Japanese climate change u-turn could affect FIT

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Today's announcement of the Japanese government's intent to row back its climate change commitments is likely to color a reassessment of the country's generous FIT regime in March, according to one solar analyst.

Ash Sharma, senior director of solar research for market research analysts IHS, told pv magazine that, although IHS remains bullish on Japanese solar, this morning's announcement in Warsaw is likely to see Japan's FIT payments go in only one direction in four months' time.

"I'm speculating, and there is no direct link (between the climate change announcement and the solar FIT) at the moment, but it's natural to predict that if a country reduces its greenhouse gas reduction targets there will be a need to dial back what they are doing on solar deployment," said Sharma.

"I would say the ceiling tariff will be revised again at the end of March and any changes to greenhouse gas policy could have a negative effect on that and could then further reduce the tariff.

"There has been negative news coming out of Japan about reducing solar incentives for solar, or maybe closing the residential program, for a while now.

Still bullish on Japanese solar

"But we are still bullish on Japanese solar. This year it will be the world's second largest market – maybe the first depending on the fourth quarter – and it will be big next year. We certainly expect Japan to be among the top five global markets next year. Even with a reduction, the FIT program is still generous, arguably too generous at this stage."

Japan garnered condemnatory headlines this morning after announcing at the COP 19 (Conference of Parties) climate change summit in Warsaw that it would slash its greenhouse gas (GHG) reduction targets as a result of closing down the country's nuclear reactors in the wake of the Fukushima meltdown two years ago.

"Given that none of the nuclear reactors is operating, this is unavoidable," said Japanese environment minister Nobuteru Ishihara, according to a Reuters report today.

New figure is a rise on 1990 emissions

The report stated Japan – which, according to Reuters, relied on nuclear for 26% of its energy mix pre-Fukushima – will now target a 3.8% reduction in its 2005 carbon emissions by 2020, a figure that would represent a 3% rise from 1990 levels and a u-turn on its previously stated aim of a 25% reduction on 1990 emissions.

The Japanese environment ministry was unavailable to confirm details of the change in GHG commitments.

Any knock-on effect for solar will send tremors around the world with global cmpanies at every stage of the supply chain scrambling to get a piece of prime minister Shinzo Abe‘s generous-FIT-driven solar market.

Chinese solar developer and polysilicon manufacturer GCL-Poly, Japanese thin film maker Solar Frontier and German inverter manufacturer SMA were all unavailable to comment at the time of going to press.

The Japanese External Trade Organization (JETRO) was also unwilling to comment but may have to revise a press release on its website trumpeting foreign investment in solar in the country.

The release cites a planned JPY300 billion (US$3 billion), five-year solar commitment by Goldman Sachs Group and further investment pledges by GCL-Poly (JPY100 billion) and Macquarie Group (JPY100 billion over three years for solar and wind).

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