<%@LANGUAGE="VBSCRIPT" CODEPAGE="1252"%> WorldTribune.com: Mobile — Managing energy: U.S. could learn from the Japanese model

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Monday, July 7, 2008 Free Headline Alerts

By Sol Sanders

As the G8 summit of the world’s most important economies convenes under Japanese chairmanship in Hokkaido, it is an appropriate time to review one of the country’s startling success stories.

Tokyo has come closer than any of the other industrial societies to managing one of its most critical problems over the years – its almost total reliance on imported sources of energy. [Nuclear energy supplies about 30 percent of Japan's electrical power but 80 percent of its energy is based on imports of fossil fuels.]

The exercise would be all the more beneficial for the rest of the assembled who if truth were known have not done all that good a job at managing their part of the problem. And with the world economy teetering on a major downturn with problems of energy cost inflation highest on the list of woes, it could be instructive.

Prime Minister Yasuo Fukuda has said he plans to present Japan’s energy experience as a contribution to the discussions which are likely to circle around this central issue. But that is problematical. Fukuda is having a very hard time at managing to communicate with his own countrymen in an administration that has suffered more than its share of hoof in mouth disease. If he can do it remains to be seen.

Of course, energy conservation is mother’s milk to the Japanese as is the whole concept of saving and thrift. The world’s latecomer to the industrialization process has more than the rest of the modern developed world not forgotten its relatively recent poverty-stricken past only 150 years ago.

Perhaps its massive destruction and loss in World War II reawakened or slowed the process of waste and conspicuous consumption that has overtaken European and American societies since the end of that conflict. But Japanese still tend to save, and, in fact, there is an argument that its unusually high savings rate – until recently largely held in household accounts – has been an inhibitor in recovering from the implosion of The Bubble Economy in the early 1990s and the decade of stagnation which followed it.

The energy problem was apparent to all when Japan resumed its pre-1936 pattern of development in the 1950s. To all intents and purposes Japan simply picked up where it had left off before its militarists began the disastrous and bloody adventures on the Mainland of Asia and the attack on the U.S. No one would forget in Japan that it was the American oil embargo which finally tripped the Japanese militarists into attacking Pearl Harbor. The cost and use of energy would be a chief ingredient of its success or failure of the rebuilt economy.

Japanese planners were cognizant of the problem in all its ramifications. Tokyo moved with considerable expedition, for example, to close down its inferior coal mining operations in Kyushu. They had been run for several decades, in part, with virtual slave labor imported from Occupied Korea. That was in spite of the fact that the mine closures caused extended social and political friction along with the switch to imported coal and oil.

Then so long as it had control of foreign exchange allocation with a blocked yen, it played a rather simple but clever game with the major international oil companies. It rewarded those who brought in oil at lowest prices and highest quality with increasing allocation of shares of a rapidly growing market – so that all during the period of highest growth of its postwar reconstruction, it had the lowest energy costs of any major industrial country.

There was a concerted effort not to get into the oil business overseas – with one horrendously failed example. That would have used its own scarce capital to get proprietary ownership in the fungible and then abundant world energy markets. [Beijing please note!]

When the first oil crisis of the 1970s descended on the industrial world, Japan, as the largest and most vulnerable victim with its total dependence on imported fossil fuel, responded with emergency measures. But unlike the U.S, and Western Europe, when the crisis receded, it did not abandon its efforts. So well has policy strategy worked, that according to the International Energy Agency, Japan consumed half as much energy per dollar’s worth of economic activity as the European Union or the United States, and one-eighth as much as China and India in 2005.

Japan’s reputation has been partially sullied with the wretched, unworkable Kyoto Accords of 1997, put together in a unrealistic fashion in its ancient capital with its appeal to the environmental freaks. Its own energy solutions have been elsewhere. True, it is leading the charge toward hybrid cars. But Japanese manufacturers have never been ones to turn down the opportunity of cashing in on fads, however marginal and temporary.

But the real story of Japan’s energy conservation has been in the relatively unheralded but insistent nuts and bolts of energy fixes in its major and minor industries. Recovery of heat for power generation from exhaust, for example, has been high on that list. And special equipment developed in Japan has now become an export item what with the increase in world oil and gas prices.

Because of these micromanaged adjustments and despite the huge increases in production in the 1970s and 1980s, Japan has maintained a relative level of fuel consumption. This has been done even in such high energy consumers as steel where the Japanese claim to have spent $45 billion on energy conservation techniques.

Fukuda has been trying to dampen down expectations for the Summit to find instant solutions – such as the Kyoto attempt for world pollution – to the growing problem of energy prices and world food price inflation.

You get some idea of the modesty of Japanese proposals which have been so successful in the past with his current statements with Fukuda’s pre-Summit statements.

"Agreeing on this medium-term target is the core challenge for U.N. negotiations that will take place up to the end of 2009," Fukuda said. "The G8 is not a forum to agree on that target."

Turning to its own climate change efforts, Fukuda has said Japan will try to cut gas emissions by 60 percent to 80 percent by 2050, but the government will not reveal its medium-term goal until sometime next year.

"It is a complicated issue which cannot be solved in the short term"," Fukuda told a group of news agencies in an interview ahead of a Group of Eight (G8) leaders' summit meeting. "The G8 needs to set the direction by sending a message."

But it isn't that Fukuda will not be trying to make an impact. Speculation has been rife in recent weeks that his administration is failing, that he might be forced to move aside for still another Liberal Democratic Party [LDP] leader. He is the second after the charismatic Junichiro Koizumi voluntarily stepped aside at the height of his popularity in 2006, leaving behind a huge LDP majority coalition in the Lower and ruling house. [The opposition has taken control of the upper and less powerful house and is harassing Fukuda and the LDP with non-binding resolutions.].

Fukuda will have his photo opportunities at the G-8 include meetings with U.S. President George W. Bush, German Chancellor Angela Merkel and Russian President Dmitry Medvedev, as well as Chinese President Hu Jintao. He will also meet with heads of state from South Africa, Mexico and South Korea. All that should help his sagging poll ratings.

Prospective candidates for the prime ministry are waiting in the wings. Japan's former foreign minister, Taro Aso, whom Fukuda narrowly defeated in the LDP's leadership election last September, said in a June 2 speech that the country had lost its ``competitive edge.'' Lower house lawmaker Yuriko Koike, who hopes to be the country’s first woman prime minister, said in an April 15 interview that Fukuda needed to ``lead more assertively.''

But whatever the outcome for Fukuda himself, the patient energy conservation procedures will continue in Japan. They account, in part, for why some Japanese manufacturers – facing increasing costs and no real solution to the problem of intellectual property protection in China – are pulling back to build new plants in the country. [Toyota, for example, has apparently put on hold its massive plant construction program in the U.S. – in the face of what looks to be a cyclical downturn in demand but also rising costs of the kind Detroit has long wrestled with for years.]

The greatest threat to the Japanese economy – the demographic catastrophe – may even get some help with LDP members finally turning their hand to problems of nationality and immigration of foreign labor. The coming labor shortage and the heavy weight of the fastest aging population in the industrial world hangs heavily over future prospects. But if something can be done, it probably will be in the same tedious but effective way Japan has tackled the energy problem over the years. Some of those making the more bombastic energy proposals during an American presidential campaign season might take note.

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