Government Leadership on Climate Change: The Japanese Solar Power Solution

There is good news out of Japan this week where the Environment Minister Tetsuo Saito tabled a plan before the Council on Economic and Fiscal Policy that would see significant public investments in solar power. A few hours ago the Council released a document entitled “Growth Strategy through Low Carbon Revolution” (my translation), that lays out an aggressive plan to halve the cost of solar power in Japan over the next three to five years. Here how it works: the government would purchase massive numbers of solar panels from industry in order to furnish schools, municipal offices and other public institutions on a scale that would allow them to generate solar power for their own needs while also producing surplus electricity that they would sell back to the utilities ( a feed-in tariff system). The power companies in turn would be obliged to purchase this green energy at twice the rate of conventional power. If all goes according to plan, then the government projects the cost of solar power can be reduced from 49 ¥/kWh to 24¥/kWh. The Japanese MSN news site is already heralding this as a “green school plan”.

Most climate change policy experts now agree that individual voluntary actions (switching lightbulbs, etc.) to conserve energy are necessary but not sufficient measures for tackling the problem. Indeed, as economists such as Mark Jaccard assert, without an overarching shift in government policy – to price carbon, and thereby lower the relative cost of alternative energy sources, we are basically spinning our wheels. That is why this government initiative in Japan is so encouraging. It offers to stimulate economic growth in a sector in which Japanese firms are competitive, while simultaneously providing a viable strategy to scale up the use of renewable energy sources. Most importantly it provides a heartening example of top-down government leadership to arrest climate change.