Interim Report by the Study Group on Decarbonization, Energy Geopolitics and the Middle East

1. Introduction

1) The Issue

In recent years, particularly after the adoption of the Paris Agreement at COP21, moves toward decarbonization have been accelerating worldwide. This also suggests a growing sense of crisis over the rising average temperature of the Earth. Terms like decarbonization and a shift to clean energy carry complex and broad meanings and are expected to have implications far beyond the energy sector, extending to various social systems and the way people live. However, amid the global shift to decarbonization, the overall process has not been understood sufficiently, although some pioneering studies have been conducted on the magnitude and extent of its impact and the speed of associated changes.

By looking into the changes in the Middle East, especially in the Persian Gulf region as a major oil and gas producing area that is expected to be significantly affected by the shift to clean energy, the Study Group on Decarbonization and Energy Geopolitics in the Middle East intends to deepen the understanding of the current situation of decarbonization and study how the energy transformation in the Middle East will affect global energy geopolitics. The Study Group will also continue to work on potential changes to these moves toward decarbonization, with particular attention to how changes in the Middle East will affect Japan. One thing to note is that Japan’s dependency on the Middle East for crude oil imports increased to 97.3% in June this year, according to the Agency for Natural Resources and Energy. Naturally, diversifying the source is the key to ensuring reliable supply. Japan should seriously consider how to lower its dependency, or it should take action in the first place, such as reducing the relative share of oil in its energy mix by accelerating the introduction of renewable energy. One possible measure for Japan would be to effectively lower the “risks” by contributing to stability in the Middle East through diplomatic or other efforts. It would be also essential that both Japan and the Middle East enhance attention to each other and strengthen mutual relations. With these perspectives in mind, the Study Group intends to make recommendations on how global decarbonization trends will impact Japan’s diplomacy, economy, and business, and how Japan should prepare for such impacts.

In light of these objectives, this interim report seeks to generally outline the impacts of decarbonization to lay the groundwork for subsequent studies. The aim is to discuss from broad perspectives international relations, diplomacy, economy, business, and other topics beyond the energy sector in view of the impact of decarbonization on not only the Middle East but also the entire world. By accumulating insights into the decarbonization process and the future of the world through these activities, the Study Group ultimately aims to enhance the awareness of decarbonization in Japan’s public and private sectors and thus help Japan chart a clearer path to the future, as well as to ensure that the long-fostered relationship between Japan and the Middle East will be maintained in the future in a meaningful way.