Revised Energy Conservation Act (2008)

The Act on the Rational Use of Energy (Energy Conservation Act) is the pillar of Japanese energy conservation policies. The Act was enacted in 1979 in the light of the oil shock. This comprehensive act covers all sectors as follows: Energy management in manufacturing, commercial and transportation sectors; energy efficiency standards for vehicles and appliances (Top Runner Program); energy efficiency standards for houses and buildings. In 2008 the act was revised to strengthen measures to enhance energy efficiency, including those for the commercial sector. Also in this revision, sectoral approaches used in domestic regulation was introduced, to be implemented as of April 2009. a) Regulatory Expansion in the Commercial Sector Before the revision, only large scale factories and workplaces were targeted to enforce the energy management. The revision expanded this site-specific requirement to a company-wide one; a company consuming above a certain amount of energy must implement energy efficiency measures for all of its factories and workplaces. This also expands coverage beyond manufacturing sites, to offices and franchise companies running convenience stores. A new regulation was also added, requiring that a board member be appointed to be in charge of energy management for the whole company. b) Sectoral Approaches as National Regulation (Sectoral Benchmarking) Sectoral approaches have for the first time been introduced as a domestic regulatory measure. Sectoral benchmarks are being established for certain sub-sectors, initially in energy intensive industries. Indicators are established for companies to benchmark their energy efficiency level against others within the same sub-sector, and medium- and long-term targets are set (to be achieved around 2015-2020). Currently, each factory and workplace is required to achieve annually on average 1 % reduction or more in energy intensity. The revision adds benchmarking indicators and associated targets to the above in certain sub-sectors: iron and steel, cement, and electricity suppliers. Targets are set at the energy efficiency level of the best performing companies (top 10%-20%) in each sub-sector based on the average value and standard deviation. Companies covered by the scheme must submit yearly reports on the status of the benchmarking indicator, in addition to the ratio of energy intensity reduction and on the implementation of an energy management system. Based on the companies reports, the government may take necessary measures when it sees substantial lack of efforts in reference to the targets. The measures include guidance, publication of the companys name, and order (with a fine imposed when the company does not adhere to the order). The indicators average value and standard deviation for each sub-sector will also be published by the government based on company reports. The names of companies performing well beyond the target will be also published.

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