The Centre quarterly newsletter, December 2024 issue, is out!
In this issue:
Call for…
The EU Japan Centre is releasing a weekly press review covering Japan's economic and policy matters.
Economic News
▶ Japan's industrial output in Oct. up 3.0% on back of chip equipment
29 Nov, 2024
Japan's industrial output rose 3.0% in October, marking the second consecutive month of growth, driven by strong exports of semiconductor manufacturing equipment and cars. The seasonally adjusted index stood at 104.3, following a 1.6% increase in September. Despite this growth, the Ministry of Economy, Trade and Industry noted that industrial production is fluctuating "indecisively." The ministry expects a decline in output over the next two months, largely due to weak demand in sectors like production machinery and transport equipment. In October, shipments rose 2.8%, while inventories decreased slightly by 0.1%.
Mainichi: https://mainichi.jp/english/articles/20241129/p2g/00m/0bu/005000c
▶ Japan gov't OKs $92.6 billion extra budget to curb inflation burdens
29 Nov, 2024
The Japanese government approved a 13.9 trillion yen ($92.6 billion) supplementary budget to address inflation and support households facing financial pressure. The budget includes subsidies for energy costs, cash handouts to low-income households, and investments in emerging industries. However, the approval process faces uncertainty after the ruling Liberal Democratic Party lost its majority in the October election. The government plans to finance half of the budget through new bond issuances, raising concerns about Japan's fiscal health. Key measures include 3.4 trillion yen for inflation relief and 4.8 trillion yen for disaster preparedness and economic revitalization.
Mainichi: https://mainichi.jp/english/articles/20241129/p2g/00m/0na/033000c
▶ Japan, Britain, Italy weigh Saudi Arabia joining fighter jet project
30 Nov, 2024
Japan, Britain, and Italy are considering inviting Saudi Arabia to join their next-generation fighter jet development project, the Global Combat Air Program, with Saudi financial support. The three countries aim to deploy the first jet by 2035. While Saudi Arabia is interested in joining, it is unlikely to become an equal partner due to concerns over cybersecurity, defense technology, and cultural differences. Japan's Mitsubishi Heavy Industries, Britain's BAE Systems, and Italy's Leonardo will lead the project, which reflects growing security cooperation amid global tensions.
Mainichi: https://mainichi.jp/english/articles/20241130/p2g/00m/0in/013000c
▶ Japan eyes next-gen solar power equivalent to 20 nuclear reactors
01 Dec, 2024
The Japanese government plans to generate 20 gigawatts of electricity from thin, flexible perovskite solar cells by 2040, as part of its strategy to achieve net-zero emissions by 2050. Japan aims to leverage its significant iodine production, a key material for perovskite cells, to secure a stable supply and boost economic security. Perovskite cells, which are lightweight and versatile, could be installed on various surfaces, overcoming space limitations for traditional solar panels. However, commercialization is expected to take place in the 2030s due to challenges in durability and cost. Japan also aims to export this technology in the future.
▶ Japan emerges as alternative titanium supplier amid U.S.-Russia tensions
01 Dec, 2024
Amid growing concerns over the global titanium supply due to tensions between the U.S. and Russia, Japanese producers are positioning themselves as key suppliers. Japan is the second-largest producer of titanium sponge, with companies like Toho Titanium and Osaka Titanium Technologies expanding production to meet rising demand, particularly in aerospace. Japanese titanium is seen as high-quality and reliable, attracting interest from Western countries. In response to potential disruptions from Russia's exports, Japan's titanium production increased 20% in 2023. Prices have also risen, and demand is expected to continue growing in the medium to long term.
Nikkei Asia: https://x.gd/jMP8s
▶ Japan-Sweden Summit Meeting and Working Dinner
04 Dec, 2024
On December 4, Japanese Prime Minister Shigeru Ishiba and Swedish Prime Minister Ulf Kristersson held a summit and working dinner, marking the elevation of Japan-Sweden relations to a "strategic partnership." They discussed deepening cooperation in security, economy, and areas like green transition, digital technology, and life sciences. Both leaders welcomed Sweden's NATO membership and the signing of a Memorandum of Cooperation on energy and innovation, particularly in nuclear energy. They expressed concern over Russia-North Korea military ties and agreed to strengthen collaboration on security issues, emphasizing the interconnectedness of the Euro-Atlantic and Indo-Pacific regions. They also agreed to continue close cooperation on East Asia and North Korea.
