Reviews, Commentaries, etc. - NOMURA Koji

Reckless Policy for Energy Saving (in Japanese)

Koji Nomura

Wave (Denki Shimbun) (The Denki Shimbun)   2021.08

Article, review, commentary, editorial, etc. (trade magazine, newspaper, online media), Single Work

"Major Policy Changes Needed to Achieve Balance with Economic Growth" (in Japanese)

Koji Nomura

Energy Forum (Energy Forum Inc.)   ( 800 ) 22 - 23 2021.08

Article, review, commentary, editorial, etc. (trade magazine, newspaper, online media), Single Work

"Interview with the Author - Japan's Economic Growth and Energy" (in Japanese)

Koji Nomura

Energy Forum (Energy Forum Inc.)   ( 800 ) 126 - 126 2021.08

Article, review, commentary, editorial, etc. (trade magazine, newspaper, online media), Single Work

How are the factors for energy productivity improvement perceived? (in Japanese)

Koji Nomura

IEEI (International Environment and Economy Institute) (IEEI: International Environment and Economy Institute)   2021.07

Article, review, commentary, editorial, etc. (trade magazine, newspaper, online media), Single Work

Stagnation of TFP Improvement (in Japanese)

Koji Nomura

Wave (Denki Shimbun) (The Denki Shimbun)   2021.06

Article, review, commentary, editorial, etc. (trade magazine, newspaper, online media), Single Work

Growing Concerns about the U.S. Inflation Risk (in Japanese)

Koji Nomura

Energy Policy Report (Energy Forum Inc.)   2021.06

Article, review, commentary, editorial, etc. (trade magazine, newspaper, online media), Single Work

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The massive fiscal stimulus deployed to fill the aggregate demand shortfall caused by the pandemic has received broad support from the IMF, the World Bank, and economists around the world. As a side effect, however, inflationary concerns have been mounting in the United States alongside the recovery in output and a buoyant stock market that has repeatedly set new all-time highs. With vaccination rates high, the mood in the United States is increasingly one of approaching the end of the pandemic, and accumulated purchasing power is poised to be unleashed — a situation in sharp contrast to Japan, where a fresh state of emergency has been declared. In March, President Biden approved 1.9 trillion dollars in fiscal stimulus, bringing the cumulative total to nearly 6 trillion dollars. The previous month, Professor Summers of Harvard University warned in the Washington Post that this stimulus package carried the risk of producing inflation at a level not seen in recent times. Professor Summers, who served as Treasury Secretary under the Clinton administration and is closely associated with the Democratic Party, carries considerable weight, and his concerns have been taken seriously. The basis of his argument lies in the overwhelming scale of the stimulus: whereas the Obama administration's fiscal stimulus during the global financial crisis was sized to fill roughly half of the demand shortfall, the current package amounts to three times the demand that was lost. Professor Summers flagged the risk of inflation at a level not seen in half a century. Professor Ball of Johns Hopkins University and his colleagues adjusted the U.S. Phillips curve by stripping out the effect of temporary layoffs from the unemployment rate and using the weighted median of the consumer price index as the inflation measure. Under this framework, they projected that the fiscal stimulus would reduce unemployment by 1.5 to 3.5 percentage points, pushing inflation to 2.5–3.0% through 2023, and assessed the risk of an inflationary spiral as small provided appropriate monetary policy was implemented. However, the April CPI figures released on May 12th came as a shock to markets. Urban CPI rose 0.8% from the previous quarter, showing a clear accelerating trend, and the twelve-month inflation rate reached 4.2% — the largest increase since September 2008. Fed Vice Chair Clarida continued to view the drivers as transitory, but whether that assessment is correct or whether a delayed policy response is warranted remains deeply uncertain. For long-term inflation containment, the key question is whether the Biden administration's massive infrastructure investment plan of more than 2 trillion dollars can deliver productivity improvements in the U.S. economy. However, the plan includes investments of questionable productivity benefit, and uncertainty is substantial. Investment in the energy transition is one component of this, required on a sustained basis over decades and necessarily coexisting with existing systems during the transition period. Productivity is likely to retreat, or at minimum its improvement will be considerably delayed, and the dampening effect on inflation will be weak. Should the U.S. economy head toward prolonged productivity stagnation, the risk of stagflation — the simultaneous occurrence of inflation and recession — is also present. The path of energy transition in the United States will likely be significantly reshaped by how economic conditions evolve going forward.

