-2014 and a prospective 17 per cent reduction requirement during the second compliance period 2015-2019. If a facility exceeds its reduction requirement the excess reduction as a credit is allowed to be sold. Four types of such credit are defined by the program:

• Surplus reductions achieved by other targeted facilities.

• CO2 reductions voluntarily achieved by small and medium scaled facilities in Tokyo.

• Surplus reductions achieved by facilities outside Tokyo.

• Environmental value generated through the use of renewable energy (renewable energy credits).

Since 2002 the Green Building Program has covered more than 1,300 buildings. The most recent version of the program, implemented in 2010, seeks to ensure that:

• Minimum energy performance standards are set higher than the national standards.

• A feasibility study is required when introducing on-site renewable energy technologies. Owners and developers are required to submit proposals to TMG and publish a report on their examination process for having solar energy facilities introduced in prospective buildings.

The exact reductions achieved by the C&T Program are yet to be calculated since the program’s first compliance period ends in 2014. According to Bureau of Environment (BOE), however, approximately 59 per cent of the targeted facilities can be expected to comply with their reduction obligations. On the other hand, the Green Building Program has resulted in the number of lower performance buildings decreasing, while the number of higher grade buildings is increasing. Two-thirds of the buildings under the Green Building Program exceed the thermal performance in insulation efficiency criteria provided under Japan’s Rational Use of Energy Act. Examples of such eco-energy buildings include those that have plans for a large-scale installation of solar panels, new radiation cooling/heating systems and LED lighting. Even in buildings that already have the lowest levels of CO2 emissions equipment is being upgraded to reduce emissions further, when extension wings or annexes are being constructed.

The C&T Program is also creating new business models to stimulate economic activity. Such new businesses can include consultations on acquiring emission reduction credits for energy efficiency measures by small and medium-sized business facilities and for the validation and trading of various credits. This ultimately impacts on the market, whereby an incentive is created to produce and sell eco-efficient products.

2.3 - Key components and Institutional Set-up

Cap and Trade Program

In 2000 the Department of General Affairs and the BOE of TMG introduced the Tokyo CO2 Emissions Reduction Program; however as the program was voluntary based, only about a quarter achieved emissions reductions which were greater than 5 per cent. The C&T Program aimed to remedy this issue.

During the C&T policy-making process TMG took a participatory approach, actively gathering opinions from businesses, industry groups, environmental NGO/NPOs, academics and engineers. However, when TMG announced the intention of introducing the C&T Program in 2002 all businesses and industry groups strongly disagreed with the plan. Some industry groups, such as the Japanese Federation of Economic Organizations (Keidanren), argued that it had the potential to restrict Tokyo’s economic activities and some businesses, such as property businesses and developers, considered the proposed caps to be excessive and unfair.

A key stakeholder was the Tokyo Chamber of Commerce and Industry (TCCI). Despite its initial reluctance, TCCI came to see that there could be supportive measures in the plan and argued for offset credits from small and midsize facilities within the Tokyo area. In the end TCCI formally accepted the program, and this influenced the decision-making of the legislative branch of the Tokyo Metropolitan Assembly.

Green Building Program

In contrast to the C&T program, there was little disagreement among the stakeholders when BOE introduced the Green Building Program in 2000 (implemented in 2002). BOE recognized that the national energy efficiency standards were not effectively implemented. They were not well tailored to Tokyo’s unique regional characteristics and most of the targeted buildings in Tokyo were not given incentives to over-comply with the lowest standard. Thus, BOE established a mandatory disclosure scheme of large-scale buildings’ energy performance with its own rating system.

The program requirements apply to owners of newly-built buildings with over 5,000 m² total floor area. Owners and developers of such buildings are required to construct buildings that incorporate environmentally friendly designs based on the TMG green building design guidelines. The owners must also prepare Building Environmental Plans explaining and rating their environmental designs, (based on the TMG standards), and submit these plans one month prior to building permission applications.

2.4 - Factors for Success

Data collection and recording. Prior to the C&T Program the Tokyo CO2 Emissions Reduction Program yielded a large database of information on targeted facilities. It highlighted sources for individual energy consumption including specific machinery and infrastructure. The detailed breakdown allowed TMG to calculate emissions and identify best practices for energy efficiency, and to make evidence-based arguments to assert that emission reduction targets were indeed possible.

Legal requirements. The preparation of Building Environmental Plans was pivotal in fully assessing buildings in terms of their energy efficiency attributes. It gave TMG the information it needed to decide how to extend the scheme to different buildings and strengthen measures for more effective implementation.

Stakeholder interaction provides tailored solutions. Interacting with relevant stakeholders is of the utmost importance in terms of tailoring the programs to the needs of individual businesses and to create effective incentives. By including stakeholders from the beginning, the targets and reduction measures were appropriate and achievable. This policy process also gave the stakeholders the chance to learn more about the capabilities to improve their own mitigation measures.

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