MOFA: https://www.mofa.go.jp/erp/we/se/pageite_000001_00001.html
Business News
▶ Launch of Demonstration Test for CO2 Capture from Chemical Recovery Boilers at Paper Mills in Japan
-- Using CO2MPACT™ Mobile to Contribute to the Decarbonization of the Pulp and Paper Industry --
29 Nov, 2024
Mitsubishi Heavy Industries (MHI) and Hokuetsu Corporation launched a CO2 capture demonstration at Hokuetsu's Niigata Mill in November, using MHI's "CO2MPACT™ Mobile" system. This is the first application of MHI's CO2 capture technology in the pulp and paper industry, aiming to reduce CO2 emissions from chemical recovery boilers in paper manufacturing. The demonstration will help evaluate the system's commercial viability and support decarbonization in the industry. MHI is committed to achieving carbon neutrality by 2040 and is advancing carbon capture, utilization, and storage (CCUS) solutions to contribute to global environmental efforts.
Mitsubishi Heavy Industries: https://www.mhi.com/news/24112901.html
▶ Japan Automakers Stepping on Gas for PHVs as EV Sales Hit Brakes
29 Nov, 2024
As global EV sales slow, automakers are increasing investments in plug-in hybrid vehicles (PHVs), which offer a practical eco-friendly solution. Mitsubishi, Toyota, Mazda, and Honda are launching new PHV models, with global PHV sales expected to double by 2030. This shift comes as EV sales stagnate, particularly in China, and automakers, including Japanese companies, move away from an EV-only strategy, focusing on hybrid vehicles to offer more choice to consumers. However, this approach may lead to higher development costs.
Yomiuri: https://japannews.yomiuri.co.jp/business/companies/20241129-225101/
▶ Hitachi Rail delivers first driverless metro for Greece
30 Nov, 2024
Phase one of Greece's first driverless metro, in Thessaloniki, was inaugurated on November 30. Supported by Hitachi Rail’s digital signaling and advanced trains, the 9.6 km metro line with 13 stations is expected to reduce traffic by 56,000 cars daily and cut CO2 emissions by 77,000 tonnes annually. Hitachi Rail provided its Communication Based Train Control (CBTC) signaling and 18 new trains, with more trains planned for future expansion. The metro will eventually connect the city center to the airport. The project also uncovered important archaeological finds, which will be displayed in the stations.
Hitachi: https://www.hitachi.com/New/cnews/month/2024/11/241202a.pdf
▶ Japan's Denso, Fuji Electric to invest $1.4bn in SiC EV power devices
30 Nov, 2024
Denso and Fuji Electric are investing 211.6 billion yen ($1.4 billion) to produce silicon carbide (SiC) power semiconductors for electric vehicles in Japan. The project aims for 310,000 units annually by 2027, with subsidies from Japan's government. SiC semiconductors, which improve EV range, are gaining traction despite a slowdown in EV demand. The investment signals a focus on future growth in the semiconductor market.
▶ Osaka Gas to build U.S. e-methane procurement network
02 Dec, 2024
Osaka Gas plans to invest 100 billion yen ($667 million) to build an e-methane procurement network in the U.S., aiming to supply over 60% of Japan's 2030 target for the fuel. E-methane, a synthetic methane made by combining hydrogen with carbon dioxide, is eco-friendly and can offset CO2 emissions if sourced from carbon capture. Osaka Gas will produce e-methane in Nebraska or Wyoming, targeting 200,000 tonnes per year by 2030. The gas will be shipped to Japan via LNG infrastructure. The company seeks to reduce production costs by using natural gas-derived hydrogen and carbon capture technology to make e-methane more affordable.
Nikkei Asia: https://asia.nikkei.com/Business/Energy/Osaka-Gas-to-build-U.S.-e-methane-procurement-network
▶ Trump vows to block Nippon Steel deal for U.S. Steel
03 Dec, 2024
U.S. President-elect Donald Trump publicly opposed Nippon Steel's acquisition of U.S. Steel, stating on Truth Social that he would block the deal, citing national security concerns. He emphasized using tax incentives and tariffs to strengthen U.S. Steel. Nippon Steel responded, stating its commitment to supporting U.S. Steel and American industry. Trump had previously pledged to block the deal in January, and President Joe Biden, while not directly opposing it, acknowledged the need for serious scrutiny due to national security implications. The acquisition is under review by the Committee on Foreign Investment in the U.S. (CFIUS), with a decision expected before Trump’s return to office on January 20.
