The Innovation for Green Economy and Society Green

The Innovation for Green Economy and Society － Green Innovation Japan－ June 13, 2009 Director, Policy Coordination/Evaluation and Public Relations Division, Government of Japan Hidetoshi KIMURA

Contents I Japan’s Policy to Establish Sustainable Society ØComprehensive measures that integrate three aspects of sustainable society ØLegislative frame work of environmental protection ØThe third basic environment plan ØThe second fundamental plan for establishing a sound material cycle society Ø The Kyoto target achievement plan ØThe third national biodiversity strategy II The Innovation for Green Economy and Society ØProcess of making “Green Innovation Japan” ØOutline of “Green Innovation Japan” ØPolicy package to address economic crisis ØAmount of the national budget and tax reform to go towards environmental presentation matters in FY 2009 ØFuture development strategy ØGrowth initiative towards doubling the size of Asia’s economy 2

I Japan’s Policy to Establish Sustainable Society 3

Comprehensive measures that integrate three aspects of sustainable society Climate change and energy/ resources A Sustainable Society Reduce GHG drastically A Low-Carbon Society 　 Climate change and ecosystems Coexist in harmony with the Earth’s ecosystems and realize an economic society with enjoying sustainable growth and economic development Cyclical use of resources through the 3 Rs 　 A Sound Material-Cycle Society Ecosystems and the environmental loads A Society in Harmony with Nature Enjoy and pass on nature’s blessings From “Becoming a Leading Environmental Nation in the 21 th Century” (June 30, 2007: Cabinet Decision) 4

Legislative Framework of Environmental Protection Fundamental Environmental Law (1993~) (1 st 1994~ /2 nd 2000~/ 3 rd 2006) Basic Environmental Plan Fundamental Law for Establishing a Sound Material -Cycle Society (2000~) Fundamental Plan for Establishing A Sound Material-Cycle Society Waste Management and Public Cleansing Law (1970~) Law for Promotion of Effective Utilization of Resources (1991~) Law for Recycling of Container and Packaging, Home Appliances, Construction materials, Food Waste, End-of -life Vehicles Law Concerning the Promotion of the Measures to Cope with Global Warming Basic Law Concerning Biodiversity (1998~) National Biodiversity Strategies Kyoto Protocol Target Achievement Plan (2000~) • Nature Conservation Law (1972~) • Natural Park Law (1957~) • Wildlife Protection and Proper Hunting Law • Invasive Alien Species Law (2004~) • Law for the Promotion of Nature Restoration • Low for the Promotion of Eco-tourism　 etc. Other Environmental Regulation Laws (i. e. ) • Air Pollution Control Law(1968~) • Water Pollution Control Law(1970~) • Chemical Substances Control Law(1973~) • Law Concerning the Rational Use of Energy (1979~) etc. 5

The structure of the third basic environment plan Current environmental status and directions for environmental policy development ①Integrated improvements of the environment, economy and society ②Formation of sustainable national land nature ③Enrichment of R&D and measures considering uncertainly ④The new role of national and local governments and citizens, and the promotion of their participation and collaboration (April 17, 2006 Cabinet decision) Specific implementation of environmental policies in the present quarter century ①Efforts for global warming issues ②Efforts to establish a sound material cycle society ③Efforts to secure a good air environment in urban areas ④Efforts to secure an environmentally sound water cycle ⑤Efforts to reduce environmental risks from chemical substances ⑤Strengthening of efforts with international strategies ⑥Efforts for the conservation of biodiversity ⑥Formation of policy measures from a long-term perspective ⑦Building a system where values of the environment are activity evaluated in the market (i. e. Emission trading system, carbon offset) ⑧Promotion of fostering human resources and communities for environmental conservation Effective implementation of the plan Strengthening environmental consideration and coordination by each entity Monitoring the Plan’s progress by numeric indicators, etc ⑨Improvement of infrastructure such as science and technology, environmental information and policy method with a long-term perspective ⑩Contribution for the formulation of international frameworks and rules 6

