One of the largest institutions in the world for R&D into energy and environmental problems, NEDO is constantly adapting and innovating to the needs of society and the market. Established in 1980 by the Japanese government as a semi-governmental organization to promote the development and introduction of alternative energy, Chairman Kazuo Furukawa discusses NEDO’s expansion into IoT, robotics and AI, as well as some of the results from its forward-thinking international partnerships.
Could you please explain your unique history as an organization?
NEDO stands for New Energy and Industrial Technology Development Organization. There were two oil shocks in the 1970s, and at the time the Ministry of Economy, Trade and Industry (METI), which is the organization in charge of energy and industrial policy, said, “The energy and environment is a big issue. How are we going to tackle this?” Both energy and the environment are very technologically complicated issues, and it requires a long term to complete. Such a development process comes with high risks. In principle, companies should take risks for developing the technologies, but they often cannot afford to. Because of this, it is hard for them to invest capital in this area. That is why NEDO was created.
Initially, we were focused on technologies such as solar power, wind power, hydrogen and advanced power technology. We thought they had potential even if it was uncertain that how these new technologies would play out. Towards this end, the country has gotten behind these initiatives and backed them. We have created a government-private partnership. It is industry, government and academia coming together to create a consortium with the ultimate goal of developing innovative businesses in the energy sector.
We are not just limited to energy and environment; we have broadened the scope of our activities to include robotics, artificial intelligence (AI), internet of things (IoT), and cyber physical systems (CPS). In terms of CPS, this refers to using a computer’s virtual augmented reality to create a novel environment in reality. This is used in our projects in terms of social infrastructure. We try to boost innovative business initiatives in Japan across the spectrum.
Since we were established in 1980, we have consistently focused on renewable energy development and saving energy. In terms of reducing CO2 and other greenhouse gases emissions, we focused on the most important technologies. We worked, endeavored to make the Kyoto Mechanism cut its CO2 and greenhouse gases, but unfortunately the US and China did not participate in the Kyoto Protocol. That was unfortunate, but we kept our promise and completed our terms. We have learned a lot through our Kyoto Mechanism.
I do not think it is necessary to have a shared framework. As outline in the Paris Agreement, it is important to have a platform that all countries can participate in. This is very important, and we have worked with other countries on this issue. As stated in the Paris Agreement, having a framework with voluntary targets for five years was decided. That will be followed by more targets and it is continued forward. This is a very good framework, and is something we committed to seeing through all the way.
I actually participated in COP21, and was very moved by all the enthusiasm of the participants who were so eager to tackle the global warming problem. After that, we thought about what is most important for NEDO and Japan. What do we do? We came to the conclusion that innovation is the most important thing. We had the perspective before, but we are even more committed now to innovation and promoting innovation.
Before COP21, Japanese Prime Minister Shinzo Abe had proposed the establishment of a new international conference for policymakers, business persons and researchers to discuss and address climate change through innovation, which we call the “ Innovation for Cool Earth Forum”, also known as ICEF. Now, NEDO and the Ministry of Economy, Trade and Industry (METI) are jointly organizing ICEF. As one of the its features, ICEF develops a roadmap. It aims to help industry, academia and governments around the world to promote vision sharing for developing and disseminating innovative low-carbon technologies as well as taking concrete action. Last year an ICEF roadmap entitled “Distributed Solar and Storage” was released at side events of COP21. NEDO and METI will host the next forum “ICEF2016” on October 5-6, 2016, in Tokyo for further discussion on net zero emission of CO2.
We worked a lot on the national project because it was very important to us, but it was not the only thing we worked upon. We are also working to make Japan a stronger, more vital country. One thing that we are trying to do as a nation is to breathe some life into, and support, medium-sized venture-type firms similar to Silicon Valley. That kind of corporation has not settled in Japan, and we are trying to find a way to nurture them.
In terms of innovation, what is going to be crucial is what we call open innovation. There are a lot of venture companies out there, mid-size and small companies, but the large corporations mostly ignore them. Large companies tend to be very vertically integrated, and do not look outside horizontally, per se. Trying to find a way to get the large companies to notice and create a way for them to systematically work with medium and small companies is one of our goals.
Creating engagement, interaction, and conversation between these venture companies and the larger corporations is one thing. We think that this will naturally spawn new environmental businesses if it happens. Here at NEDO, we are trying to act as a bridge to link the two groups. This is something that METI is trying to do as well.
