Japan’s Energy Transition Ideal: Decarbonization and Green Growth
Japan has set a goal of achieving carbon neutrality by 2050 and has been pushing to expand renewable energy sources like offshore wind and solar. In the automotive sector, the government ambitiously targets 100% electric vehicle (EV) sales by 2035, with EVs positioned as icons of the green society.
These ambitions have been not only symbols of environmental policy but also expected to serve as pillars of new industrial growth. However, the reality is far removed from these ideals.
The Reality of Japan’s Renewable Energy Policy: Energy Transition Stalls
The Cost Barrier Revealed by Mitsubishi Corp.’s Offshore Wind Withdrawal
In August 2025, Mitsubishi Corp. announced its withdrawal from three offshore wind projects off the coasts of Akita and Chiba. The cause was soaring costs of wind turbines driven by heightened global competition and disrupted supply chains. The cancellation of this plan—originally meant to deliver 1.7 GW to approximately 1.5 million households—is a severe blow to Japan’s renewable energy strategy.
Sources: Financial Times, Reuters
Overseas Reactions:
“That’s a reflection of Japanese culture in play… make you feel at ease, then pull the wool over your eyes.”
“Japan has hundreds of nuclear reactors worth of offshore wind energy potential just sitting around untapped. It’s a crime this isn’t being more actively capitalized upon.”
“The cultural cling to ‘proven’ (read old) technology is an issue too… ‘Japan has been living in the year 2000 since 1970’ rings very true.”
The Delay in Solar Panel Recycling and the Absence of Legislation
By the 2030s, Japan is expected to face a surge in decommissioned solar panels—tens of thousands of tons annually. Yet in 2025, the government skipped submitting a mandatory recycling law. The lack of clarity over who bears disposal costs and misalignment with existing regulations are bottlenecks in renewable energy adoption.
Sources: EECC, Japan Times
Overseas Reactions:
“If Japan can’t even establish a recycling system for solar panels, how can they talk about sustainability seriously?”
“This is the classic case of pushing renewables without thinking of the end-of-life costs. Short-term PR, long-term disaster.”
The Harsh Reality of Reliance on Fossil-fuel-fired Power
To compensate for renewable energy’s instability, Japan continues to depend heavily on thermal power. Fuel costs remain elevated—under the influence of the Ukraine War and Middle East turmoil—putting immense pressure on household electricity bills and corporate profits. This starkly highlights Japan’s low energy self-sufficiency and the fragility of its energy security.
Source: MarketWatch
Overseas Reactions:
“I was looking at my Tepco charts and noticed that I’m paying almost 20-30 % more in the past 3 months … prices up more than 40 % more..?”
“Looking at the kWh chart, I am indeed using around 25 % more but somehow prices up more than 40 % more..?”
The Limits of Demand-side Transformation Reflected in EV Slowdown
EVs were intended to symbolize decarbonization, yet real-world adoption stalls. Persistent high battery costs, lack of charging infrastructure, and reduced subsidies have made EVs expensive and inconvenient for many consumers. While European and American automakers cut back their production plans, low-cost Chinese EVs dominate the market; Japan’s share continues to falter. This shows that energy transition struggles not only on the supply side but also on the demand side.
Source: BloombergNEF
Overseas Reactions:
“How do you slow down what you haven’t even started? Toyota is already behind… Especially with China pushing full speed ahead.”
“Japan doesn’t want to trade dependence on foreign oil for dependence on foreign batteries. That’s why hydrogen looks better.”
“Japanese population is very resistant to change… partially due to having many old people.”
The Core Gap: Why Ideal and Reality Diverge
The Limits of Subsidy-Driven Expansion
Subsidies fueled the initial expansion of renewables and EVs, but as costs failed to meet expectations and subsidies were cut, the market’s growth stalled. Without a clear pathway to independence from subsidies, Japan’s energy markets have shown they cannot sustain themselves.
Eroding Global Competitiveness
Europe pushes forward with policy-driven energy transition, China leads with scale and low cost, and the U.S. balances industrial promotion and energy security through the IRA. Japan, while technologically capable, lags due to weak industrial strategy and delayed regulatory frameworks, leaving it at a disadvantage even in key global markets.
Lack of Social Consensus
Energy projects—from nuclear restarts to renewable installations—often face local opposition in Japan. Unlike some European countries, where collective responsibility for energy transition is more accepted, Japan struggles to translate ideals into action due to public resistance and lack of consensus.
Envisioning Japan’s Future Energy Strategy
- Reassess Nuclear Power
Consider small modular reactors (SMRs) and restart aged nuclear plants for stable, low-carbon baseload generation. Challenges include waste management, safety, and rebuilding public trust. - Re-industrialize Renewable Energy Equipment
Produce wind turbines, solar panels, and batteries domestically to reduce reliance on imports, enhance energy security, and support industrial growth. However, the high upfront cost must be shared across society, potentially raising short-term electricity prices. - Diversify Low-Carbon Energy Mix
Combine hydrogen, synthetic fuels, and hybrid technologies with renewables rather than relying solely on EVs. This approach aligns better with existing industrial infrastructure but risks international isolation if global markets pivot strongly toward EVs. - Optimize Energy Demand
Focus on reducing consumption via smart grids, energy-efficient homes and appliances, and behavior change. This avoids costly power supply expansion and builds long-term sustainability, though it requires strong political leadership and societal buy-in.
Closing Summary: The Energy Transition Is a Real-life Matter
Mitsubishi’s offshore wind withdrawal, solar recycling failures, fossil fuel dependence, and EV sluggishness expose the growing chasm between Japan’s ideal energy vision and its current reality.
This gap impacts everyday life—higher electricity bills strain household budgets; rising industrial energy costs affect wages and employment; stalled renewable rollout erodes rural economies; and EV inaction limits consumer choice and raises vehicle costs.
The path forward must move beyond symbolic targets and subsidies. What Japan urgently needs is a pragmatic, credible energy model founded on regulatory reform, industrial strategy, and public consensus. The country stands at a pivotal juncture in defining its energy future.
