Japan's Energy Dependence Leaves it Exposed to Global Conflict, Says New Report

New report warns Japan’s LNG strategy could undercut national resilience

1. Japan faces geopolitical challenges that make its high level of dependency on fossil fuel imports a security risk.
2. Strategic investment in clean energy offers a pathway to energy security and strengthening national resilience, while allowing Japan to meet its climate goals.
3. In the interim, as Japan continues to use liquified natural gas, meeting climate goals will require prioritising supply chain methane abatement. 

Tokyo, 22/7/2025 9:00GMT: The Climate Bonds Initiative has published a new briefing that calls on Japan to fast-track its Green Transformation (GX) strategy by reducing its long-term reliance on fossil fuel imports and investing more heavily in domestic clean energy generation. 

The report, Revisiting Japan’s Sustainable Growth Strategy, highlights how Japan’s continued dependence on imported fossil fuels — especially liquefied natural gas (LNG) — has become a critical vulnerability amid escalating geopolitical instability. With 99.7% of oil, 97.7% of LNG, and 99.6% of coal sourced from abroad, Japan’s energy system is acutely exposed to global supply shocks. 

While LNG has sometimes been positioned as a “transition fuel,” new research shows that methane emissions across the supply chain significantly undermine its climate credibility. 

Despite recent progress, including the launch of Japan’s sovereign Climate Transition Bond and the CLEAN initiative on methane emissions, Japan’s 7th Strategic Energy Plan continues to promote fossil gas through new infrastructure and long-term contracts. The briefing warns that this approach is inconsistent with Japan’s 2050 net-zero target, and suggests that a commitment to renewables and rapid, credible transition could establish Japan as a leader in green transition. 

The report identifies five priority actions Japan should take to align its GX ambitions with the current global context: 

1. Accelerate methane abatement across the LNG supply chain
2. Modernise and expand the power grid to unlock renewable energy
3. Enhance energy system resilience through storage and virtual power
4. Adopt international best practices to speed up energy market reform
5. Treat nuclear as transitional, with transparency and public trust 

Clean energy, particularly wind and solar, is identified as Japan’s clearest path to increased self-sufficiency, regional revitalisation, and energy sovereignty. Studies suggest that renewables could supply up to 80% of Japan’s electricity by 2035, if supported by investment in transmission, storage, and permitting reform. 

 Sean Kidney, Climate Bonds CEO, said: “Japan’s energy security is now directly tied to its climate leadership. Clean energy is no longer just a sustainability issue, but a national resilience imperative. Japan has shown exceptional leadership on green transition with its GX plan and sovereign issuance. Now, it’s time to put those commitments into action.”  

<ENDS> 

Notes to the editor:  

About the Climate Bonds Initiative: Climate Bonds is the leading international non-governmental organisation mobilising global capital for climate action. We drive the growth of the green and sustainable debt market through science-aligned frameworks including our taxonomies and standards, our Certification, our data and insights, and our provision of expert policy and technical advice. More information on our website here. 

Disclaimer: The information in this communication does not constitute investment advice in any form, and the Climate Bonds Initiative is not an investment adviser. Any reference to a financial organisation, debt instrument, or investment product is for informational purposes only. Links to external websites are provided solely for informational purposes, and the Climate Bonds Initiative assumes no responsibility for their content. 

The Climate Bonds Initiative does not endorse, recommend, or provide advice on the financial merits or suitability of any debt instrument or investment product. No information within this communication should be construed as such, nor relied upon when making any investment decision. 

Certification under the Climate Bond Standard solely reflects the climate-related attributes of the use of proceeds for the designated debt instrument. It does not assess the creditworthiness of the instrument, nor its compliance with national or international laws. 

All investment decisions remain the sole responsibility of the individual or organisation. The Climate Bonds Initiative accepts no liability for any investments made by individuals or organisations, nor for any investments made by third parties on their behalf, based wholly or in part on information contained in this or any other Climate Bonds Initiative public communication.