If there’s one thing China and Japan can agree on it’s the environment. This is an area in which China has much to learn from Japan’s 20th century revival: Surging economic and population growth on finite land resources demanded smart energy and transport solutions.
Having moved much of its manufacturing to China to help its own emission reductions, Japan is now breathing in smog blown over the East China Sea. As part of efforts to help clean up China’s environment, in December Japan feted the launch of 10 centers in seven Chinese cities to promote the transfer of its homegrown environmental technology.
The announcement, made as Prime Minister Yasuo Fukuda visited Beijing, suggests Japan has the technology China needs, if the latter is willing to pay.
China’s steel plants could save 180 million tons of carbon dioxide per year by applying the Coke Dry Quenching (CDQ) system used in 90% of Japan’s steel mills, said Toshi Sakamoto, executive chair of the Japan’s state-run Climate Technology Initiative. CDQ offers drastically reduced sulfur and dust emissions, but installation costs US$20-40 million. This price can be prohibitive in China’s state-owned steel sector, where quotas have mattered more than efficiencies.
However, Sakamoto insists that reductions in energy use and pollution can pay for the CDQ system within five years. One notable success story is the Shougang Steel Corporation in Beijing, which has saved 27,000 tons of energy per year since it began using the system.
“Domestic [Chinese] copies of the equipment cost half the price but have low energy savings,” Sakamoto noted.
This is not the only area in which Japan can offer expertise honed while combatting its own environmental woes.
“Japan excels in environmental monitoring systems, waste treatment plants … and insulation systems for offices and homes,” said Gerhard Fasol, CEO of Eurotechnology Japan, a consultancy that advises Japanese state and corporate players on technology exports.
The country can also offer guidance on carbon dioxide emissions. As China approaches the global average of 4.6 tons per capita, it is worth examining the processes by which Japan has streamlined energy consumption so emissions come in at 9.9 tons. This figure is quite respectable for a developed economy and compares favorably to America’s annual emissions of 20 tons per person.
The oil crises of the 1970s and 1980s were Japan’s wake up call, according to John A. Laitner, a senior economist for technology policy for the US Environmental Protection Agency (EPA) Office of Atmospheric Programs.
Between 1973 and 1994 petroleum went from 77% to 44% of Japan’s overall energy pie. The natural gas share grew from 1.5% to 14% in that period while nuclear power was ramped up from 0.6% to 10.8% according to statistics collected by the New Energy Development Organization (NEDO), a state body funding research into alternative energy and efficiency technologies.
“[Today] what the US wastes in the production of electricity is more than Japan uses to power its entire economy,” said Laitner.
Japan’s success in cutting emissions was the result of investment in both public transport and fuel efficient automobiles.
Given that transport equipment and machinery make up the bulk of Japan’s China-bound exports, there’s scope for firms to supply China with greener auto technology. But Toyota’s Prius and Honda Civics, which run on hybrid fuel, have thus far had little success in China.
A comparatively high (US$41,361) price combined with a low environmental consciousness among China’s mostly first-time buyers were blamed for low sales of hybrids in 2007. Only 176 units of the Prius, which has been produced by Sichuan FAW Toyota since 2005, were sold in the first half of 2007.
“The 1.5 liter engines are too small and the design is too much too soon for local buyers who prefer to spend cash on a more powerful sedan,” said Koji Endo, auto analyst with Credit Suisse Japan.
Ash Sutcliffe, an auto analyst and editor of www.chinacartimes.com, recommends that Toyota target its hybrids at the mass market – for example, by releasing a hybrid version of the Yaris, priced at US$13,700-16,500.
A sign of desperation perhaps, Honda recently cut prices of its Japan-made Civic Hybrid to US$34,468 in order to compete with the Prius.
“The head of Dongfeng Honda has said it’s a waste of time importing it into China, as it won’t sell,” added Sutcliffe.
Japan badly needs a piece of China’s auto market, which saw sales of 8.7 million units last year. Sales in Japan shrunk 7.6% to 3.4 million in 2007, their lowest since 1972. But rolling out green cars is harder in China, where petrol stations rountinely fail to meet the fuel quality standards that have allowed green automobiles to take off in Europe and Japan.
Japanese public transport solutions may have more luck. The warming of ties between Beijing and Tokyo may have given Japan the edge over rival German technology in winning the lucrative contract for the Beijing-Tianjin train line due to come into operation this year.
Ten eight-car Hayate trains (a series developed by Kawasaki and five other Japanese firms) built by local firm CSR Sifang Locomotive & Rolling Stock will shuttle passengers between the two cities at 300 kilometers per hour.
Bullets to Beijing
Other Japanese-developed high-speed trains are also making an appearance. After laborious negotiations, China bought the Shinkansen technology for trunk lines connecting Beijing with several provincial cities. This will see the travel time from Beijing to Qingdao cut from 12 hours to six, making trains a viable alternative to air travel, said Howard Johnston, managing director of Tramways & Urban Transit, a public transport consultancy advising national governments.
Another option comes in the form of magnetic levitation (maglev) trains. A maglev project currently under development in Japan will see trains hurtling along a 290-kilometer route at nearly 500kph by 2025. China is said to be well suited to maglev trains, but the question is whether Beijing can afford it.
Johnston is convinced a Beijing-Shanghai-Hong Kong maglev would be “revolutionary” and pay for itself in the lower operating and fuel costs involved. However, others are less convinced.
Transport solutions like maglev have emerged in Japan through government-industry collaborations. Efforts to sell them in China have often depended on state-led promotional efforts with little actual diffusion of technology due to worries of overpricing on the Chinese side.
Dr Stephanie Oshita, assistant professor of environmental science and management at the University of San Francisco, argues that there simply hasn’t been enough attention given to the commercial feasibility of the technology in China.
“Projects are piloted without enough focus on finding Chinese firms that can afford to use the technology,” she said.
Japan’s setting up environmental technology centers across China may be the start of helping change that – provided the price is right.