Overview of the 2 nd Fundamental Plan for Establishing a Sound Material Cycle Society (March 28, 2008 Cabinet decision) Current situation and Issues Ø All three indicators; “resource productivity”, “cyclonical use rate” and “final disposal amount” improves towards year 2010 targets set by the 1 st fundamental plan and are expected to achieve the targets. However, reduction of household waste progresses rather slowly. Ø Need to respond to global environmental issues such as worldwide resource limitation as well as global warming Thus, it is necessary to further develop sound material cycle societies both domestically and internationally by implementing the 3 Rs thoroughly Mid-to-long term image of SMS Ø Realize “Sustainable Society” by integrating with activities to realize “low carbon society” and “nature harmonious society” Ø Realize “Stock-based Society” by stocking and utilizing goods to achieve wealthy society 　Regionally-characteristic SMS(Spheres of sound material cycle) , Lifestyle along the concept of Mottainai, Collaboration and partnership between stakeholders, and dissemination of the 3 Rs into economic activities including manufacturing Activities of stakeholders ○Partnership and Collaboration Mutual collaboration of every stakeholders to establish sound material cycle society ○Citizens ○Businesses ・ Prevention of illegal dumping and ・Campaign of life style change such implementation of the 3 Rs as “my chopsticks” and “my bag” ・ Advanced waste management, interindustrial collaboration ○NGO/NPO and Universities and others ○Local governments ・Interface of collaboration and partnership ・Partnership with stakeholders and ・ Accumulation of knowledge and reliable implementation of nation-wide activities information ○National government ・Partnership among stakeholders and implementation of nation-wide activities ①Integrated efforts with low carbon and nature-harmonious society（ waste power generation and biomass utilization）、 ②Establishment of “spheres of sound material cycle”, ③National campaign on the 3 Rs, ④Promotion of sound material cycle business through various measures such as green purchasing, ⑤Development of 3 R mechanisms focusing on reduction, ⑥Advanced 3 R technology and system, ⑦Information gathering and development of human resources, ⑧Establishment of international sound material cycle society based on action plan to promote global zero waste societies, East Asia vision of sound material cycle society, or improving resource productivity Indicators and targets 【 1 Material Flow–based Indicators 】 【 2 　Indices related to effort】 　（a）Waste generation per capita per day 　（b）Household generation per capita per day 　（c）Generation of commercial waste (1) Numerical target setting（FY 2015） (1)　Numerical target setting ① 「Input」：Resource Productivity → 420 thousand yen/ton 　　　　（60% increase from FY 2000）　　①　Reduction of municipal solid waste 　　②　Reduction of final disposal of industrial waste ② 「Recycle」：Cyclical use Rate → about 14 -15%　 → About 60% reduction from FY 2000 　　　　　　　　 （40 -50% increase from FY 　　③ Changes in awareness and actions of citizens 2000） 　→　awareness: about 90% actions: about 50%　 ③ 「Output」：Final Disposal Amount → about 23 million tons 　　④ Promotion of Sound Material Cycle Businesses　 　　　　　　　　（about 60% reduction from → Double the market for Sound Material Cycle businesses FY 2000） from FY 2000 (2) Indicators to monitor progress of stakeholders efforts such as (2)　Setting supplementary indicators such as indicators on “refuse rate of plastic bag” and “ranking of municipalities active in the 3 Rs” Collaboration with the action for low carbon society (3)　Setting indicators to monitor progress such as “Hidden flow and TMR” to promote awareness on global environmental 7

Material Flow Indicators: Indices to set a target ●The target for 30% improvement in FY 2005 　（42） Resource productivity & The cyclical use rate ●Target in the previous plan ●Result in 60% improvement in 15 years （33） （26） 30% increase (14～ 15） (14） (12. 2） ●The target for 20% improvement in FY 2005 The base year The final disposal amount （37） 109. 09 M tons ●World-class results in reducing the final disposal amount 57. 10 M tons The target year in the previous plan Current situation -70% The target year in the new plan ●Target in the previous plan Approx. 23 M tons 32. 41 M tons -30% Approx. 28 M tons 1990 2005 2010 2015 The 2 nd Plan In FY 2000 → In FY 2015 ・Resource productivity 26 million yen per ton → 42 million yen per ton ( about 60% improvement ) ・ The cyclical use rate 　10%　→ 14～ 15% ( about 40~50% improvement ) ・The Final disposal 5. 700 million ton → 2. 300 million ton 　( 60% reduction ) The 1 st Plan In FY 2000 → In FY 2010 ・Resource productivity 26 million yen per ton → 37 million yen per ton ( about 40% improvement ) ・ The cyclical use rate 　10%　→ 14% ( about 40% improvement ) ・The Final disposal 5. 700 million ton → 2. 800 million ton 　( 50% reduction ) ●Aiming to reduce by another 30%, compared 8 to the current level

