Sony Could Move Operations Out Of Japan Due To Lack Of Renewables
What’s happening? Sony and other organisations have told the Japanese government they may look to move manufacturing operations overseas if renewable energy procurement in the country is not made easier, as they are struggling to meet the demands of customers, such as Apple, for all-renewable supply chains. The firms reportedly told Japan's administrative reform minister, Taro Kono, it is difficult to purchase renewable power in the country due to limited quantities and high prices.
Why does this matter? This story highlights the influence Western corporates have in dictating the pace of decarbonisation beyond their direct operations – and the nature of it.
Apple’s supplier clean energy programme has a target to transition the electricity use across the firm’s entire supply chain to 100% renewables by 2030, with a total of 71 suppliers across 17 countries committing to the goal. Sony is not on the list. The firm recently announced a target of 15% renewable electricity use by 2025, and it wants its facilities globally to run on clean energy by 2040 – a decade later than Apple’s vision.
As the Financial Times highlights, Sony’s Japan factories, where it makes image sensors for iPhones, could be a sticking point. Minister Kono reportedly acknowledges the country is lagging behind others on renewables – with complex regulations, grid access and market design blamed for the slow adoption.
Japan has other decarbonisation issues. Its decision to close its fleet of nuclear power stations following the 2011 earthquake, tsunami and Fukushima disaster has resulted in it relying far more heavily on liquefied natural gas, which increased its carbon emissions substantially. There are discussions on restarting reactors, but these have been met with heavy local opposition.
While Japan and other neighbouring countries have set their own net-zero targets, and renewables will form a part of reaching these, the slow pace of renewable energy development may mean other technologies such as carbon capture and storage are favoured to decarbonise. Hydrogen is reportedly forming a large part of the country’s future energy plans, but it may be this is fossil-fuel derived with emissions removed – i.e. it will take the form of blue hydrogen.
More generally, Japanese executives have warned against the West setting the standards on decarbonisation. Banking on renewables and EVs would not be favourable for Trans-Pacific Partnership members, where coal power is prevalent and there is a strong history of hybrid vehicle development, meaning other decarbonisation technologies may emerge.
Will such energy supplies fall into the definition of what firms like Apple deem as “clean energy”?
Lateral thought from Curation – Aside from energy policy, there are other areas where there has been a divergence between Asia Pacific nations and the West – most notably of late in the success in dealing with the effects of Covid-19. This is something the West has spectacularly failed at in relation to other nations, particularly those in the Asia-Pacific region.
Asian countries may feel it unnecessary to follow the lead of Western governments and corporates when there has been such a poor response to dealing with this global pandemic in places like Europe, the UK and the US.
Marc Height is Head of ESG at Curation Corp, an emerging and peripheral risks monitoring service
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