Suga commented that “Responding to climate change is no longer a constraint on economic growth”. Absolutely right.
He added that “taking assertive measures against climate change will lead to changes in industrial structure and the economy that will bring about growth”. I.e. going green will mean economic growth.
This is a significant step-up in climate ambition by Japan, to be applauded. The change brings Japan into line with 2050 net-zero targets in the European Union (EU) and in South Korea, and China’s recent commitment to carbon neutrality by 2060. If the US Presidency changes next month the US is expected to add its own 2050 net-zero commitment. The EU, China, Japan, Korea and the us are together responsible for more than half the world’s GDP, and over half the world’s emissions.
Japan by itself is the world’s third-largest economy, and fifth-largest CO2 emitter. The country’s energy mix currently includes 88% fossil fuels; this will change dramatically to meet the new target, with big impacts expected for fossil fuel suppliers like Indonesia and Australia (Japan is Australia’s largest market for coal). Expect a further dash for the exits by coal investors.
And finally, green bonds. There have been some USD23.5 billion of green bonds issued in Japan to date, tiny in comparison to the $13 trillion of bonds outstanding in the country. We are going to see a lot more Japanese green bonds in the future.