IntroductionofBenchmarksunderthe

EnergyEfficiencyLawinJapan
September2009
AkihiroMATSUTA
DeputyDirector
EnergyEfficiencyandConservationDivision
AgencyforNaturalResourcesandEnergy
MinistryofEconomy,TradeandIndustry,Japan

Key Questions
What was the background of the recent introduction
of benchmarks in Japan?
How were they developed? What issues were most
hotly debated during the discussion?
What are the commonalities between the Japanese
and the emerging EU benchmarks? How much will
they differ?
What is the possible future development of the
Japanese benchmarks?
1

OverviewofJapansEnergy
EfficiencyLawandSectoral
Benchmarks

JapansEnergyEfficiencyLaw
EnergyEfficiencyLawisthepillarofJapaneseenergyconservationpolicies.
Thelawwasenactedin1979inthelightoftheoilshock.
Thiscomprehensivelawcovers
allsectorsasfollows

(i)Targetistoimproveannuallyenergy
intensity1%ormoreonaverage.

(1)Energymanagementin
manufacturing,commercialand
transportationsectors

(ii)Currentcoverage:7,000 companies
(9,000factoriesand5,000workplaces)

(2)Energyefficiencystandardsfor
vehiclesandappliances(Top
RunnerProgram)

(increasedfrom10%bythelatestrevision
ofthelaw)

(3)Energyefficiencystandards
forhousesandbuildings

Industrialsector:approx.90%
Commercialsector:approx.50%

Industrial
Sector
Commercial
Sector

Approximately90%
Approximately50%
Approximately10%
[%]

CoverageofenergyusebytheRegulation

JapansEnergyEfficiencyLaw
WhySectoral Benchmarks?

1.Themoreenergyefficiencyisimproved,themoredifficultit
istocontinuetoreduce1%ormoreofenergyintensity.To
ensurefairnessinevaluatingcompanies energysavingefforts,
Benchmarkshavebecomenecessary.
2.JapanhasadvocatedSectoral Approachesformultilateral
tablessuchastheUNFCCC,APPandIEA.Inordertoappeal
effectivenessofthisapproach,Japanneededtointroduceit as
adomesticregulationastheworldsfirstattempt.

Sectoral ApproachesasNationalRegulation(Sectoral Benchmarking)

Targetshavebeensetattheenergyefficiencylevelofthebest performing
companies(top10%20%)ineachsubsector(Averagevalue Standard
deviation).
Ahigherleveltargetisadoptediffurtherenergysavingpotentialscan
betakenintoaccount.
[DistributionofBMindicator(asanimage)]
100%

Rank
(inrelativevalue)

Assumingthatdistribution
ofBMindicatorsforms
normaldistribution

50%

Around1020%

BMIndicator

0%

BM

Average

Sectoral ApproachesasNationalRegulation(Sectoral Benchmarking)

Companiesinthesesubsectorsareobligatedtoreporteveryyear
thestatusofbenchmarkingindicator,inadditiontotheratioof
energyintensityreductionandimplementationofenergy
managementsystem.
Basedoncompanies reports,theindicatorsaveragevalueand
standarddeviationforeachsubsectorwillbepublishedbythe
government.
Thenamesofcompaniesperformingwellbeyondthetargetwill
bealsopublished.

Whydidweselectthreesectors?
[Basicprinciple]
Thethreesectorswereselectedtobeginwith,takingintoaccountenergy
consumptionandprogressofinternationaldiscussionsofeachsector.
Thecoveragewillbeexpandedtoothersectors;commercialsectorisalso
envisaged.
Energyconsumptionbyindustriesparticipating
theVoluntaryActionPlanin2007fy
Industry(Industrialsector)

FederationofElectricpowerCompaniesof
Japan

Convertedto
crudeoil,
1,000kl

Energyconsumptionof
manufacturingindustries
Metalproducts
&machines

155,000

JapanIronandSteelAssociation

63,400

JapanChemicalIndustryAssociation

29,930

PetroleumAssociationofJapan

17,250

JapanPaperAssociation

8,300

JapanCementAssociation

6,280

JapanAutoPartsIndustriesAssociation

3,740

JapanAutomobileManufacturersAssociation

3,370

JapanFederationofConstructionContractors

2,090

JapanMiningIndustryAssociation

2,050

2007fy(convertedtocrudeoil,171millionkl)
2006fy 173

SourceEnergy&EconomicStatisticsinJapan

Red:sectorsalreadycovered
SourcetheFiscal2008FollowuptotheVoluntaryActionPlan
ontheEnvironment,JapanBusinessFederation

Blue:sectorstosettargetinFY2009
7

OverarchingPrinciples
1.Ensureconsistencywithmultilateraldiscussions
Consistencywithdiscussionsininternationalsectorassociations
andAPP.
ReportofCO2emissionisalsopartofregulatoryrequirements.