The Aims of the Kyoto Target Achievement Plan (April 28, 2005 Cabinet decision) 1. 2. Ensure achievement of 6% reduction commitment under the Protocol Steady implementation of a continuous as well as longterm GHG emissions reduction on a global scale 21 st Century is a century of the environment. Climate change is a common issue to all human beings. The government of Japan, as one of the most advanced countries across the globe in implementing measures on climate change, is aspired to take a leading role in the international community. 9

The Framework of the Kyoto Target Achievement Plan easures and Policies for Achieving Targets 1. Measures and Policies relating to Greenhouse Gas Emissions Reduction, Removal, etc. (1) Measures and Policies relating to Greenhouse Gas Emissions Reduction [Examples of Primary Additional Measures] Promotion of voluntary action plans Increased energy-saving performance of houses and buildings Improvement of energy efficiency of equipment that meets Top-runner Standards, etc. Ensuring thorough energy management at factories and offices, etc. Improvement of automobile fuel efficiency Promotion of emissions reduction measures amongst small and medium-sized enterprise Measures for the agriculture, forestry and fisheries, water and sewage, traffic flow, etc. Measures for urban greening, waste, and Three Fluorinated Gases (HFCs, PFCs and SF 6), etc. Promotion introduction of new energy sources (2) Greenhouse Gas Sink Measures Forest management such as tree thinning, promotion of the “Beautiful Forest Building National Campaign” 2. Cross-sector Policies Systems for Calculation, Reporting and Public Disclosure of Greenhouse Gas Emissions Development of national campaigns Issues needing to be addressed promptly Domestic Emissions Trading System Environment tax Targets of Greenhouse Gas Emissions and Removals CO 2 from Energy Emissions Targets for 2010* Base Year Million tons Total of CO 2 Emissions Comparison 1, 076~1, 089 +1. 3%~+2. 3% Industry 424~428 -4. 6%~-4. 3% Commercial and Other 208~210 +3. 4%~+3. 6% Residential 138~141 +0. 9%~+1. 1% Transportation 240~243 +1. 8%~+2. 0% 66 -0. 1% Energy Conversion CO 2 from non-Energy, CH 4, N 2 O HFCs, PFCs SF 6 132 -1. 5% 31 -1. 6% Greenhouse Gas Emissions 1, 239~1, 252 -1. 8%~-0. 8% (*)As a target guide for emissions, a maximum predicted effect and a minimum predicted effect for reduction measures have been established. Naturally, the goal is to try and achieve the maximum effect; however, even if only the minimum effect is achieved, it has been formulated so that it will at least meet Japan’s targets under the Kyoto Protocol. For definite progress towards 6% reduction commitment under the Kyoto Protocol, all measures, including sink measures and Kyoto mechanisms, will be implemented. 10

The Outline of the Third National Biodiversity Strategy （November, 27, 2007 Cabinet Decision） 【Importance of Biodiversity】 　【Challenge】 Biodiversity supports life and livelihood ①Basis for existence of all life on earth　　 　②Use value including future options　 　　 　③Basis for enriching culture 　　 ④Security of livelihood Crisis 1: Species and habitat degradation due to excessive human activities Crisis 2: Degradation of satochi-Satoyama due to insufficient level of management *Satoch-Satoyama: Rural landscapes formed by sustainable use of natural resources Crisis 3: Ecosystem disturbances caused by the introduced alien species and chemical contaminations Crisis caused by Climate Change ・Huge potential for species extinction and ecosystem collapse　 【Long-term perspective 】 Grand design, targeting 100 years ahead ・Ground design of the national land from the viewpoint of biodiversity is presented as the “Centennial Plan, ” which aims to recover the nations’ ecosystem over the next century 　　【Involvement of various stakeholders 】 Involvement of local governments and the private sector ・Needs for efforts by local governments and businesses are emphasized with a view to linking biodiversity conservation to local areas Four Basic Strategies 11

Four Basic Strategies Mainstreaming Biodiversity in our daily life 1) Launching “our life on biodiversity” project which aims to enhance the involvement of local governments, businesses, NGO and the public 2) Hands-on nature experiences for school kids, and primal experiences to “feel with the five senses” Re-building sound relationship between man and nature in local communities 1) Selecting “important satochi-satoyama areas have to be inherited by next generation” 2) Developing communities coexisting with wildlife through separating habitat and capacity building 3) Promoting sound activities of agriculture, forestry and fisheries 4) Managing habitat for endangered fauna and flora; combating alien species issues Securing linkages among forests, countryside, rivers and the sea 1) Realizing the ecological network at national scale 2) Promoting a comprehensive review of national and quasi-national parks, and promoting nature restoration 3) Studies on marine protected areas to secure sustainable fishery activities Taking action with global perspective 1) Hosting COP 10 of the convention on biological diversity 2) Conducting a country-wide comprehensive ecosystem assessment (Japan biodiversity outlook) 3) Proposing the “SATOYAMA Initiative” to the world 4) Consideration of mitigation and adaptation measures for climate change in the context of biodiversity 12

