Present condition of ESCO business for carrying out climate change countermeasures in Japan

Panel: Panel 5. Market-based instruments

Authors:
Chiharu Murakoshi, Jyukankyo Research Institute
Hidetoshi Nakagami, Jyukankyo Research Institute

Abstract

The ESCO business in Japan started in 1996. Although there was only one ESCO as of 1996, there are now more than 20 companies and entries from utilities have also performed positively. The market scale of ESCO business was 556 million Euro in 2001, and is expected to grow 50% in 2002.

The Japanese government drew up the action plan to cope with COP3 and planned to reduce final energy consumption by 57 million kL-oil equivalent by 2010, of which 1 million kL is expected to be reduced by ESCO business activity. In order to achieve this target, the government contributed the subsidy of 294 million Euro to energy efficiency retrofit for buildings in 2002.

In the private sector, the Japan Association of Energy Service Companies (JAESCO) was established in 1999. It has matured into an organization containing 110 members, and a number of new members are currently joining. ESCO business introduction in local authorities has made less progress.

However, many local authorities are considering introduction of ESCO schemes. By 2010, when all local authorities will have implemented their climate change countermeasures, it is possible that such programs will grow to be the largest ESCO market. It is expected that the ESCO business in Japan will grow greatly from now on. However, there are also many problems to be solved for introduction.

We describe the current situation of the ESCO business in Japan, governmental support for energy efficiency including ESCO business, stance of local authorities, and future market barriers.