Nikkei Asia: https://asia.nikkei.com/Business/Business-deals/Trump-vows-to-block-Nippon-Steel-deal-for-U.S.-Steel
▶ Japan's Tokyo Electron deepens Taiwan ties with new operations center
03 Dec, 2024
Tokyo Electron, Japan's leading chipmaking equipment maker, has opened a major operations center in Tainan, Taiwan, to strengthen its partnership with Taiwan Semiconductor Manufacturing Co. (TSMC). The center, located near TSMC's advanced chip production plants, aims to enhance efficiency by providing local chip equipment repair, research, and development services, reducing turnaround times. Tokyo Electron CEO Toshiki Kawai emphasized Taiwan's importance as a global AI chip hub. The company is also building a technology center in Hsinchu and plans significant investments, including a $10 billion commitment and 10,000 new global jobs over five years.
▶ Supply Chain Established for Cargo Tanks Transporting Liquefied CO2 at Elevated Pressure
03 Dec, 2024
Nippon Yusen Kabushiki Kaisha (NYK), Knutsen NYK Carbon Carriers AS (KNCC), and JFE Shoji Corporation have completed a feasibility study on the production of LCO2-EP cargo tanks for CO2 transportation and storage. These tanks, designed for elevated pressure (EP) systems, will be used for both LCO2 carrier cargo and onshore temporary storage. The study confirmed the production facilities, capacity, and costs for manufacturing the tanks using versatile carbon steel. The companies, in line with their March memorandum on CO2 capture and storage (CCS), plan to establish a stable supply network for large-scale production and early implementation of CCS projects.
▶ Japan tech companies scramble to comply with EU cybersecurity laws
04 Dec, 2024
Japanese tech companies, such as NEC and Mitsubishi Electric, are struggling to meet new EU cybersecurity regulations, including the Cyber Resilience Act (CRA) and NIS2 Directive. These rules require companies to address cyber risks from the development stage, with fines for non-compliance reaching up to 2.5% of global sales. Although full implementation is three years away, companies must already comply for products under development. To adapt, Japanese firms are conducting gap analyses and strengthening cybersecurity measures in Europe.
Nikkei Asia: https://asia.nikkei.com/Spotlight/Cybersecurity/Japan-tech-companies-scramble-to-comply-with-EU-cybersecurity-laws
▶ Participation in Feasibility Study for Low-Carbon Aluminium Project in Finland
04 Dec, 2024
Mitsubishi Corporation (MC) is collaborating with Rio Tinto, Fortum, Finnish Industry Investment (Tesi), and Vargas Holding to conduct a feasibility study for the Arctic Low-Carbon Aluminium Project in Finland. This project aims to produce primary aluminium using CO2-free electricity, marking the first new aluminium production project in Europe in over 30 years. The study will assess financial, technical, economic, social, and environmental aspects, including negotiations for electricity procurement with Fortum. MC's involvement aligns with its Energy Transformation strategy, focusing on securing low-carbon aluminium to support decarbonization and electrification efforts. Aluminium, a key material in various industries, is expected to see increased demand due to its role in a circular economy.
Mitsubishi Corporation: https://www.mitsubishicorp.com/jp/en/news/release/2024/20241204001.html
▶ Japan takes first step toward space-based solar power supply
04 Dec, 2024
A team of Japanese researchers, led by Japan Space Systems (JSS), is conducting an experiment to test space-based solar energy technology. The project involves aircraft equipped with solar panels flying 5 to 7 kilometers above sea level, beaming microwaves to the ground to be converted into electricity. This field test in Suwa, Japan, is a precursor to transmitting solar power from space, a concept first proposed in the 1960s. If successful, the next phase, starting in fiscal 2025, will involve space-based solar panels at altitudes of hundreds of kilometers. However, challenges remain, particularly the high costs of launching and constructing solar panels in space, estimated at over $6.69 billion for a 1 million-kilowatt solar farm.
Nikkei Asia: https://asia.nikkei.com/Business/Science/Japan-takes-first-step-toward-space-based-solar-power-supply
▶ U.S. carbon capture pioneer taps Japan's Mitsui, Mitsubishi for funds
05 Dec, 2024
Four Japanese companies, including Mitsui & Co., Mitsubishi Corp., and Mitsui O.S.K. Lines, are investing in Heirloom Carbon Technologies, a U.S. startup using direct air capture (DAC) technology to remove carbon dioxide from the atmosphere. The companies are contributing $150 million to Heirloom, which has raised over $260 million in total. Heirloom’s DAC system, which uses limestone to absorb CO2 at lower costs, began operations in California in 2023 and plans to expand to Louisiana. The companies aim to support decarbonization efforts, with potential synergies in carbon credits and sustainable aviation fuel production.
The EU-Japan Centre currently produces 5 newsletters :
Joint venture established in 1987 by the European Commission (DG GROW) and the Japanese Government (METI) for promoting all forms of industrial, trade and investment cooperation between the EU and Japan.
The EU-Japan Centre’s activities are subject to the allocation of a Grant Agreement by the European Commission for 2024-2026