II The Innovation for Green Economy and Society 13

The Process of making “Green Innovation Japan” Exchange ideas with specialist s Gather Public comments （From June 16 to February 16） ＜Total 823＞ 　　Related to Low-Carbon Society： 459 　　Related to Nature： 67 　　Related to Sound Material-Cycle： 88 　　Others： 455 Future Development Strategy (April 17, 2009 Decision of Council on Economic and Fiscal Policy) 1. Low-Carbon Revolution 2. Healthy and Long-lived Society 3. Promote Attractiveness of Japan Policy Package to addressing Economic Crisis (April 10, Cabinet and Cooperate with other related Ministries ①Environmental Specialists 　 ②Economists 　 ③Mayors Mayer of Sakai City, Toyama City, Shimokawa City, and Yusuhara City (Parts of 13 Eco-model Cities) 　 ④Representatives of the economic world 　 Announced the draft of "The Innovation for Green Economy and Society" at the council on economic and fiscal policy. government party) Supplementary Budget Economic and Fiscal Reform 2009 Ministrerof the Environment Proposed “The Innovation for Green Economy and Society on April 20, 2009 14

Delay in measures for climate change will cause the serious environmental crisis which will bring the collapse of our social activity and the enormous expense for adaptation ＋ Biggest and worldwide economic crisis since the war Environmental investment all over the world （Green New Deal） Japan’s World- Class Environmental Resources ØWorld-leading environmental technologies ØBeautiful seasonal changes of natural scenery ØThe spirit of “mottainai” Become a forerunner of overcoming the environmental crisis Create present and future demand jobs The investment to keep Japan’s advantage and continue to be the environmental superpower for the future Integrated improvement of environment and economy Integrated realization of a “low carbon society, ” a “sound material-cycle society, ” and a “society in harmony with nature” Participate every actor Basic idea Best-mix of policy Measures for Asia and whole world 15

2. Innovation toward green local community 4. Innovation toward green investment 1. Innovation toward green social capital Point of “the innovation for green economy and society” 3. Innovation toward green consumption 5. Innovation toward green technology 6. Contribution for green Asia ØThe proportion of renewable energy in total energy consumption will Promote energy-saving be 20% home appliance, nextØThe volume of solar generation vehicles and Use local wood for building materials power generation will be 20 energy-efficient houses times of today’s level World-leading industry introduced ØHalf of new cars sales will Realize high efficient facilities and be Eco-cars The goal compact city management systems of this and beautiful innovation land Full utilize local In 2020 resources and talents Secure resource and energy by promoting 3 R Environmental market will increase and renewable energy from 70 to 120 trillion yen and environmental jobs will increase from 1. 4 to 2. 8 million by 2020 in Japan 16

　1. Innovation toward green social capital　　　　　 Create the demand through “green public works. ” Ecoreform across the nation starting with public facilities such as schools ØInstall photovoltaic systems in schools and public facilities around Japan and use them for environmental education. ØRealization of a “Kasumigaseki Low-carbon Society” then expand it to other national buildings (ex. Increasing the use of wood, Promoting renewable power generation. etc. ) ØPromote eco-reform in local government’s facilities. Photovoltaic power generation installed in the school LED lighting Clean up our land ØDevelop eco and human friendly compact cities ・Produce “cool cities”　・Utilize unused resources and energy ØDevelop eco-friendly transportation infrastructure ・Maintenance sidewalk and bicycle roads ・Promote wireless LRV(Light Rail Vehicles) ・Strengthen function of “Super-hub Port”　 ・Energy-saving transportation system using GPS Produce good urban environment exploit “water” “green” and “wind” Maintenance sidewalk and bicycle road Save beautiful nature and waterside ØUntying illegal dumping ・Treat past illegally dumped waste　　 ・Strengthen watching and patrolling ØUntying marine litter ØMeasures against PCB and Asbestos Eco-reform in cities and transportation Collect marine litter ・Treatment of waste electric machinery containing small amounts of PCB ・Promoting the detoxification of Asbestos Maintenance and preserve forest to mitigate climate change ・Forest maintenance such as thinning ・Proper management of preservation of reserved forest ・Use local wood for housing ・Promote the use of wood biomass ØMaintenance of national park ØSecure beautiful waterside ・Regenerate and preserve water- friendly riverside The Moat of Imperial Palace ・Maintenance the Moat of Imperial Palace ・Promote wastewater treatment system such as septic systems Measures to adopt abnormal climate caused by climate change 17

