Japan's Green Energy Strategy

Exploring the Future of Arab-Japan Relations in a Changing Energy Landscape

Introduction

In an era of evolving energy landscapes and geopolitics, the future of Arab-Japan relations, particularly with the United Arab Emirates (UAE), is under scrutiny. These relations, once underpinned primarily by oil trade, are evolving due to shifts in energy demands, policy goals, and strategic visions. While the outlook is uncertain, two academic perspectives predominate: one foresees a decline in these relations due to decreased oil dependency, while the other emphasizes the potential for continued growth and cooperation in various fields. This article aims to elucidate these viewpoints.

Perspective One: Decline due to Decreased Oil Dependency

One argument is that the Arab-Japan relationship could face decline as Japan makes progress in diversifying its energy portfolio. This argument revolves around the principle that Japan's strong push towards green energy and reduced carbon emissions could decrease reliance on Arab oil, thereby affecting the vitality of their bilateral relationships. This argument is based on the fact that Japan has initiated a shift towards green energy adoption in a substantial way (Takahashi, 2020).

Japan's "Green Growth Strategy," launched in 2020, underscores this shift, as it sets the ambitious goal of achieving a carbon-neutral society by 2050 (METI, 2014). This strategy outlines targeted policies and measures to promote renewable energy, energy efficiency, and advanced technologies such as hydrogen and carbon recycling. The strategy's implementation could fundamentally reshape Japan's energy demand landscape, reducing its traditional dependence on oil and other fossil fuels. As Takahashi (2020) points out, Japan’s trade ministry has issued a “roadmap to shepherd Japan’s economy away from fossil fuels, and foster growth in green energy industries to bring within reach Prime Minister Yoshihide Suga’s pledge to eliminate net carbon dioxide emissions by 2050.” Indeed, Japan is essentially calling “for strong government spending to subsidize and incentivize emissions reduction, and innovation in more than a dozen industries — details the potential economic growth that can be expected if the country reaches net zero carbon emissions (Takahashi, 2020). The report from Japan’s trade ministry gives “a tentative framework to support Suga’s vow in October to achieve decarbonization within three decades, it represents a major shift in the central government’s attitude in treating renewable energy not as a barrier to economic growth but as a catalyst” (Takahashi, 2020). With this push, dependence on oil from the Middle East is expected to decline substantially.

Japan, as the world's third-largest economy, has been heavily reliant on Arab nations for its oil supply for many decades (IEA, 2021). In 2019, more than 80% of Japan's crude oil imports came from the Middle East, underscoring the importance of the region to Japan's energy security (EIA, 2020). However, ongoing energy transitions, including the growth of renewable energy, the potential restart of nuclear power plants, and the rise of electric vehicles, are challenging this status quo. If Japan shifts away from fossil fuels, it stands to reason that the nation will have less reliance on Arab states and therefore less interaction with them due to this increase in energy independence.

The surge in electric vehicles (EVs), for instance, could significantly reduce oil demand in the transportation sector. Japan, being home to automaking giants such as Toyota and Nissan, is a major player in the global EV market. The country aims to make all new passenger cars electric by 2050 (METI, 2014), a move that could decrease oil imports in the long term.

In light of these developments, skeptics might suggest that the traditionally oil-centric ties between Japan and Arab nations may be under significant stress. For example, at the end of 2022, Arab News (2022) reported that while the UAE and Saudi Arabia accounted for 76.4% of Japan’s oil needs, oil imports were actually trending downward. Thus, the argument is that as Japan gradually lessens its oil dependency, the dynamics of its relationships with oil-rich Arab countries could change, leading to a possible decline in bilateral relations. However, this is only one side of the issue. The other side has its own arguments as well.

