VZCZCXRO7767
PP RUEHCHI RUEHFK RUEHHM RUEHKSO RUEHNAG RUEHPB RUEHRN
DE RUEHKO #0219/01 0290914
ZNR UUUUU ZZH
P 290914Z JAN 09
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC PRIORITY 0408
INFO RUEHZU/ASIAN PACIFIC ECONOMIC COOPERATION PRIORITY
RUEHSS/OECD POSTS COLLECTIVE PRIORITY
RUEHBJ/AMEMBASSY BEIJING PRIORITY 7473
RUEHNE/AMEMBASSY NEW DELHI PRIORITY 8652
RUEHFK/AMCONSUL FUKUOKA PRIORITY 2155
RUEHNAG/AMCONSUL NAGOYA PRIORITY 0028
RUEHOK/AMCONSUL OSAKA KOBE PRIORITY 5943
RUEHNH/AMCONSUL NAHA PRIORITY 4502
RUEHKSO/AMCONSUL SAPPORO PRIORITY 2714
RUEHBS/USEU BRUSSELS PRIORITY
RUEATRS/TREASURY DEPT WASHDC PRIORITY
RUEHGV/USMISSION GENEVA PRIORITY 3473
RHMCSUU/DEPT OF ENERGY WASHINGTON DC PRIORITY

UNCLAS SECTION 01 OF 03 TOKYO 000219 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EEB/ESC, EAP/J AND OES 
 
E.O. 12958: N/A 
TAGS: ENRG EFIN SENV KGHG PGOV JA
SUBJECT: GOJ TARGETS CLEAN ENERGY, RESOURCE SECURITY IN 
FY2009 ENERGY BUDGET 
 
REF: A. 08TOKYO1690 
     ¶B. 08TOKYO1585 
     ¶C. 08TOKYO1505 
     ¶D. 08TOKYO1948 
 
TOKYO 00000219  001.2 OF 003 
 
 
¶1. (U) SUMMARY: The GOJ's FY09 energy budget proposal focuses 
on securing stable access to conventional energy resources 
while simultaneously pursuing energy efficiency and 
low-carbon alternatives.  It should enable the GOJ to launch 
several policies developed in the run-up to the 2008 Toyako 
G8 Summit.  The GOJ proposes 768.3 billion yen ($8.17 
billion) in 2009 energy-related outlays for the Ministry of 
Economy, Trade and Industry (METI) to: (1) explore and secure 
natural resources, both overseas and through development of 
domestic under-sea gas and mineral resources; (2) develop 
carbon reducing technologies; and (3) improve energy 
efficiency.  There are substantial increases in funding for 
research and development of methane hydrates, rare metals 
exploration, and research into carbon storage and 
sequestration.  The budget also introduces support for 
residential solar power and enhanced incentives to develop 
and commercialize clean vehicle technologies.  END SUMMARY. 
 
5.2 Percent Increase in 2009 Energy-Related Spending 
--------------------------------------------- ------- 
 
¶2. (U) The GOJ's 2009 energy-related budget proposal totals 
768.3 billion yen ($8.17 billion), an increase of 5.2 percent 
over 2008 (Note: figures assume $1=94 yen, and the budget 
typically passes in March for the fiscal year beginning in 
April).  The GOJ proposes 265.5 billion yen in FY09 to 
guarantee a stable supply of natural resources, an increase 
of 0.9 percent.  The Japan Oil, Gas and Metals Exploration 
Corporation (JOGMEC), which funds resource surveys and 
guarantees resource-related debt financing, is slated to 
receive a 27% budget increase.  The boost in funding will 
enable JOGMEC to double its spending to secure supplies of 
rare metals used in electronics manufacturing.  JOGMEC's 
Director General for Minerals Finance Tsuguyo Takahashi told 
emboffs he hopes for speedy passage of the budget so his 
organization can continue work on several projects, including 
remote sensing of mineral resources in southern Africa, 
programs to recycle rare metals from used electronic 
equipment, and programs to take advantage of technological 
innovations to extract remaining deposits of rare minerals 
from shuttered mines. 
 
¶3. (U) The FY09 proposal also increases funding for research 
and development of methane hydrates off the coast of Japan by 
eighty percent to 4.5 billion yen.  Outlays for surveys of 
ocean-bed hydrothermal deposits would also grow to support 
Japan's ten-year strategy to identify petroleum, natural gas 
and mineral resources within Japan's Exclusive Economic Zone. 
 The policy includes surveys of rare earth and manganese in 
the cobalt-rich crust, hydrothermal deposits, and movement to 
the second phase of the GOJ's methane hydrate research 
program. 
 
