The Centre quarterly newsletter, December 2024 issue, is out!
In this issue:
Call for…
The EU Japan Centre is releasing a weekly press review covering Japan's economic and policy matters.
Economic News
▶ Creation of 'GX Proactive Action Declaration' to Support Companies Actively Engaged in the GX Market
06 Dec, 2024
Ministry of Economy, Trade and Industry of Japan has introduced the "GX Proactive Action Declaration" to support companies driving the creation of the GX (Green Transformation) market. This initiative encourages businesses to adopt low-carbon products and services across their supply chains. Initially focusing on products like green steel and low-carbon hydrogen, the declaration aims to boost market demand by involving a wide range of companies. The declaration is open year-round, with plans to expand target products and continue supporting market creation through working groups.
METI(Japanese): https://www.meti.go.jp/press/2024/12/20241206004/20241206004.html
Establishment of the GX Business Working Group (PDF):
▶ Conclusion of Implementing Arrangement for Fast Reactor Development with France[MH1]
06 Dec, 2024
Japan and France have updated their cooperation agreement on fast reactor development. Japanese and French agencies, including the Japan Atomic Energy Agency (JAEA) and France's Alternative Energies and Atomic Energy Commission, signed an "Arrangement for R&D Cooperation" on December 6, 2024, to advance research in areas like severe accidents, materials, and fuel technology. Additionally, a "Design Cooperation Implementation Arrangement" was signed with FRAMATOME to collaborate on the design and evaluation of fast reactor equipment. The agreements will integrate France's experience into the design of Japan's demonstration fast reactor, supporting joint development efforts.
Mitsubishi Heavy Industries: https://www.mhi.com/news/241206.html
▶ Nuclear reactor in Japan's Matsue restarted for 1st time since 2012
07 Dec, 2024
The No. 2 reactor at a nuclear plant in Matsue, Shimane Prefecture, was restarted on Saturday after meeting stricter safety requirements introduced after the 2011 Fukushima disaster. Chugoku Electric Power Co. plans to resume commercial operations in early January. The reactor, which had been suspended for inspections since January 2012, is similar to those at Fukushima. Local residents, concerned about safety due to the plant's proximity to 450,000 people, have filed lawsuits to block the restart, but their efforts were rejected by the Hiroshima High Court in May.
Kyodo: https://shorturl.at/DmphU
▶ Japan to start CO2 storage exploratory drilling in 2025
08 Dec, 2024
Japanese companies will begin exploratory drilling for underground CO2 storage in 2025, with government subsidies supporting the effort. The Ministry of Economy, Trade and Industry aims to select candidate sites by March and start drilling that year. Five locations are planned, including sites in Hokkaido, Tohoku, Niigata, the Greater Tokyo area, and Kyushu. The government is funding part of the drilling costs, estimated at 10 billion yen ($66.6 million) per site, with a total budget of 32 billion yen for fiscal 2024. Japan aims to store 1% of domestic emissions by 2030 and 10-20% by 2050.
Nikkei Asia: https://asia.nikkei.com/Spotlight/Environment/Climate-Change/Japan-to-start-CO2-storage-exploratory-drilling-in-2025
▶ Japan gov't submits draft extra budget to Diet for economic package
09 Dec, 2024
Japan's government has submitted a draft supplementary budget of 13.9 trillion yen ($92.7 billion) to finance a new economic package aimed at alleviating inflation-related financial pressures on households. The package includes subsidies for energy costs, cash handouts for low-income households, and measures to stimulate industries like AI and semiconductors. However, the plan's passage is uncertain due to the ruling coalition losing its majority in the House of Representatives. The budget will be partially funded by new bond issuances, raising concerns about Japan's already fragile fiscal health. The government aims to spend 3.4 trillion yen on inflation relief and 5.8 trillion yen on economic stimulus.
▶ Japan to regulate tech giants with at least 40 million users
10 Dec, 2024
Japan has adopted a new ordinance to regulate tech giants with at least 40 million domestic users per month, targeting anticompetitive practices. The law, effective from December 19, aims to promote competition in areas like app stores, operating systems, browsers, and search engines. Companies like Apple and Google are likely to be the main targets. It prohibits platform owners from blocking new entrants or favoring their own services. Violations can lead to fines of up to 20% of Japanese sales, with repeated offenses resulting in 30% fines. The law will fully come into effect by December 2025.
Japan Times: https://www.japantimes.co.jp/news/2024/12/10/japan/crime-legal/japan-regulation-tech-giants/
▶ Used cooking oil program to start in Tokyo ward that hosts airport
11 Dec, 2024
Tokyo’s Ota Ward has partnered with Japan Airlines and Daiei to produce sustainable aviation fuel (SAF) from waste cooking oil. The initiative aims to reduce carbon emissions by 60-80% compared to traditional jet fuel. Residents will be encouraged to collect waste cooking oil in special 1-liter bottles, with collection tanks set up in supermarkets and other outlets. The plan also involves schools and community groups to raise awareness. Ota Mayor Akimasa Suzuki hopes residents will help create a carbon-free society, with the project benefiting from Ota’s proximity to Haneda Airport.
