Transportation and energy policy in Japan: what options matter

Abstract:

Japan imports virtually all of its energy, and transportation is one major user. This paper will extend a chapter in a forthcoming book on energy policy in Japan to look at the evolution of motor vehicles in energy demand. It traces three sets of policies: the development of public transport, the provision of incentives for small “kei” cars, and a new array of policies to support the develop of new energy vehicles, including fuel cell electric vehicles. The key conclusion is that a focus on alternative drivetrains is costly and will have only a small initial impact on energy use. At base, fuel cells or electric cars will still ultimately rely on imported energy, and fuel efficiency at the vehicle level is offset by losses in electricity generation and transmission.

In contrast, policies to encourage the use of smaller vehicles can have a more immediate impact, and at little or even negative cost (as smaller vehicles are intrinsically less expensive). However, while focusing on motor vehicle efficiency is politically popular, policies that enhance the utilization of public transport would likely bring greater gains. That will change if Japan is able to increase domestic renewable energy production. However, any diminution of energy imports or improvement in CO2 emissions would stem from the renewable side, and not on changes in the sort of motor vehicles found on Japanese roads.