Role of Manufacturing in Japan's Economy (in Japanese)

Koji Nomura

Wave (Denki Shimbun) (The Denki Shimbun)   2021.05

Article, review, commentary, editorial, etc. (trade magazine, newspaper, online media), Single Work

Sources of Price Differential (in Japanese)

Koji Nomura

Wave (Denki Shimbun) (The Denki Shimbun)   2021.04

Article, review, commentary, editorial, etc. (trade magazine, newspaper, online media), Single Work

Next Growth Champion (in Japanese)

Koji Nomura

Wave (Denki Shimbun) (The Denki Shimbun)   2021.02

Article, review, commentary, editorial, etc. (trade magazine, newspaper, online media), Single Work

Green Industrial Revolution in UK (in Japanese)

Koji Nomura

Energy Policy Report (Energy Forum Inc.)   2021.02

Article, review, commentary, editorial, etc. (trade magazine, newspaper, online media), Single Work

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In November 2020, the UK government announced its "Ten Point Plan for a Green Industrial Revolution," followed five weeks later, on December 25th, by the Japanese government's "Green Growth Strategy Toward Carbon Neutrality by 2050." While both share a tendency to paint an optimistic picture without clearly articulating the logic that justifies it, the UK's Ten Points — opening with the bold message that "Britain, which led the first Industrial Revolution 200 years ago, will lead the world again" — far surpasses Japan's growth strategy in concreteness and concision. The UK Ten Point Plan, from Prime Minister Johnson's foreword onward, places strong emphasis on Green Recovery, whereas the Japanese government's report does no more than briefly note that "in Europe and the United States..." Japan did not undergo a full lockdown, and the government's primary obligation was to support the unemployed and businesses in sectors such as food and beverage, accommodation, and retail. More than 95% of construction sites across the country continued operating throughout the pandemic, with thorough infection control measures in place. Against this backdrop, support for civil engineering works or research and development — however green — could easily appear opportunistic in Japan, and lacks persuasive force. A second emphasis of the UK Ten Points is job creation. The Green Industrial Revolution is said to generate 250,000 jobs in the UK by 2030, with a breakdown provided: 60,000 in offshore wind, 50,000 each in CCUS and green buildings, 40,000 in zero-emission vehicles, and so on. Yet while the arithmetic behind the figures may be understood, the logic by which they would generate economic growth is nowhere to be seen. Jonathan Ford of the Financial Times points out that "green jobs don't come from nowhere — they replace jobs that existed before." What should be compared is the value created by the jobs before and after, and it has been argued that the economic value generated by green jobs would fall short of the work lost in coal mines and coal-fired power stations. One cannot help but raise an eyebrow at the UK government's use of gross employment figures to dress up the Green Industrial Revolution. Energy transition is painful. The real question is the "net gain," which is difficult to measure. If workers previously confined to low-productivity jobs are able to achieve higher productivity in new businesses, the net gain is positive — but in the UK's case, it appears likely to be negative. On the other hand, if some former workers had been receiving incomes disproportionate to their productivity, or if overinvestment by monopolistic enterprises had generated inefficiencies that contributed to high electricity prices, then energy transition might deliver a positive social gain through lower electricity prices. However, a report by Professor Gordon Hughes of the University of Edinburgh, based on actual cost data from more than 350 onshore and offshore wind farms in the UK, finds that the price of wind-generated electricity has not fallen — it has in fact risen — and that there is no prospect of significant decline over the next five to ten years. If generation costs continue to rise, the odds of success for the Green Industrial Revolution will be correspondingly diminished.