Asahi: https://www.asahi.com/ajw/articles/15524685
▶ Japan health ministry to urge businesses to disclose efforts on women's health
11 Dec, 2024
The Japanese health ministry plans to encourage companies to disclose efforts supporting women’s health, like offering "period leave" and health consultations. Businesses with 101 or more employees must include these initiatives in their action plans, which will be made public. The ministry will also introduce a certification for companies promoting women’s health, alongside existing recognition for advancing women’s workplace participation.
Mainichi: https://mainichi.jp/english/articles/20241210/p2a/00m/0na/015000c
▶ Tokyo to make day care free to boost birth rate
12 Dec, 2024
Tokyo plans to make day care free for all preschool children starting in September to address the city's low birth rate. The policy, which previously applied only to second-born and subsequent children, will now include first-borns. This initiative is part of efforts to alleviate the financial burden on families in Japan, where a declining population is a growing concern. Tokyo Governor Yuriko Koike emphasized the urgency of tackling this demographic crisis. The city is also considering a four-day work week for government staff to encourage parenthood. Japan's aging population and labor shortages are further driving these efforts.
Japan Times: https://www.japantimes.co.jp/news/2024/12/12/japan/tokyo-day-care-free/
▶ Proposed 2040 energy targets: 20% nuclear, 40-50% renewables
12 Dec, 2024
Japan's industry ministry is finalizing a new energy plan aiming for nuclear power to account for 20% and renewable energy (solar, wind) to make up 40-50% of the energy mix by fiscal 2040. The plan, which will be presented next week, revises the 2030 targets of 20-22% for nuclear and 36-38% for renewables. As of fiscal 2023, nuclear power and renewables contributed 8.5% and 22.9%, respectively. The new plan will also include some thermal power with decarbonization measures and broader percentage targets due to uncertainty around electricity demand and decarbonization progress.
Asahi: https://www.asahi.com/ajw/articles/15543823
▶ Japan, Britain and Italy to invest equally in fighter jet JV
12 Dec, 2024
Japan, the U.K., and Italy will equally invest in a joint venture (JV) to develop a next-generation fighter jet under the Global Combat Air Programme (GCAP), which aims to deploy a sixth-generation fighter by 2035. The three nations established the GCAP International Government Organisation (GIGO) in December 2023 to manage the project. Each country will contribute 33% to the JV, with companies BAE Systems (U.K.), Leonardo (Italy), and Japan Aircraft Industrial Enhancement (Japan) participating. The JV will be headquartered in Reading, U.K., and led by an official from Leonardo. Japan, the U.K., and Italy will hold equal influence in the project. Saudi Arabia is in talks to join as a partner but will not invest in the JV.
Nikkei Asia: https://asia.nikkei.com/Politics/Defense/Japan-Britain-and-Italy-to-invest-equally-in-fighter-jet-JV
▶ Japan big manufacturers' confidence improves as auto output recovers: BOJ
13 Dec, 2024
In December, business confidence among major Japanese manufacturers improved, driven by recovery in the auto industry. However, firms remain cautious due to global economic uncertainty, particularly U.S. President-elect Trump’s trade policies. The sentiment index for manufacturers rose to 14, while nonmanufacturers’ confidence fell. Retailers and hotel operators faced challenges due to rising wages and staff shortages. The BOJ will review these results in its upcoming policy meeting.
Kyodo: https://shorturl.at/xaQx9
Business News
▶ JERA and BP to merge offshore wind businesses as costs soar
09 Dec, 2024
JERA and BP announced a 50-50 joint venture to merge their offshore wind power businesses, creating a company called JERA Nex bp in the UK by September 2024, pending regulatory approval. The venture will combine assets from both companies, including offshore wind plants in Japan, Taiwan, the UK, and Germany. They plan to invest up to $5.8 billion by 2030. This collaboration aims to address the challenges of rising material costs and declining profitability in the offshore wind sector. The joint venture will manage 1 GW of operational capacity and 12 GW under development, focusing on projects that meet strict investment criteria. The companies see Japan and Europe as primary markets, with potential for expansion in Asia.
Nikkei Asia: https://shorturl.at/2VMns
▶ Bezos-backed U.S. chip designer plans foray into Tokyo
10 Dec, 2024
U.S. chip designer Tenstorrent is launching a business in Japan to design advanced semiconductors, targeting sectors like self-driving technology and robotics. The company plans to open an office in Tokyo and hire about 40 designers by 2025, with the aim of expanding to 100 designers. Tenstorrent may outsource production to Japan's Rapidus, a government-backed chipmaker, as part of its collaboration in artificial intelligence semiconductors. Japan faces a shortage of chip designers due to past industry decline, and Tenstorrent's entry could help address this gap. The global chip design market is expected to grow significantly by 2033. Tenstorrent operates on a fabless model, outsourcing production to Taiwan Semiconductor and Samsung.