Perspective Two: Continued Growth and Cooperation

Conversely, there is another side of the debate that offers a more optimistic outlook, and it goes like this: despite shifts in Japan's energy landscape, there are reasons to anticipate continued growth and cooperation between Japan and the Arab world, especially the UAE (Abdullah & Al-Tamimi, 2015). This outlook is based on the fact that Japan is not seeking to discontinue its relationships with the Arab world but, rather, diversify them as well—just as it is doing with its energy sector at home (Al-Faheem, 2022). As Al-Faheem (2022) explains, the relationship between Japan and the UAE, for instance, goes back more than half a century, nad “the strong ties between the countries are not restricted to tourism or economic and energy domains.” This means there is a lot of solid history and support upon which the two states can erect a relationship even as Japan transitions to cleaner energy. The relationship is also one in which the two states have corresponding views on how to grow into the 21st century: “We now see diversified economic co-operation, with the UAE hosting approximately 340 Japanese companies. According to a survey by the Japan External Trade Organisation, 75 per cent of Japanese companies in the UAE regard the ‘merits of free zones and special economic zones’ as one of the biggest advantages of doing business in the country. And despite the challenges of the pandemic, new horizons of economic co-operation have emerged between the UAE and Japan, such as Japan’s first fuel ammonia and carbon recycling co-operation agreement with the Abu Dhabi National Oil Company. Numerous other agreements in the energy field have further illustrated the growth of UAE-Japan economic ties. In 2021, the UAE and Japan signed a hydrogen co-operation agreement, aiming to enhance investment in the hydrogen sector while realising joint ambitions to accelerate the energy transition towards a low-carbon future” (Al-Faheem, 2022). On top of all this, this relationship also supports “the direction of the two countries to fulfill commitments to combat climate change made under the Paris Agreement. Both the UAE and Japan have announced plans to achieve Net Zero Carbon Emissions by the year 2050, and the UAE will host the climate summit Cop-28 next year to bring together world leaders in driving this change” (Al-Faheem, 2022). These are two countries that were previously heavily invested in and dependent on fossil fuels—now they are gearing up to tackle climate change and shift toward clean energy solutions while maintaining strong economic and diplomatic ties.

In fact, Al-Faheem (2022) summarizes the growth prospects of Japan-Arab ties with these concluding remarks: “In bringing the world together to inspire future generations, Japan will host an Expo where participants will develop solutions to contemporary challenges and send a message of solidarity to the international community. Fifty five years after the UAE’s first appearance at Expo, the UAE will proudly stand with Japan in celebrating how far both countries have come as partners and as global beacons of prosperity, development and growth.” What can be seen here is an alliance that is grounded on issues that matter—climate change, social care, international respect and cooperation, and real growth. It is, in other words, a relationship that is set to prosper rather than decline in the coming years.

Jamal Abdullah and Dr. Naser Al-Tamimi of the Al-Jazeera Centre for Studies noted that “although Japan has drawn up an ambitious policy to diversify its energy sources and imports, it will continue to import large amounts of oil and LNG over the next two decades. Since these goods are vital for global economic growth, Japan cannot ignore repercussions of developments in the Middle East region. In particular, the Fukushima disaster and its aftermath affirmed the importance of the Gulf region to Japanese decision makers. Japan has also pioneering experience in the field of energy efficiency, which all countries in the region can benefit from. In addition, the new developing energy trends in the GCC countries include more energy efficiency in buildings, district cooling, and smart grids. These trends increasingly affect the direction of their energy policy. It is likely that the Gulf countries will allocate billions of dollars for renewable energy projects in the coming years, and this in turn would open the way for Japanese companies to invest and develop relations in the new sectors in the region” (Abdullah & Al-Tamimi, 2015). In other words, Japan and the Arab world are destined to be together for many years yet to come.

Researchers even highlight the UAE's ambition to diversify its economy as outlined in its Vision 2021 (UAE Vision 2021), and its strides in non-oil sectors such as renewable energy, technology, security, tourism, and cultural exchange as viable areas for increased collaboration. With COP28 in view, the UAE's commitment to sustainability, such as the Noor Abu Dhabi Solar Plant, already shows a readiness to partner with Japan on the global stage for sustainable solutions: the Noor Abu Dhabi (2023) “is one of the first initiatives to deliver the UAE’s Energy Strategy 2050. Having more than 1200 MW Capacity of fully operational photovoltaic technology marks a significant milestone”—and the plant is currently celebrating three years of clean energy production (Noor Abu Dhabi, 2023).

One could also make the argument that the importance of technology partnerships continues to exist. The UAE's investment in Japan's technology sector, and Japanese companies' keen interest in the UAE's thriving digital market, form a strong basis for continued cooperation (Al-Faheem, 2022). The recent surge in bilateral security agreements and Japan's ongoing involvement in regional maritime security also reinforce the strength of their relationship (Al-Faheem, 2022).

Conclusion

The future of Arab-Japan relations is indeed unfolding at a juncture of various dynamic forces. From an energy perspective, the shift from fossil fuels to renewable energy sources is triggering changes in the relationships between traditional oil exporters, such as the Arab nations, and importers like Japan. As Japan marches towards its goal of a carbon-neutral society, the nature of its interaction with Arab nations, particularly the UAE, is bound to transform.