Global Warming Countermeasures 
------------------------------ 
 
¶4. (U) To realize former PM Fukuda's goals for a "Low Carbon 
Society", a highlight of the 2008 G8 Summit (refs A-C), 
proposed FY09 outlays to counter global warming rise 
fifty-six percent to 28.5 billion yen.  The GOJ proposes 
increased spending to realize its commitments under the Kyoto 
Protocol (21.8 billion yen).  Funding for research and 
development of carbon sequestration and storage (CCS) 
technologies more than doubles to 4.8 billion yen, including 
3.3 billion yen ($33 million) in new funding for testing and 
verification of subterranean carbon storage.  METI's proposed 
FY09 outlays for implementing innovative energy technologies 
as part of the GOJ's "Cool Earth 2050" program total 88.6 
billion yen, an increase of 41 percent. 
 
¶5. (U) METI's funding for Clean Coal Technologies (CCT) rises 
 
TOKYO 00000219  002.2 OF 003 
 
 
21 percent and includes 12 billion yen in new funds to 
promote technology transfer and expert exchanges in the 
Asia-Pacific Region, with China and India as priority 
countries. 
 
Energy Conservation 
------------------- 
 
¶6. (U) The GOJ proposes to spend 101.9 billion yen for energy 
conservation.  Targeted conservation measures include: 54.5 
billion yen for energy-efficient buildings; 40.8 billion yen 
for research and development of energy efficient 
technologies; and six billion yen for "green IT projects" to 
improve IT related energy efficiency. 
 
¶7. (U) Separate from the budget proposal the Ministry of 
Finance announced, at METI's request, tax measures to promote 
energy-saving and new-energy facilities.  The Finance 
Ministry proposes allowing immediate depreciation over two 
years on investments in energy-saving technologies or 
facilities, such as solar power, natural gas vehicles and 
highly-insulated windows, as well as for the purchase of 
energy-saving home electric appliances. 
 
New Technologies and Alternative Energy: Solar Wins Big 
--------------------------------------------- ---------- 
 
¶8. (U) The FY09 budget proposes 137.9 billion yen to promote 
new energy technologies.  Solar power receives a substantial 
increase and the budget includes 20.1 billion yen to support 
residential solar power installation (ref D).  The Director 
of METI's Energy Conservation and Renewable Energy Department 
told emboffs METI's installation target is 85,000 residences 
by 2011.  The current average purchase price for residential 
solar units is 700,000 yen, and METI expects the subsidy to 
cover around ten percent of the costs for a typical unit. 
Three hundred local governments also have subsidy schemes 
which provide up to 100,000 yen to defray the costs of 
installation.  METI does not expect the current economic 
downturn to affect its target for residential installation. 
 
Next-Generation Vehicles 
------------------------ 
 
¶9. (U) The FY09 proposal also includes 29.7 billion yen to 
introduce and develop next-generation vehicles and fuel 
cells.  The GOJ's goal by 2020 is for half of new auto sales 
to be next-generation vehicles.  METI proposes 5.3 billion 
yen in 2009 to subsidize the introduction of clean-energy 
automobiles, including plug-in hybrids, Clean Natural Gas 
vehicles, and accompanying infrastructure such as charging 
stations.  Officials in METI's New and Renewable Energy 
Division told emboffs the agency estimates 2,000 electric 
vehicles will be sold in 2009, primarily to corporate fleets. 
 The budget also proposes 6.1 billion yen in new funding to 
support installation of residential fuel cells. 
 
¶10. (U) The FY09 budget proposal also includes 800 million 
yen in new funding for non-feedstock bio-ethanol production 
and three billion yen for fundamental research on innovative 
battery technologies, both of which will support Japan's 
automobile manufacturers as they compete to produce greener 
vehicles. 
 
Nuclear Energy 
-------------- 
 
¶11. (U) METI's portion of nuclear spending falls slightly to 
21.6 billion yen, a decrease of 0.6 percent.  Funding for 
research and development of next generation light-water 
reactors, fast reactors and small reactors; for research and 
development of the light-water reactor fuel cycle; and for 
regional assistance for siting nuclear facilities see modest 
increases, consistent with METI's request.  These were offset 
by decreases for overseas uranium mining and disaster 
planning. 
 
TOKYO 00000219  003.2 OF 003 
 
 
 
¶12. (SBU) Comment: METI Vice Minister Mochizuki, a former 
head of the Agency for Natural Resources and Energy, singled 
out energy security as a top priority in a recent press 
conference on the budget and emphasized the need to balance 
resource security, energy efficiency and environment issues 
in Japan's energy strategy.  The 2009 energy budget's 
combination of funding to secure traditional fossil fuels and 
support for alternative energy technologies clearly reflects 
this strategy. Increases to fund the energy 
security/low-carbon policies envisioned by then-PM Fukuda in 
early 2008 suggests the GOJ continues to place a priority on 
its energy policy despite falling commodity prices and the 
current political paralysis. Energy issues have not been a 
focus of political debate between the ruling party and the 
opposition, and the energy budget will likely pass as 
proposed.   End Comment. 
ZUMWALT