Governments Around the World Have Declared their Intent to Achieve a Decarbonized Society
Proactive about preventing global warming, the Biden administration in the United States has established such goals as zero greenhouse gas (GHG) emissions from power generation by 2035, and virtually zero GHG emissions for the entire country by 2050. Furthermore, the Chinese government has declared its goal of carbon neutrality by 2060 with the aim of achieving a decarbonized society. The United Kingdom, Japan, and other developed nations have also announced political support for the field of decarbonization as part of measures to recover from the economic slump caused by the COVID-19 pandemic.
Following the lead of the governments of countries like those mentioned above, many global corporations have announced their own carbon neutrality initiatives. Underlying this is the fact that financial institutions and investors tend to value carbon neutrality and other environmental measures and view them as an indicator of a company’s future prospects and performance improvement. In turn, this is accelerating the move toward carbon neutrality by companies, including their supply chains.
Amid this global decarbonization trend, the amount of attention paid to renewable energy has risen rapidly. For example, the scale of the global solar energy market will see an average annual growth rate of at least 17% between 2020 and 2025. By 2030, installed capacity is expected to exceed 2,000 gigawatts, and renewable energy is forecast to occupy around 13% of all energy produced (according to a July 1, 2021, GII overseas market research report).
In Japan, the market for renewable energy generation systems in fiscal 2020 is estimated to have been 1.7986 trillion yen in total for the five areas of solar power, wind power, hydroelectric, biomass, and geothermal power generation systems. The installation of solar power peaked in fiscal 2014 and has continued to contract since that time. The installation of offshore wind power systems, however, is expected to take off in fiscal 2030 and is forecast to expand more than fourfold compared with fiscal 2020 by fiscal 2035. Overall, the market for renewable energy generation systems in fiscal 2035 is predicted to be 1.7651 trillion yen, a slight decrease compared with the estimate for fiscal 2020 (according to “FIT, Renewable Energy Generation-Related Systems and Services Market, and Industry Entrants Fact-Finding Report 2021” issued by Fuji Keizai).
The Application of Electronics Technology Will Be Essential to Decarbonization
Amid the anticipated global expansion in the market for renewable energy, systems that can compensate for the weaknesses of renewable energy—namely, unstable supply and management—are seen as key to achieving an even more efficient transition away from carbon. Examples include the increased use and improved performance of storage batteries, and the construction of mechanisms for maintaining the power supply via the power network. Also, it is believed that electronic components manufacturers can demonstrate their strengths in this area.
To date, electronic component manufacturers have focused their efforts on research and development aimed at innovations brought about by IT and electronics technology. Meanwhile, the current electronics market is in the middle of a period of great change brought about by AI, big data, IoT, 5G, and other technologies. Adding to this the needs involved in digital transformation under the COVID-19 crisis as well as decarbonization will require the integrated and effective utilization of various innovations.
In the electronics component industry, power semiconductors are currently attracting great attention. Because of their ability to control and transform high voltages and currents, they are used extensively in electric vehicles. Electric vehicles are a well-known solution for realizing carbon neutrality, and the United States, Europe, and China have all announced a common goal of prohibiting the sale of gasoline vehicles in the future and promoting electric vehicles. Currently, the United States and Germany hold the largest market shares in the power semiconductor market, but technological development is also accelerating in Japan, and this is a market that can be said to have great potential.
Besides the above, key areas of activity for electronic component manufacturers in the move toward decarbonization are many and wide-ranging, and the market for each is expected to grow. These include energy conservation, resource conservation, and reducing CO2 emissions from manufacturing processes; developing environmentally conscious products; devices and storage battery systems for renewable energy; and increasing production efficiency by reevaluating production lines and switching to highly efficient production equipment and facilities.
Attention on CCUS and Cap and Trade
Alongside renewable energy, hydrogen, a clean and inexhaustible form of energy, has also gained attention. The domestic hydrogen market is expected to grow to 396.3 billion yen in fiscal 2030, an increase of 34.2 times compared with fiscal 2019. Hydrogen fuel, in particular, used in areas such as power generation, is anticipated to expand to 177.1 billion yen, about 253 times the figure in fiscal 2019 (according to “The Future Outlook for the Hydrogen Usage Market: 2020 Edition” issued by Fuji Keizai).
In addition, CCUS (Carbon Capture, Utilization, and Storage) technologies are being developed which don’t stop at just reducing emissions but actually separate emitted CO2 from other gases and capture it so that it can be buried in the ground or utilized as a new resource. The captured CO2 is combined with other elements such as hydrogen and used in fuel, chemical raw materials, and concrete. CCUS measures applying electronics technologies are being implemented in various countries, and CCUS is also being looked at for the new potential business applications it may hide.
Furthermore, cap and trade schemes for trading CO2 and other greenhouse gas emissions look as if they will be put to good use during the interim before we truly realize a decarbonized society. As the name implies, cap and trade schemes involve the establishment of GHG emission limits (caps) for individual companies; companies then trade excess and insufficient emission amounts between each other, promoting the realization of a decarbonized society across society as a whole.
The Japanese government announced the establishment of a new market for corporations to trade GHG emission amounts in 2021. Around 500 companies actively engaging in decarbonization initiatives are expected to participate. Through Japan’s own regulations, the aim is to head off the EU and other governments that have taken the lead in GHG emissions trading in order to avoid Japanese corporations being put at an excessive disadvantage.
As diverse markets for decarbonization expand on a global scale, how will predominance in areas such as electronics technologies be demonstrated in each market? Going forward, the spotlight will be on the leadership in each country.