2. Innovation toward green local communities 　 　　　　　　　　　　　Activate “local power” Measures by local government Measures by local communities ØFinancial support by the establishment of “local Green New Deal Funds” ØDevelop Eco-friendly transportation system by introducing the community bicycle program etc. ØPreserve and utilize nature resources ØPrevent pollution such as water and air pollution 　・Establish local consortiums to train and utilize Eco-specialist 　・Support environmental NPO and environmental actions by private company ・Support for utilizing local environmental activities District heating and cooling system ØMaintenance and preserve forest with using urban power 　・Utilize “Carbon Offset” CO 2　emissions from companies and local governments Offsets J-VER ØDevelop active local communities using various human resources Growing rape blossoms by students of Nishi-yodogawa high school; Velib in Paris Develop healthy forest and active farm, mountain, and fishing village　 Capital 　・Preserve “Satoyama”　　 ・Divide the living area for wild animals and human Growing sunflower by students of Nakashibetsu Agricultural high school Preserving “Satoyama” Establishing sound material-cycle society ØActivate sound material-cycle communities Reduce & absorb CO 2 emissions utilizing wood biomass and forest maintenance ØNew challenge utilizing dormant faculties of agriculture and farm village ・Recycle of rare metal ØPromote “reduce” and “reuse” ØCirculatory utilization of biomass ØPromote circulatory use of water ØPromote circulatory use of nitrogen and phosphorous 18

　3. Innovation toward green consumption 　　　　　　 Support the creation of the green demand from household Promote purchasing energy-saving home appliances simultaneously ØDramatically popularize energy-saving home appliances 　Promote energy-saving home appliances using the “Eco-point” Promote energy-saving houses and buildings ØSupport thermal insulation ØMake LCA guideline for remodeling buildings ØPromote “ 200 -year housing” ØPromote fuel cell and heat pomp ØPromote green purchasing and contract 　・Secure reliability of products labeling by the “test of products” 　・Secure proper products labeling by guideline for environmental labeling Promote next-generation vehicles etc. ØPromote next-generation vehicles by subsidies, tax incentive, etc. Double-glazed window Apartments introduced the heat pumps ØIntroduce proper regulation of biofuel ・Find problems and examine standard through practicing models Model projects in Miyake island Nanbu Clean Center (Kyoto city) ØStipulating measures to curb GHG emissions relating to the work of the government　 ・Promote national measures and support local measures 19

4. Innovation toward Green Investment 　　　　　　Foster leading-edge environmental industries responsive to the green demand Create systems encouraging green economic Finance fostering green investment ØEstablish an interest-free environmental finance system activities ØExpand the investment in environmentally sound businesses ØExamine the domestic emission trading system 　・steady operation of trial practice (including JVETS) ・Utilize the domestic CDM scheme ØGreening the tax system ØPromote carbon offset and carbon foot-print Promote environmentally sound management • Promote ISO 140001, Eco-action 21, and other environmental management system • Promote environmental communications such as environmental reports • Make the guideline for private companies to forward the preservation of biodiversity Foster sound material-cycle industry ØImprove system and technology for recycling 　・Resolve the “miss-match” of recycling market 　・Promote recycling of “rare metal” ØImprove reliability and transparency of sound material-cycle business ØFoster the low carbon waste treatment 　・Introduce high-efficient waste-to-power generation 　・Promote proper public information 　・Promote green investment by public pensions 　・Promote NPO bank, community fund, and fund for environmental projects ・Develop the scheme to evaluate company’s environmental consideration “Kankyo-ryoku” Promote green IT ØGreen IT using advanced telecommunication with leading edge environmental technology ・Achieve an international consensus and standardization of technology and evaluation for GHG reduction using telecommunication ・Environment-oriented country by ubiquitous Greening energy structure ØAim for the superpower of renewable energy 　・introduce ambitious goal about the introduction of renewable energy 　・Introduce “Feed in tariff” small hydraulic power plant 　・Massive introduction of renewable energy such as solar power, wind power, biomass, and small hydraulic power ・Demonstrate the “smart grid” ØMeasures utilizing local resources 　・Wooden pellet utilizing waste and thinned wood 　・Promote small hydraulic power 　・Utilize waste heat of hot spring ØSafe and secure nuclear power plant → Waste- to-power generation Wind turbine using civil investment 　・Increase the equipment utilization rate 　・Steady construction of new generation Nuclear power generation ・Establish nuclear fuel cycle and early realization of the fast breeder reactor