Repeated Optimism

Koji Nomura

Wave (Denki Shimbun) (The Denki Shimbun)   2021.01

Article, review, commentary, editorial, etc. (trade magazine, newspaper, online media), Single Work

SME Business in Society 5.0

Koji Nomura

Risona-re (Resona Research Institute Co., Ltd.)  19 ( 1 ) 7 - 10 2021.01

Article, review, commentary, editorial, etc. (trade magazine, newspaper, online media), Single Work,  ISSN  0918-6670

Coherency of Energy Policies

Koji Nomura

Wave (Denki Shimbun) (The Denki Shimbun)   2020.11

Article, review, commentary, editorial, etc. (trade magazine, newspaper, online media), Single Work

Expansion of Household Own-account Production of Service due to the COVID-19

Koji Nomura

Energy Policy Report (Energy Forum Inc.)   2020.11

Article, review, commentary, editorial, etc. (trade magazine, newspaper, online media), Single Work

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Half a year has passed since the economic damage from the COVID-19 pandemic began in earnest, and the first statistical signs of recovery are beginning to emerge. Japan's economic growth rate in the second quarter of this year came in at minus 10.0%, a somewhat deeper contraction than the minus 8.9% recorded during the global financial crisis. The two crises have, however, affected the Japanese economy in qualitatively different ways, and it is from a comparison of their respective recovery processes that I wish to consider the outlook for future energy consumption. The damage to manufacturing from the pandemic is shorter-lived than that inflicted during the global financial crisis, which was driven by a dramatic collapse in external demand. The export volume index, the industrial materials shipment index, and the durable consumer goods shipment index have all been recovering strongly, and the pace of macro demand recovery is faster than during the financial crisis. For industrial production as a whole, it took approximately twice as long during the financial crisis to achieve the level of recovery seen between May and August this time. The recovery has been led by the automobile manufacturing sector. Production volumes for standard passenger cars, light vehicles, and motorcycles have all roughly doubled, and by providing appropriate working environments amid advancing automation, factories have succeeded in resuming operations without generating clusters of infection. Where demand exists, manufacturing adapts quickly to new production methods that avoid the concentration of people. For services, whose defining characteristic is simultaneous production and consumption, such adaptation is considerably more difficult. The recovery in automobile production was also supported by demand for private car commuting as people sought to avoid using public transportation. Particularly among economically better-off households, there has been a shift away from collectively consumed mobility services such as trains and buses toward "own-account production" — producing those services for oneself. The office, a composite service collectively consumed by employees, has also been partially substituted by own-account production at home. For products such as split-system air conditioners, built-in kitchen systems, electric refrigerators, and electric washing machines, domestic production levels in August of this year have already surpassed the February levels that preceded the full impact of the crisis. Laptop computers were up 25% and fiber optic communication cable products up 19%, as households produce for themselves the composite services that constitute a high-quality working environment. Over the medium to long term, own-account production services will likely coexist alongside the collectively consumed services of the past. Energy consumption in public transportation and offices will not change substantially even as passenger and occupancy density declines. The replacement of old appliances will accelerate the penetration of energy-efficient durable goods, but this will not offset the additional energy consumption from expanded usage. In the near future, households will consume by choosing between own-account production services and high-quality external services. Energy demand remains weak at present, but when macro demand recovers to its former scale, energy consumption will tend to increase. There is no need to lament the expansion of consumption — what is called for is preparedness to ensure stable supply.

Challenges to Develop Society 5.0 for SDGs in Japan

Koji Nomura

Monthly Keidanren    40 - 41 2020.11

Article, review, commentary, editorial, etc. (trade magazine, newspaper, online media), Single Work

Stagnation due to Low Wages

Koji Nomura

Wave (Denki Shimbun) (The Denki Shimbun)   2020.10

Article, review, commentary, editorial, etc. (trade magazine, newspaper, online media), Single Work

Effective Import Dependency of Electricity

Koji Nomura

Wave (Denki Shimbun) (The Denki Shimbun)   2020.09

Article, review, commentary, editorial, etc. (trade magazine, newspaper, online media), Single Work

