VZCZCXRO1902
RR RUEHAST RUEHHM RUEHLN RUEHMA RUEHPB RUEHPOD RUEHTM RUEHTRO
DE RUEHKO #0697/01 0860801
ZNR UUUUU ZZH
R 270801Z MAR 09
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC 1844
INFO RUEHZN/ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE
RULSDMK/DEPT OF TRANSPORTATION WASHINGTON DC
RHMCSUU/DEPT OF ENERGY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC

UNCLAS SECTION 01 OF 03 TOKYO 000697 
 
SENSITIVE 
SIPDIS 
 
EEB/TRA, STATE PASS OES D. NELSON, DOT: L. LAWSON, EPA: 
CGRUNDLER, DOE/EERE 
 
E.O. 12958: N/A 
TAGS: ELTN ENRG SENV JA
SUBJECT: JAPANESE LEADERSHIP PROMOTES NEXT-GENERATION 
VEHICLES 
 
REF: TOKYO 345 
 
TOKYO 00000697  001.2 OF 003 
 
 
¶1. (SBU) SUMMARY: Senior GOJ lawmakers continue to emphasize 
policies that support development and sale of electric and 
other next-generation vehicles as vital both to Japan's 
long-term economic growth and in order to reach CO2 reduction 
targets.  Improving energy efficiency and reducing reliance 
on hydrocarbons in the transportation sector figured 
prominently in a mid-March 2009 meeting of the Council on 
Economic and Fiscal Policy (CEFP) as well as in the FY2009 
budget, which passed the Diet March 27.  The high-level 
attention suggests future economic stimulus efforts may 
include additional support for next-generation vehicle 
technology. END SUMMARY. 
 
-------------------------------------------- 
HIGH-LEVEL FOCUS ON NEXT-GENERATION VEHICLES 
-------------------------------------------- 
 
¶2. (U) Prime Minister Taro Aso stated during a March 18 CEFP 
meeting, which focused on measures to realize a low-carbon 
society, that Japan "should strive to become a nation that 
leads the world in such areas as solar power generation and 
electric cars."  Several senior lawmakers, including Ministry 
of Economy, Trade and Industry (METI) Minister Toshihiro 
Nikai and Ministry of Land, Infrastructure, Transport and 
Tourism (MLIT) Minister Kazuyoshi Kaneko, outlined their 
agencies' efforts at the meeting.  Senior Economic officials 
at the meeting also previewed for the Aso Cabinet areas the 
GOJ will emphasize in its next round of economic stimulus 
measures.  Following the meeting, Economic and Fiscal Policy 
Minister Kaoro Yosano said steps to promote a low-carbon 
society, including next-generation vehicles, will be the 
"most important pillar" in the GOJ's long-term economic 
growth strategy. 
 
¶3. (U) METI Minister Nikai told the CEFP Japan should 
strengthen its efforts to research and develop fuel cell and 
battery technologies in the face of increasing international 
competition, according to a transcript of the meeting. 
Noting that Japan has sixty percent of the world market for 
lithium ion batteries and ninety percent of the market for 
hybrid technology, Nikai stressed that Japan must continue 
its efforts to remain a leader in the field.  Nikai also 
referred to the two-year old joint research project on 
hydrogen storage and fuel cells with Los Alamos National 
Laboratory and said he intends to work with U.S. Energy 
Secretary Chu to further areas of collaboration. 
 
¶4. (U) MLIT Minister Kaneko observed that the transport 
sector accounts for twenty percent of Japan's carbon dioxide 
emissions, and, when considering that households and offices 
account for an additional 30 percent of emissions, MLIT is 
responsible for developing policies related to half of 
Japan's carbon dioxide emissions.  To this end, in addition 
to detailing proposals to encourage energy-efficient building 
design, Kaneko emphasized the development of clean vehicle 
technologies and more efficient transportation and 
distribution infrastructure.  Noting that hybrid vehicles 
currently account for only one of every fifty new vehicles 
sold in Japan, Kaneko reiterated the importance of achieving 
the GOJ's target of next-generation vehicles accounting for 
half of new car sales by 2020. 
 
¶5. (U) Kaneko also highlighted MLIT's support for development 
of an Intelligent Transport System (ITS) that would adapt 
existing transportation infrastructure to better accommodate 
next-generation vehicles, and he said Japan should strive to 
disperse technology such as ETC (an electronic toll 
collection system) and the Vehicle Information and 
Communication System (VICS, an electronic traffic information 
network) throughout Asia.  Kaneko specifically noted that 
Japan's ETC standard has been making progress in China. 
 
----------------------------------------- 
THE GOJ'S NEXT GENERATION FUEL INITIATIVE 
----------------------------------------- 
 
¶6. (U) The centerpiece of the GOJ's program to promote 
eco-friendly vehicles is the Next-Generation Automobile Fuel 
Initiative, which METI established in May 2007 in 
consultation with the automotive and oil industries.  The 
initiative channels the GOJ's priorities into five areas, 
specifically: (1) development of next-generation vehicle 
batteries, (2) development of hydrogen fuel cell technology 
 
TOKYO 00000697  002.2 OF 003 
 
 
and related infrastructure, (3) support of clean diesel as a 
higher-efficiency, clean fuel, (4) expansion of "secure, safe 
and fair" second-generation biofuels, and (5) capitalizing on 
information technology to create the "world's most friendly 
automobile society."  Through a combination of strategies 
focusing on automotive technologies, fuel, and 
infrastructure, the program aims to reduce the transportation 
sector's dependence on oil by 20 percent and improve energy 
efficiency by 30 percent by 2030.  The GOJ also includes fuel 
cell vehicles, hydrogen production, transport and storage, 
and intelligent transport systems among the 21 priority 
technologies included in former Prime Minister Fukuda's March 
2008 "Cool Earth Innovative Technology Program". 
 