　5. Innovation toward green technology 　Strengthen leading-edge environmental technologies Basic research for improve and develop both environment and economy ØPromote the research on environment and economy for policy development ØMake middle and long term roadmap for building a “Low carbon society” Technology development considering dramatic GHG reduction in 2050 • Develop high-efficient and low-cost solar batteries • Develop low-cost and easy-to-use electric car • Research about CCS and Methane hydrate • Develop distributed energy system, and hydrogen production from non-fossil fuel • Utilize nuclear fusion and space light energy Promote and utilize environmental technology Greenhouse gases observing satellite “Ibuki” Technology development considering practical use within 10 to 20 years ØTechnology for renewable energy such as PV, solar heat, biofuel, wind power, small hydraulic power, geothermal, substantiation of CCS (Carbon Capture and Storage) ØEnergy efficient technology such as LED lighting, nonfluorocarbon and high-performance insulation, and energysaving refrigerators, freezers and air conditioners using low. GWP(Global Warming Potential) refrigerant Research about the adaptation of climate change ØResearch about the impact on local water environment by climate change ØResearch and development about adaptation 　・Predict and evaluate the impact of climate change focused on food, water, ecosystem, disaster prevention, and so on ØPromote leading edge technology and utilize existent technology 　・Aggressive participation on international standard 　・Modify and promote technology to developing countries 　・Announce the result of Ibuki’s observation internationally 　・Advance research of environmental technology Electric Bus Promote monitoring, administration, and information gathering and offering ØExpand the area and target of monitoring and environmental administration ØPreparation for the 10 th Conference of the Parties to the Convention on Biological Diversity (COP 10) 21

　6. Contribution for Green Asia Prosperous societies constructed together with a sustainable developing Asia Develop strategic, systematic, and local based environmental cooperation Establish environmental morel city in Asia ØChoose some cities and islands as environmental model city or island, and support their activities ØPromote measures based on “Clean Asia Initiative” ØPromote Japan’s advanced environmental technology ØIntegrated introduction of talents, technology, and system　　 to Asian and Pacific countries ØMake “Asian standard “of environmental technology ØPromote international cooperate research ØPartnership and cooperation with various subjects such as Indonesian cement factory equipped with destruction equipment for universities in Asian countries fluorocarbon with Japan’s support Promote “co-benefit approach” ØEstablish platform for information sharing with various subjects ØPromote long-term utilization of talent and technology Found Asian sound material-cycle society ØInternational cooperation through Asia 3 R promotion forum ØSupport the practice and improvement of waste treatment and 3 R in Asian countries Support for building environmentally sound water cycle society ØPromote “Good water governance” ØCooperation with international institutions such as “Network of Asian River Basin Organization” ØPromote septic system and human waste treatment facilities Found society in harmony with nature in Asia ØPopularize SATOYAMA initiative ØSupport for making national biodiversity strategies in Asian countries ØMake and practice the strategy for international coral reef network ØPromote the measures against illegal cutting, forest fire and reforestation Polluted Asian river Decentralized sanitary sewage system Measures against trans-boundary air pollution ØInvestigate air pollution in East Asia and support the measures against the pollution ØSupport the measures against yellow sands such as reforestation 22

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Size of the Policy Package to Address Economic Crisis I. Immediate Measures Government Expenditure Total Size （Trillion yen） 4. 9 44. 4 1. Measures to support employment 1. 9 2. 5 2. Financial measures 3. 0 41. 8 -Avoiding a negative spiral- II. Growth Strategy –Investing for the future- 6. 2 8. 8 1. The low-carbon revolution 1. 6 2. 2 2. Health, longevity and child-rearing 2. 0 2. 8 3. Realization of the potential of the 2. 6 3. 8 Japanese economy and development of of the 21 st century 4. 3 5. 0 1. Revitalization of regions 0. 2 0. 4 2. Safety and security 1. 7 2. 2 3. Support for local governments 2. 4 0. 1 15. 4 56. 8 IV. Tax reform Total ○Promote Photovoltaic Power Generation 　　・”School’s New Deal” Plan 　　including ・Eco-friendly renewal of school building　 　 ・The creation of an ICT-friendly school 　　・Support to introduction of solar power (Offices and residential sector)　　　　 610 490 260 210 500 　 infrastructure to deal with the challenges III. Easing anxiety and enhancing vitality Concerning Low-carbon revolution　　 1, 580 　 （billion yen） ○Promote fuel-efficient cars and energy -efficient home appliances 870 　　・Support for eco-friendly vehicles　 370 　 ・Dissemination of eco-friendly home appliances (TVs, air conditioners, and refrigerators) by “eco point” scheme 290 ○Revolution in transportation and infrastructure 30 ○Turning Japan into resource-rich country 70