2.Evaluatetotalenergyconsumption

Thelawalsocoversindirectconsumptionofpurchasedelectricity,
steam,etc.

3.ReflecthighenergyefficiencylevelinJapan
Setting,asnecessary,moredetailedbenchmarkingindicators.

4.Reportbenchmarkingvalueforentirecompanyratherthan
individualsitesorfacilities.
Optimaloperationofeachfacilitydoesnotnecessarilyleadto
optimizationofamanufacturingsiteasawhole.Likewise,acompany
optimizesitsentirebusinessratherthaneachbusinesssite.
8

Specificdiscussionsineachsector
(1)IronandSteel
(2)Cement
(3)ThermalPowerPlants

BenchmarkforIronandSteel
BasicconceptisthesameasthatoftheWorldSteelAssociation.
(1)Forenergyconsumption,[direct+upstream credit]areincludedincalculation.
*EUETScountsdirectemissionswithoutupstream.

(2)Asdenominator,crudesteelproductionisused.
(3)Blastfurnaceandelectricarcfurnacearedividedassubsectors.
(InJapan,thelatterisfurtherdividedintoordinaryandspecialtysteel.)
(4)Abenchmarkingvalueiscalculatedforanproductionsiteas awhole.
*IntheEUETS,eachfacilitywillhaveabenchmarkingvalueinthethirdtradingperiod.

PracticesofJapansEnergyEfficiencyLawhavebeenreflectedtodiscussionsin
theWorldSteelAssociationandtheAPPSteelTaskForce.
Essential Facilities

DirectEnergy
Sources

Coke Oven

Sinter

Brast Furnace

Pellet

BOF
Casting

Upstream
EnergySources

DRI Plant
EAF

Credit

Lime Kiln

Hot rolling

Steam Boiler

Cold rolling

Power Plant

Coating

Oxygen Plant
10

BenchmarkforIronandSteel
Subsector

BenchmarkingIndicator

Steelcompany
usingblastfurnace

Ordinarysteel
companyusing
electricarcfurnace

Specialtysteel
companyusing
electricarcfurnace

Target
Below0.531
kl/t

Energyconsumptionfortotalprocess
Crudesteelproduction

*Asforthetwosubsectorsofelectricarcfurnace,
energyconsumptionfordownstreamprocess(Rolling
Processetc.)shallbeadjustedaccordingtothequantity
ofthesemifinishedproductspurchasedfromorsoldto
externalorganization.

Below0.143
kl/t

Below0.36
kl/t
(crudeoil
equivalent)
11

BenchmarkforCement
(1)BasicconceptisthesameasthoseconsideredinPCA(U.S.) and
CEMBUREAU(EU).Denominatorisbasedonclinkerproduction.
PracticesofJapansEnergyEfficiencyLawhavebeen reflected
indiscussions of theAPPCement TaskForce.

(2)AdvancedenergyefficiencyofJapanscementindustryhasbeen
takenintoaccount.
Allenergyefficiencymeasuresinclinkerproductionprocess
havealreadybeenimplementedinJapan.
Energyefficiencycanbeimprovedmainlyinclinkergrinding
processinwhichelectricityisused.
Considersintensityofclinkergrindinginfinishingprocessfor
Portlandcementproductionaswell.

Slightlydifferentfromboundarydefinitionofothers.However,consistencyis
easilyensuredforinternationalcomparison,onlybyremovingJapans
specificelementfromcalculation.
12

BenchmarkforCement
Exempted

Otherproducts
productionprocess

Mine

Finepowered
slag
(purchased)

(limestoneproducts,etc.)

Slagcrushing
Breakdownofenergyconsumption
DirectEnergy
Sources

8%

82%

Rawmaterial
process

Burning
process
Clinker
production

Electricity
(purchased/onsite
generation)

Cementproduction
process

Salesofelectricity
(Deducted)

Under
10%

Finishing
process
Portlandcement
production
process
Shipment

Mixedcement
production
process

Exempted
13

BenchmarkforCement
Forcement,thetargetissetatevenmoreambitiouslevelthantop1020%
(AveragevalueStandarddeviation),duetogreaterenergyconservation
potential.