------------------------- 
ACTION PLAN FOR BATTERIES 
------------------------- 
 
¶7. (U) Under the Next-Generation Automobile Fuel Initiative, 
the GOJ's action plan for next-generation vehicle batteries 
consists of two distinct strategies, namely: (1) a research 
and development strategy to coordinate industry, government 
and academia efforts to meet various cost, performance, and 
commercialization targets; and (2) an infrastructure-building 
strategy aimed at developing the regulatory framework, 
standards, safety requirements and physical plant (e.g. 
battery charging stations) to support diffusion of 
next-generation vehicles.  The near-term target (2010) is to 
develop an improved battery for limited-application commuter 
electric vehicles and high-performance hybrids that costs 
around 100,000 yen/kwh (one-half the FY2007 baseline cost of 
200,000 yen/kwh), according to METI Manufacturing Industries 
Bureau Automobile Division official Ryo Maeda.  By 2015, the 
GOJ's target is an advanced battery costing 30,000 yen/kwh 
(one-seventh the FY2007 baseline) with 1.5 times the 
performance of existing technology.  METI's roadmap includes 
an interim target to produce a battery for use in a 
high-performance plug-in hybrid vehicle with three times the 
performance and at one-tenth the cost of the FY2007 baseline 
by 2020.  By 2030, METI has called for production of a 
battery for use in a full-scale electric vehicle with seven 
times the performance and one-fortieth the cost of the FY2007 
baseline. 
 
¶8. (U) According to Maeda, private industry itself is leading 
the effort to meet the 2010 target, while a collaboration 
between industry, academia and the GOJ is working toward the 
longer-term targets.  Since FY2007 the GOJ has budgeted 4.6 
billion yen to support R&D for advanced battery systems. 
(COMMENT: The FY2009 budget proposal, due to become law 
before April 1, includes an additional 2.6 billion yen.  END 
COMMENT). 
 
--------------------------------------------- --------- 
THE JAPAN HYDROGEN AND FUEL CELL DEMONSTRATION PROJECT 
--------------------------------------------- --------- 
 
¶9. (U) The Japan Hydrogen and Fuel Cell Demonstration Project 
(JHFC), launched in 2002, is the GOJ's coordinated effort to 
commercialize fuel cell-powered vehicles.  The project, 
currently in its second phase, targets initial 
commercialization of fuel-cell vehicles in 2015, with 
expected targets of about five million units by 2020 and 15 
million units by 2030.  The project, with a 990 million yen 
budget in FY2009, includes continued demonstration of fuel 
cell vehicles under actual driving circumstances; further 
verification of the safety and durability of hydrogen fueling 
stations; and a campaign to raise public awareness of the 
benefits of hydrogen technology, according METI Hydrogen and 
Fuel Cell Promotion Office Director Makoto Kawahara.  The 
JHFC includes the participation of eight domestic and foreign 
vehicle manufacturers that have developed six types of fuel 
cell vehicles, one fuel cell bus, and one hydrogen internal 
combustion engine vehicle, Mazda's RX-8 RE.  (NOTE: According 
to media reports, MLIT approved on March 5, 2009, Mazda's 
second hydrogen rotary engine vehicle, the Premacy Hydrogen 
RE Hybrid.  At 200 kilometers, the new vehicle's fuel range 
is reportedly twice the distance of Mazda's first model with 
40 percent greater engine output.  Mazda will reportedly 
become the world's first company to commercially lease a 
hydrogen-gasoline hybrid vehicle with an electric battery. 
END NOTE.) 
 
------------------------- 
BUDGET AND TAX INCENTIVES 
 
TOKYO 00000697  003.2 OF 003 
 
 
------------------------- 
 
¶10. (U) In FY2009, METI's total funding for the introduction 
and development of next-generation vehicles and fuel cells is 
JPY29.7 billion, including JPY5.3 billion to promote electric 
vehicle and plug-in hybrid technologies, quick electricity 
chargers, and other clean energy vehicles such as clean 
diesel and LPG-fueled vehicles.  The GOJ is also developing 
various tax incentives to promote electric vehicles, 
including exempting hybrid and electric car purchases from 
the Automobile Acquisition Tax, which typically equals five 
percent of the cost of a vehicle (ref). 
 
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COMMENT 
------- 
 
¶11. (SBU) Given the GOJ's desire to be a world leader in 
next-generation and fuel cell vehicles and its desire to meet 
CO2 reduction goals, economic policy will likely support 
development, sale and overseas cooperation to advance clean 
vehicle technology.  Clean vehicle sale incentives are likely 
to be one component of the upcoming stimulus package, which 
will have the additional benefit of supporting automobile 
manufactures during the current dire sales period. 
POST