Amount of the national budget and tax reform to go towards environmental preservation matters in FY 2009 Global environment management 867 ・Policies to reduce carbon emission ・Measures for carbon sink of climate change 　 ・Promoting Long-life housing Air environment management 234. 2 ・Environmental improvement of roadside, surrounding of airport ・Preparing facilities for road safety ・Preparing sewage-works and rural community sewages ・Protecting fishery 114 ・Exploiting local biomass ・Promoting sound material-cycle society ・Preparing ocean oriented waste treatment facilities Management of chemicals ・Maintaining urban parks and natural parks ・Restoration of nature Others 78 ・Establishing evaluation system of carbon footprint ・Promoting and developing environmental technologies Water, soil and ground environment management 743. 2 Waste management and recycling Nature conservation (billion yen) 261. 2 8. 2 ・Research for the risk of chemicals ・Inspecting environmental safety of chemicals FY 2009 Tax Reform l Investment tax reduction for the investment in energy-saving and new-energy facilities and in production facilities for goods such as energy-saving home electric appliances l Introduce new measures to allow tax deduction for housing investment relating to newly built long-term quality houses at one’s own expenses and renovation aimed at improving energy conservation and barrier-free l. Temporarily reduce tax burden on the automobiles that have passed higher environmental standards 25

Future Development Strategy (J Recovery Plan) Future Vision for the Year 2020 　　　　　 　　Japan will become a nation that plays world-leading roles through low-carbon emission revolution, a nation where all the citizens, irrespective of age and gender, are able to lead an active life without anxiety, and a nation where citizens and local communities are able to fully exercise their potentials and attractive characteristics at home and abroad. Basic policy concept: Smart investment (2)　Identifying the potentially competitive sectors of Japan (“underlying strength”) that will yield significant positive economic impacts and have great significance in the society, rather than simply taking economic-stimulus measures　 　　　　Working on concentrated investments and accelerated reforms for the next 3 years [Economic impacts in the next 3 years (on a cumulative basis)] Demand creation: 40– 60 trillion Job creation: 1. 4– 2. 0 million jobs 　 [Year 2020]　 Gross domestic product (GDP): up 120 trillion Job creation in strategic sectors: 4 million jobs * Estimated by the Ministry of Economy, Trade and Industry (METI) Taking off from economic recession (3)　Achieving sustainable growth by breaking away from recession, expanding domestic demand, and drawing on energetic economic performance in Asia and dynamism of the world economy 　　　 Offering ideal future societal models to Asian nations that are facing constraints from environmental/resource perspectives 　　 Sustainable growth (1) 　Selecting a project with double-barreled effects: Pulling out from economic recession in the short run and encouraging sustainable economic growth in the medium- and long-run 　　　Aiming at “J”-shaped economic recovery and economic growth (J recovery)

