The Regulatory Process of the Energy Conservation Law in Japan

March 26, 2002 - 12:00pm
Bldg. 90

We examined the regulatory process of the Energy Conservation Law in Japan. While voluntary compliance was widely observed for large companies, implementation deficits were the case for small-scale ones. An informal and paternalistic regulation style was widely observed. These findings were consistent with preceding studies on the regulatory enforcement of Japanese environmental laws. The Energy Conservation Law has promoted energy conservation efforts on the part of industries, to the extent that conserved energy is associated with reduced costs. Such impacts were derived from two sources: the existence of law itself, and comprehensive performance standards. Both have educational roles in raising the awareness of industries in the realization of cost-cutting potentials through energy conservation. In contrast, detailed procedural and substantive standards had a low profile. They are unpopular among regulated entities and poorly implemented. Comprehensive performance standards were welcomed both by regulators and regulated entities insofar as the standards are deemed reasonable; unrealistic targets for energy intensity improvement of one percent per annum for large factories caused trouble at the enforcement stage. The Energy Conservation Law in Japan had an educational role in the promotion of energy conservation. However, it will not be an effective policy measure to achieve ambitious and costly energy conservation that will be necessary to meet the Kyoto Protocol (Bs target) for two reasons. First, as generally known and concretely identified in this study, a meaningful and effective regulatory framework is difficult to set. Second, a paternalistic and informal regulatory style will create enforcement deficits and undermine policy effectiveness. Alternative policy measures were discussed; among these measures we found most promising a loan incentive scheme to enhance the educational role.

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