A Tale of Two Countries: Japan, China, and the Low-Carbon Economy

By Joel Makower
Published March 15, 2010

I've had the good fortune to view the world through a Japanese lens over the past 10 days -- specifically, the worlds of green business and clean technology, about which I've come to Japan to speak.
My host is the U.S. State Department, whose Office of International Information Programs invites a range of speakers to various foreign outposts at the host countries' request. (I did a similar speaking tour in Europe last fall, and another, in India, in 2000.) This latest trip took me to four cities -- Tokyo, Fukuoka, Nagoya, and Osaka -- to give presentations and to participate in two international symposia. My overall focus was on green innovation in the U.S. toward the goal of a "low-carbon economy."
That's a term that seems to be gaining currency in Asia, Europe, and elsewhere, though it isn't uttered often in the U.S., where, at best, adherents of green business, renewable energy, and sustainable commerce typically refer to the more generic "green economy." "Low carbon" demonstrates the growing focus on climate change among business and governmental leaders in Japan and elsewhere.
It was an interesting time to be here. On Friday, Japan's Cabinet approved a major piece of climate legislation -- Japan's first. And while it represents a major hurdle, it is less than it's cracked up to be. As the English-language Daily Yomiuri reported this past weekend:
"The bill incorporates bold reductions first touted by Prime Minister Yukio Hatoyama when he addressed the United Nations in September, saying Japan would cut its greenhouse gas emissions by 25 percent from 1990 levels by 2020."The bill also includes policies that were rejected by past Liberal Democratic Party-led governments due to concerns by business circles. If the bill becomes law, it will mark a major turning point in the country's global warming policy.However, details of the policies incorporated in the bill are still to be discussed, and there are differing opinions within the government. The government will be required to tackle a mountain of problems in the days ahead to resolve these issues."
Among those issues is that the 25 percent reduction goal has the precondition "that all major greenhouse gas-emitting nations will agree on a fair and effective international framework and ambitious goals," the paper reports. Suffice to say, that precondition doesn't seem forthcoming any time soon.
Nonetheless, Japan's enlightened business leaders are focused on how to move forward on a low-carbon economy, though my conclusion is that they don't have much more of a plan to get there than do the Americans. At the events I attended, there was much discussion about how to achieve the green vision of Hatoyama, the first prime minister who seems to "get it," when it comes to the economic potential of cleantech and a green economy, but whose vision is thwarted by the legislature. That was one recurring theme. Another was commiserating over how to motivate employees to engage in green practices. They expressed frustration in Japanese consumers' willingness to buy green products. They wondered how stable oil prices will affect progress, not to mention the impacts of the global economic recession. They asked repeatedly about President Obama's "New Green Deal," a remnant of the 2008 campaign that, far as I can tell, has disappeared into the ether.

For an American visitor, it seemed, much as I wrote during my visit here in 2007, that "I was six thousand miles from home, but I could have been anywhere in the U.S., given the stories I was hearing."
But far more than I expected, the conversation that took place seemed less about Japan than about China. Japan's neighbor to the southwest seems to be causing a mild case of dyspepsia in the Land of the Rising Sun. Though the events I attended featured only one Chinese speaker, there was much conversation, and more than a little handwringing, about the role China will play in the low-carbon economy.
The conversation about China has taken a dramatic turn over the past year or so. In the past, it had more to do with "What happens when 1.3 billion Chinese want to achieve the same standard of living as their Western (and Japanese) counterparts?" That's still a concern, of course. But the conversations I've been hearing lately, in both the U.S. and Japan, have more to do with "What happens when China produces the clean technologies we'll all be needing?"
That's Japan's concern. Indeed, it seems a cruel turn of fate from just a quarter-century ago, when American leaders were asking the same question about Japan. At the time, that country seemed to be eating our proverbial lunch, outperforming us in producing a wide range of goods that had been invented in America, from solar panels to televisions.
Japan now worries that China will be a similar threat, with its weak intellectual property laws, which mean that it can easily "own" the technological secrets of things invented elsewhere, made cheaply due to its low-cost labor and manufacturing prowess. Already, for example, Japan has dropped from the number-one producer of solar panels to the number-three producer, behind China and Germany, according to the Earth Policy Institute. (The U.S. is fifth, just after Taiwan and ahead of India.) As the Institute reported last week, "Chinese annual production skyrocketed from 40 megawatts in 2004 to 1,848 megawatts in 2008, nearly five times the output of the United States."
It's that state of affairs that has Japan -- and the U.S. -- fretting. Not just about climate change but also about the economic climate that may see their global competitiveness fall further and further behind.