EDITORIAL: Renewable energy policy

The use of renewable energy should be promoted through national policy. To do this, the government must explain carefully to the public how this is going to increase costs for households and businesses.

The Kan administration plans to introduce a system that requires electricity companies to buy all the energy generated by renewable energy technologies like solar, wind and geothermal. The Ministry of Economy, Trade and Industry (METI) has put together a tangible plan. The program is intended to be the trump card for accelerating the trend toward a low-carbon society.

Generation costs for renewable energy at the moment are expensive in comparison with thermal or nuclear power generation. Renewable energy cannot spread without government support. That is why the government plans to have electricity companies buy renewable energy at above market rates, and add the increase to the electricity bill. This is an ambitious program that subsidizes renewable energy generation by having end-users pay the costs.

The government seeks to place special emphasis on solar energy. The reason Japan lost its first place in solar power generation volume to Germany five years ago is because Germany used this program as leverage to rapidly spread the use of solar power.

Japan is still on par with Germany in solar generation for private homes, but lacks a program to create massive solar generation facilities called "mega solars." So the government seeks to use the new program to push businesses to enter into the mega-solar market.

Japan is a country lacking in natural resources. It is important not just for global warming but also for Japan's energy security to increase the long-term generation of renewable energy. It is important to seek to become a global leader in the development of renewable energies like solar power.

However, the program is not without problems. Raising the purchase price for electric companies buying the renewable energy will be an incentive for more businesses to enter the market for profit. But if too many businesses start generating renewable energy, the price added onto the users' electricity bill may become excessively high.

The effect will be negative in the long-run if the program ends up forcibly expanding the domestic market, or if the program becomes unsustainable.

The European countries were criticized that costs shifted onto the electricity bill are too high, and are now under pressure to drastically reduce purchase prices. The METI plan, based on the European price levels, estimates that the annual hike in the electricity bill will be 2,400 yen ($28) for average households, and 20 million yen for major factories.

Hiromasa Yonekura, chairman of the Japan Business Federation (Nippon Keidanren), lost no time in voicing his protest and said, "The public burden will be large."

The Kan administration should listen to these opinions and advance the dialogue. At the same time, it seems the government needs to explain to the public, as soon as possible, the effects and the entire cost of the new environmental program--including the global warming tax now under consideration, together with emissions trading.

If we add it all up, how much is it going to cost us?

Until that becomes clear, no doubt many people will have a hard time agreeing to the program.

--The Asahi Shimbun, July 31