Nikkei Asia: https://asia.nikkei.com/Business/Tech/Semiconductors/Bezos-backed-U.S.-chip-designer-plans-foray-into-Tokyo
▶ Hitachi Rail to deliver 70 train cars to U.K. in $640m deal
10 Dec, 2024
Hitachi Rail has secured a £500 million ($640 million) order to produce 70 train cars for UK rail lines, to be leased and operated by FirstGroup for 10 years. Hitachi will manufacture 14 trains, each with five cars, at its Newton Aycliffe factory, with deliveries starting in 2027. The trains, designed for express routes, will use batteries or diesel engines to operate on non-electrified tracks. Maintenance services are also included in the deal. Additionally, FirstGroup has the option to purchase up to 13 more trains, should its expansion plans succeed. Angel Trains will purchase the carriages from Hitachi and lease them to FirstGroup.
Nikkei Asia: https://shorturl.at/OykDF
▶ Next-generation cargo spacecraft to resupply ISS unveiled
11 Dec, 2024
Mitsubishi Electric has unveiled its contribution to Japan's next-generation HTV-X cargo spacecraft, developed for the Japan Aerospace Exploration Agency (JAXA) to deliver supplies to the International Space Station (ISS). The HTV-X, which will replace the retired Kounotori HTV, is set for launch in fiscal 2025. Mitsubishi Electric developed the spacecraft's core functions, including electricity, control, and communications, while Mitsubishi Heavy Industries is developing the cargo hold. The HTV-X will have 1.5 times the cargo capacity of its predecessor and may later be modified to transport supplies to the U.S. Gateway space station orbiting the moon.
Asahi: https://www.asahi.com/ajw/articles/15545673
▶ Honda to end self-driving tie-up with GM as Cruise unit founders
12 Dec, 2024
Honda Motor will dissolve its self-driving vehicle partnership with General Motors (GM) after GM announced its exit from autonomous-taxi development. GM plans to buy out remaining shares of its autonomous-vehicle subsidiary, Cruise, and merge its team with GM. This move halts plans to launch a self-driving taxi service in Tokyo by 2026. Honda had invested $852 million in Cruise to develop self-driving taxis globally, but the exit puts these plans on hold. Developing autonomous vehicles is costly, and Honda now faces challenges in finding a new partner for the project.
Nikkei Asia: https://shorturl.at/ika13
▶ Fossil fuels initially needed for AI boom, Tepco adviser says
12 Dec, 2024
The rise of artificial intelligence (AI) is expected to significantly increase electricity demand, initially met by fossil fuels before transitioning to nuclear power. Data centers, essential for AI, are driving this surge, particularly in the U.S. and Japan. While companies like Microsoft and Google invest in nuclear power, it's not an immediate solution for all. In the U.S., natural gas will be used temporarily until nuclear options, such as small modular reactors, can be developed. In Japan, despite nuclear power's sensitivity post-Fukushima, growing electricity demand may result from expanding data centers and semiconductor plants.
Japan Times: https://www.japantimes.co.jp/news/2024/12/12/japan/fossil-fuel-ai-need/
▶ NTT to Offer Less Power-hungry Server, with AI Set to Bring Boom Times
13 Dec, 2024
Nippon Telegraph and Telephone Corp. plans to launch a new energy-efficient server by fiscal 2026, using IOWN, a next-generation optical technology that reduces power consumption by nearly 90%. Designed for data centers, the server is expected to be unveiled at the 2025 Osaka-Kansai Expo, where it will demonstrate its power-saving capabilities. The technology replaces electrical signals with optical signals for communication and computing, significantly cutting energy use. NTT aims to promote the server and showcase its potential in AI-driven applications at the Expo, highlighting its sustainability benefits for data centers.
Yomiuri: https://japannews.yomiuri.co.jp/business/companies/20241213-227602/
▶ Toyota courts telecom partners to develop 'smartphones on wheels'
13 Dec, 2024
Japanese automakers, including Toyota, are partnering with telecom companies and investing in semiconductors to develop software-defined vehicles (SDVs) and catch up with U.S. and Chinese competitors. These vehicles rely on software updates for features, similar to smartphones. Toyota, Honda, and Nissan are focusing on software and AI integration for EVs and self-driving cars. However, the shift to software-centric design presents challenges for traditional automakers.
Nikkei Asia: https://asia.nikkei.com/Business/Automobiles/Toyota-courts-telecom-partners-to-develop-smartphones-on-wheels
▶ Fujifilm eyes AI demand by expanding South Korea chip material plant
13 Dec, 2024
Fujifilm Holdings will build a new facility at its chip materials plant in South Korea to increase production of CMP slurry by 30%, meeting demand from local memory-chip makers like SK Hynix and Samsung Electronics. The company plans to invest several billion yen, with mass production starting by spring 2027. This move is driven by the growing market for high bandwidth memory (HBM) as AI technology expands. Fujifilm is also investing in CMP slurry production in the U.S., Taiwan, and Japan, and aims to invest 170 billion yen in its semiconductor materials business by 2027.
The EU-Japan Centre currently produces 5 newsletters :
Joint venture established in 1987 by the European Commission (DG GROW) and the Japanese Government (METI) for promoting all forms of industrial, trade and investment cooperation between the EU and Japan.
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