Energyconsumptionofrawmaterialspreparationprocess
Productionvolumeofrawmaterialsprocess(clinkerbase)

Energyconsumptionofburningprocess
Clinkerproductionvolumeofburningprocess

Energyconsumptionoffinishingprocess
Productionvolumeoffinishingprocess
(Portlandcementbase)
Energyconsumptionofshippingandotherprocesses
ShipmentvolumeVariouskindofcementandclinker
14

BenchmarkforThermalPowerPlants
Measures tobeconsidered

Conceptualindicator

PossibleMRVable indicators
Deviationfrom
designedefficiency

1.O&Mimprovement

Fossil
fuels

Thermal
Efficiency

2.Renovation&
Replacement

Minimumefficiency
standardforincoming
newplants

3.BATinstallation

Thermal Efficiency

Designed Efficiency

Coal -fired Plants (Site A)

Efficiency Degradation

Coal -fired Plant (Site B)

10

20

30

40

Years since Commissioning

CommonapproachundertheAPPtrytomaintainorincreasethe
efficiencyforexistingthermalpowerplantsthroughpeerreview

15

BenchmarkforThermalPowerPlants
1. Targettominimizedeviationfromorevensurpass
designedefficiency (toassessthelevelofmaintenance)
BenchmarkingIndicators

Target

Benchmarking
Image
101

ThermalEfficiencyinperformancetestatstandardoutput
Designedthermalefficiencyatstandardoutput

Target

100

Over100.3%

99
98

ThermalEfficiency

97
96
0.5

2.Minimumefficiencystandardforincomingnewplants
FulfillrequirementoftheworldwideBAT
16

Expansionofsectoral coverageforbenchmarking

Discussionisnowunderwaytoexpandthesectoral coverage,
tochemical,oilrefinery,paper&pulpsectors.
(Approx.70%ofJapansindustrialsectorwillbecovered.)
Furtherexpansiontocommercialsectorisinprospect:the
discussiontobefinalizedbytheendof2009.

17

Basicconceptofbenchmarkingforsectorsunderdiscussions
Chemical:3BMs(subsector:naphthacracker,Chloroalikali and
Boiler/CHP)
Coveringapprox.64%ofenergyconsumptioninthissector.
Energyconsumptionfromdirectcombustion,steamgenerationand
electricitygenerationarealsoincluded(bothonsiteandpurchased).

OilRefinery:1BM(actualenergyconsumption/standardenergy
consumption)
Standardenergyconsumption: ([BMfactorbyprocess]X[throughputby
process])
ForBMfactor,datafromSolomonAssociatesLLC.isused.
SolomonAssociatesLLC.
*Generalapproachtobeadoptedworldwide

PaperandPulp:2BMs(subsector:paperandpaperboard)
Energyconsumptionfrompowergeneration,pulpproductionandutilities
arealsoincluded.
CooperationamongsectorassociationsinJapan,China,SouthKoreaand
ASEANisunderwayfordatacollection.
18

PossibleFutureTasks
[National]
Baseforfutureregulatoryscheme
[Overseas]
UseinSectoral CDMmethodologies
Comparativetoolforenergysavingefforts
Ex.Applyincaseofintroductionofborderadjustment

JapanisexposedtomuchgreatercompetitivepressurefromChina thanU.Sor
EUintheenergyintensiveindustriessuchasiron&steel.

(Relatedactivities)
GlobalexpansionthroughAPPandbilateralcooperation
*Developingcountriesinparticular,includingChina.
*APPSteelTFandCementTFhavebeenconductingdatacollectionbasedon
commonmethodologyunderJapansinitiative.

InternationalStandardizationthroughISO,etc.
*Asforiron&steelsector,workstoestablishISOstandardsfor calculationmethod
ofCO2intensitiesareunderway.
19

Conclusions
BenchmarksinJapanhavebeensettoensurefairevaluation
forprogressofenergyefficiencyindomesticindustriesand
consistencywithinternationaldiscussions.
Benchmarksasaregulatoryschemehasjustbeenstarted.
Thereissignificantpotentialofexpandingthisschemeinboth
domesticandinternationaleffortsforenergysaving.
Ourexperiencesaboutbenchmarkscouldbehelpfulforthe
discussioninEU.TheGovernmentofJapanispleasedto
cooperatewiththeongoingEUdiscussion.

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Thanks

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