
A Growing Market
The Japanese environmental business market can be divided into three different fields: 1) Environmental Pollution Prevention, 2) Environmental Load Reduction, and 3) Recycling. Pollution Prevention includes three main areas – equipment and manufacturing (30 percent), service providers (49 percent) and facilities and construction (21 percent). Environmental load reduction includes resource conservation technology (30 percent) and resource conserving products (70 percent). The field of energy technology is expected to grow the most in the coming years – by 33 percent. A large number of environment- related patents in Japan (second only to the US), confirms the growing strength of the nation’s environmental technology. This field is expected to receive further stimulation with the help of recently enacted environment-related legislation.
Key Sectors
Environmental regulations by the Japanese government have opened up new market segments.
1. Clean Energy
According to the Ministry of Environment, the market for green energy will grow from $8.09 billion in 2000 (about 3 percent of environment businesses) to $52.82 billion in 2010 (a 550 percent increase) and $79.96 billion by 2020 (a 900 percent increase). This segment includes solar power energy, fuel cells and wind power. According to the Alternative Energy Use Act enacted in April, 2004, new power companies and power generating companies have the responsibility to use minimum levels of alternative energy.
2. Solar Power Generation
In 2004, Japan produced 51.8 percent (618,000 kilowatts) of the world’s power generated from solar cells. With the vast residential market as its focal point, the photovoltaic power generation market has enormous room to expand. According to the Minister of Economy, Trade and Industry, the goal for the generation of solar energy is 5,000 megawatts by 2010.
3. Fuel Cells
Fuel cell technology in Japan has been used in hybrid low-pollution cars with low carbon dioxide emissions since 2002. This sector has vast potential and therefore, infrastructure and introduction of related laws are required. Initiatives aimed at technological development and expansion of this field are being undertaken by the Japanese government.
4. Waste treatment
The Japanese waste treatment market is already large, and is expected to grow further. According to the Ministry of Environment, the market for waste disposal is expected to grow from $33 billion in 2000 to $70 billion in 2010 and $101 billion by 2020. Technologies sensing and processing toxic waste are highly popular.
5. Recycling
Recycling laws have been introduced in Japan in several sectors – containers and packaging, food, construction material, furniture and automobiles. New recycling technologies are being developed, creating new market opportunities:
- Conversion of organic waste to methane gas
- Application technologies for sewage
- Treatment technology for radioactive waste
- Bio-degradable plastics
- Extraction of usable materials from garbage
6. Soil and Water
It is projected that soil and water pollution controls in Japan will become stricter, and will drive growth of the market from $776 million in 2000 to $5.3 billion in 2010 (a 580 percent increase). In March, 2005, the Ministry of Economy, Trade and Industry and the Ministry of Environment announced a policy regarding the use of bioremediation technologies that utilize microorganisms to break up contaminants.
7. Air Quality
There is a growing number of business opportunities related to air pollution prevention, due to the introduction of a law in 2000 requiring use of exhaust purifiers in major Japanese cities. Just recently, the Ministry of Environment announced the development of a new technology that can measure the constituent substances of the exhaust gas emitted by vehicles while they are operating in traffic.
Israel Venture Capital & Private Equity Journal (IVCJ)
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