"Project Report on Measuring Quality-adjusted Price and Quantity of Education Outputs in Japan"

Koji Nomura

Economic and Social Research Institute (ESRI) Project Report (Economic and Social Research Institute (ESRI), Cabinet Office)   ( 81 )  2020.08

Rapid communication, short report, research note, etc. (bulletin of university, research institution), Single Work

National Wealth Survey in Mongolia

Koji Nomura

Wave (Denki Shimbun) (The Denki Shimbun)   2020.07

Article, review, commentary, editorial, etc. (trade magazine, newspaper, online media), Single Work

Will Implementation of Future Technologies Reduce Energy Consumption?

Koji Nomura

Energy Policy Report (Energy Forum Inc.)   2020.07

Article, review, commentary, editorial, etc. (trade magazine, newspaper, online media), Single Work

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In the wake of the decline in energy demand and CO2 emissions caused by the pandemic, calls for a green recovery have grown loud. Yet the fiscal stimulus deployed by advanced economies has been directed primarily at business support and income compensation, with green investment receiving allocations of an entirely different order of magnitude. As economic activity recovers, emissions will likely return to their previous trajectory. Indeed, the dispersal of activity may itself generate a significant expansion in energy consumption. Longer-term prospects depend on the adoption of emerging technologies such as AI, IoT, and 5G — which offer the prospect of substantial improvements in energy efficiency, while also raising significant concerns about the enormous expansion of electricity consumption in data centers, among other issues. Under the vision of "Society 5.0 for SDGs" advanced by Keidanren, a model simulation was conducted to estimate the impact on the Japanese economy of the social implementation of 57 future technologies. The deployment of diverse technologies — including the digitalization of manufacturing processes, telemedicine and care robots, FinTech, InsurTech, and EdTech — is projected to accelerate the economic growth rate through 2030 from the baseline case of 0.8% per annum to 2.6%. This is comparable to the healthy growth trajectory of the United States, whose per capita GDP is currently about 40% larger than Japan's. Japan currently lags the United States significantly in labor productivity. The Japan-U.S. labor productivity gap in 2030 is estimated to remain around 30% in the baseline case, but through the aggressive implementation of future technologies, the gap narrows to just 9%. The realization of Society 5.0 points to a return to a growth trajectory in which Japan catches up with the United States in productivity terms — transcending the three decades of stagnation that defined the Heisei era. Energy productivity improvement through 2030 is projected at an annual rate of 2.2% even in the baseline case, but accelerates to 3.1% under Society 5.0 — a pace comparable to what the Japanese economy achieved in the aftermath of the first oil shock. Yet even with rapid improvements in energy productivity, the acceleration of economic growth through the deployment of future technologies — accompanied by structural changes such as the expansion of digital capital accumulation — is estimated to increase overall energy consumption in aggregate. The increase in energy demand from economic expansion has consistently outweighed the reductions achieved through efficiency improvements, and the coexistence of efficiency gains and quantitative growth in energy consumption is a pattern observed throughout the postwar economy. Technological innovation is driven by latent demand for new goods and services. Energy conservation is one such demand, but its market scale is relatively modest and insufficient to serve as the primary driver; the emergence of new products with appropriately large markets — such as robotics and medical and elderly care — will be accompanied by increased energy consumption.
These projections suggest that the key to addressing energy and environmental challenges lies in the decarbonization of the supply side of secondary energy. Through the operation of next-generation renewable energy, hydrogen-fired power generation, and small modular reactors, a 17.8% reduction in total CO2 emissions from the baseline case is projected for 2030. In recent years, pessimistic views on demand outlook have been heard from energy businesses, but it should not be forgotten that these views are grounded in the experience of an exceptional period of stagnant labor productivity improvement. Strong and sustained improvement in labor productivity can be realized together with expanded inputs of capital and energy. We should look beyond prolonged stagnation and seek a vision of the future in which technological innovation, economic growth, and environmental stewardship are brought into alignment.