Sony warns it could move factories over Japanese energy policy

Sony has warned the Japanese government it may have to shift manufacturing out of the country unless rules on renewable energy are relaxed, as it tries to meet the green energy promises of customers such as Apple, according to a minister.

The comments from chief executive Kenichiro Yoshida underscore the pressures Japanese businesses are under to erase the carbon footprint of their manufacturing facilities as Apple, Facebook and other technology groups seek to shift their global supply chains to 100 per cent renewable power.

Sony’s concerns were echoed by the chief executives of Ricoh, the electronics company, cosmetics business Kao and fund manager Nissay Asset Management during a meeting with Taro Kono, Japan’s minister for administrative reform, earlier this month. 

“They told me it’s very difficult for them to purchase renewable energy in Japan. The quantity is limited and the price is very high,” Mr Kono said in an interview with the Financial Times. “So they told me either we do something about renewables or they have to move out of Japan.” 

The chief executives of Sony, Ricoh, Kao and Nissay Asset Management meet with Japan’s reform minister Taro Kono on November 18 to discuss renewable energy    © Japan Climate Initiative

Mr Kono acknowledged that Japan was “lagging behind” other countries in the use of renewable energy. He announced last week the establishment of a government task force to examine regulations that are hampering the expansion of green energy.

The focus on renewables comes in the wake of Prime Minister Yoshihide Suga’s recent pledge to make Japan carbon neutral by 2050. But the government has yet to outline specific steps to reduce the country’s reliance on fossil fuels, which increased sharply after the Fukushima nuclear disaster in 2011. 

The government’s existing plan calls for the use of renewables to increase from 17 per cent of electricity in the 2018 fiscal year to as much as 24 per cent by 2030, but that would still be below the 30 per cent already achieved by many European countries. 

In their meeting with Mr Kono, the companies, which are all members of the Japan Climate Initiative, requested the 2030 target for renewable energy to be raised to 40 per cent or more.

Sony’s European sites already run entirely on renewables, while its facilities in China are set to make that transition by the end of March and by 2030 for those in North America. 

Sony wants all of its facilities globally to run on green energy by 2040. But its factories in Japan, where Sony makes image sensors used in Apple’s iPhones, could be the biggest challenge to achieving that goal. The company will need to bring that target forward by a decade to meet Apple’s calls for its manufacturing partners to switch to 100 per cent renewables by 2030.

Producing the camera sensors requires intensive and highly stable electricity sources, making a full switch to renewables even more tricky. But shifting manufacturing abroad is also difficult due to concerns over the transfer of one of Sony’s most valued and competitive technologies.

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Sony declined to comment on its meeting with Mr Kono.

“We can’t meet the demands from our buyers,” one of the chief executives told Mr Kono, according to a person briefed on the meeting. Another company noted that its manufacturing sites in Japan only source 1 per cent of their electricity from renewables. 

To make it easier to invest in renewable energy, businesses have called on Tokyo to ease regulations restricting the use of land as well as coastlines and ports to build solar panels and wind farms.

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