Three Pillars　 <Low-Carbon Revolution> A series of projects for leading low-carbon revolution ○　Further beefing up the highest environment energy technologies of the world such as energy -saving, new energy, eco-car, , and water treatment technologies ○ Taking a leading role in “low-Carbon Revolution” through the renewal of lifestyles and infrastructures ○ New “three holy durables” will generate new market demand job opportunities ☆The new “three holy durables: ” 　・Energy-saving houses equipped with solar panels; 　・Eco-cars (electric cars, etc. ), and 　・Environmental-friendly consumer electronics [Examples of main projects] ■New programs for purchasing solargenerated electricity ■Encouraging photovoltaic facility and energy-saving refurbishing works at public facilities, schools, etc. ■Explosive diffusion of the new “three holy durables” ■Developing technologies on nextgeneration batteries, superconducting linear motors, etc. <Health and Longevity> A series of projects that take advantage of medical and nursing-care demand for expanding domestic demand ○　Improving medical/nursing-care services to dispel anxieties about the future and encourage consumer confidence ○　Creating new job opportunities in the medical/nursing-care sector and festering the sector to a domestic demand-oriented industry ○　Encouraging innovations in medical-related industries to create a new high-value added market [Examples of main projects]　　　 ■Emergency measures for improving labor conditions of nursing-care staff ■Concentrated investment in municipalities forming alliance in medical services ■Reinforcing neonatal intensive-care units and emergency medical care centers and beefing up seismic retrofitting works for hospitals ■Constructing/improving three major belt freeways: Elimination of missing links ■Supporting intensive research programs for anti-cancer curative drugs, granting quicker approvals for non-approved anti-cancer curative drugs, and developing technologies of i. PS and livelihood support robots ■Developing urban mines (recycling of mobile phones) ■Shortening examination process for medical drugs and medical equipment <Promoting the Attractiveness of Japan> A series of projects to take advantage of the “underlying strengths” of Japan fostered by rich traditions and cultural background ○　Turning into a job creative and growing industry the agriculture, forestry, , and fisheries industries that support local economies ○　Sending out the soft powers of Japan overseas, including fashion, media videos, and animations ○　Achieving the status of a “Tourism nation” through the traditional “hospitality” mindset of Japan ○　Awakening the hidden potentials of Japan by investing in human resources and thoroughly making use of IT solutions [Examples of main projects]　　　 ■Recovering a quarter of cultivation abandonment farmland (approximately 100, 000 ha) in the next 3 years 　Tripling plant factories (24 -crop system) ■Expanding contents industry to overseas markets ■Selectively investing in elimination of electric poles in tourist spots ■Significantly shortening the waiting time of immigration examination process at Narita Airport and halving access time between Haneda Airport and Narita Airport ■Providing the top-level research environment of the world (making use of post-doctoral researchers and research assistants)

Low-Carbon Revolution　 　　　　　 The environment, natural resources, and energy fields, encompassing activities such as tackling global warming through energy conservation and new and renewable forms of energy; 3 R; and water treatment systems, should be seen not so much as placing restrictions on Japan’s development as providing opportunities for the nation’s growth. Japanese technology, among the world’s most advanced, is a pioneer in the establishment of “low-carbon, sustainable society” models, and in providing such models to other countries in Asia and other regions. Japan will become both a leader country for “Low-Carbon Revolution” and a “Resource Power” as a result of its development of “urban mining” and of marine resources. Plan to become the world’s number-one Solar Power and Energy Conservation Nation 　In regard to the proportion of renewable energy (including heat pumps, etc. ) in its final energy consumption, Japan has the target of achieving 20% more than the current level by 2020, referring to the EU methodology (approx 10% in 2005). It is also planned to increase the output of solar power to 20 times the current level by 2020. In order to do this, the Japanese government will support the development of advanced technology that enables the realization of a stable electric power supply, such as power control systems. ■ Establish a “new purchasing system of solar power. ” Write-off from creating demand. The cost of power generation will be halved in 3 to 5 years through existing policies and innovation. ■ Set up solar panels in public schools and buildings (54, 000 places). (immediate priority in the next 3 years) n Accelerate zero-emission buildings. Check energy conservation and conduct repairs of public buildings (immediate priority in the next 3 years) n Accelerate house modernization (modernizing more than 50% by 2019) n Promoting replacement of home appliances with energy-saving appliances (green appliances) n Future-oriented energy social system model project (enhance next-generation energy park and select 100 projects) n Promote cooperative research, demonstration and standardization in the fields of photovoltaic cells, fuel cells, superconductivity, and so on. (demonstration in USA, etc. ) The first nation to popularize Eco-Cars　 - Attempt to make half of new car sales be eco-cars(electric cars, hybrid cars, etc. ) by 2020 n Promoting replacement of official cars with eco-cars n Promoting replacement of old cars with eco-cars n Starting electric car advanced model areas (approx. 10 places) Low-carbon transportation and urban revolution n Fastest development and popularization of low-carbon transportation in the world 　　Implementation of practical evaluation for free-gauge train by the summer of 2010 　　Establish practical application technology for cell-type tram by 2012, superconductive linear by 2016 n Concentrate measures for low-carbon infrastructure development 　－Build ring road system for three large urban areas and resolve missing links 　－Charging infrastructure to avoid idling in ports for ships Resource power n Developing institutions for correcting old mobile phone (100 million mobiles = 3 tons of gold) →　urban mining n Promoting waste plastic recycling (attempt to achieve a recycle rate of at least 90% by 2020) n Entering world water market (establish first Japanese major water company and support its business overseas) n Enhancing support to secure upstream interest, strengthen development of resources that lie in adjacent waters (methane hydrate)

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