In terms of the perspective of Abenomics, it is not just focusing on small and medium-sized venture firms, but also focusing on the environment and regional economies as well. One example I would like to talk about is Fukui Prefecture. It is in northern Japan, and is historically famous for its silk industry. They have great knowledge of textiles. What would happen if we combined a new technology with their textile know-how in a way where we can come up with innovative print fabrics? By combining this traditional industry with technology, we can create new textiles that will breathe new life into this industry. The small and mid-size venture businesses are not just about helping the economy; it is also about helping the regional economies, and Fukui is only one example. This represents what I was talking about—how important innovation is.
In Tokyo and other urbanized areas around Japan, we established JOIC, Japan Open Innovation Council, that involves mid-sized companies connecting with large companies. There are hundreds of companies meeting and discussing how they can create the next big thing. We are hoping that they are doing so from a regional perspective.
Considering how wide your mandate can be, you are into robotics, CPS, etc., what are your top priorities? Is it difficult to focus into certain sectors or projects? Where do you see the most impact of NEDO, what’s the future of NEDO look like?
In terms of the cost performance moving forward, this is something that is very important and we are very focused on. In fact, for the past 30 years, we have statistics on the cost performance of our work. Thinking about our original mission, we are with the environment and energy, reducing energy use, coming up with initiatives to save the environment and Earth. Essentially, the environment and energy will always be our focal areas for the foreseeable future.
As in the Paris Agreement, it touts zero energy for the future, and that is on a big scale. But we are thinking on a different scale. We are thinking about a more pragmatic scale. For instance, we are talking about zero-energy buildings or zero-energy homes. For us, zero energy is very important in terms of just a way of thinking. It is very important that we disseminate our technology around the world.
There are two examples. One is the State University of New York (SUNY) Polytechnic Institute, which is a zero energy building we worked with them to create. Another is electronic vehicles (EVs) in Maui, Hawaii. On this island, the governor is starting an initiative to make the island “zero energy”. Now, they have tankers coming in and delivering fuel every day, but the governor is committed to getting away from these deliveries, and make the island zero energy and self-sufficient. In terms of domestic energy, business organizations have implemented voluntary objectives, and they have reduced their businesses’ energy consumption. In terms of household and transport, they have not made as much progress and are behind.
In terms of cost effectiveness from what we have done in the past, situations have changed a little because Japan can no longer rely on semiconductors and computers to compete globally. It needs to focus on areas where it can really make its expertise shine. IoT, robotics, and AI are taking market share in these areas and disseminating them into the general industry. Focusing on this is something that we think will be cost effective, and we just started doing it, so we are not there yet.
These four areas—IoT, robotics, AI, and sensors—are the areas we see as important.
Japan is synonymous with advanced technology, a pioneer in the world. We believe that is a result of your facilities and the operations that NEDO undertakes. Indeed, you already have a global network of partners and are helping to share and disseminate advanced technology. How important is this?
We are not focused on just trying to export Japanese products overseas. That is not our true intention at all. In particular, when it comes to global warming, we want to have technologically advanced goods for use at the local level. This could involve Japanese goods, but it also involves local players. It is important that this business be a win-win, or else it will not continue and it will not be good for international relations.
We take a big approach or use a framework in the work that we do. So whether it is in China, India, the US, Europe, or other countries, there are a lot of smart grids and smart community programs that are underway. But these are not just involving one firm or piecemeal initiatives. These involve agreements that are forged between governments, communities and companies who work together to ensure that everyone benefits.
When it comes to advanced technology and the effectiveness of use, this is something that we thought a lot about before the disaster in March 2011, but after we knew how important it was and really drove it home. The effectiveness of use is not just in Japan. Since then, we have focused more on doing international work and talking with regional players to launch pilot projects overseas.
You were appointed as NEDO’s chairman in 2011 and reappointed in October 2015. Under your leadership, NEDO has made strides in hydrogen fuel cell technology and robotics. In 2014, Professor Hiroshi Amano received the 2014 Nobel Prize in Physics working with NEDO. After such great accomplishments in your first term, what are your plans to continue this tradition of success, and what are your plans to accomplish these goals?
First, as I said before, innovation is the key. Therefore, when it comes to technology, we have to ask ourselves what is innovation of energy and the environment. There is nanotechnology and robotics that all goes back to innovation. In terms of COP21, I did not talk about this a lot, but there were JCM, the Joint Crediting Mechanism. This is a kind of joint credit mechanism.
This involves working with developing countries to reduce CO2 emission and this is something that is welcomed in Japan as part of a new initiative we are working on. In terms of energy and environment, stopping global warming through innovation is key. That is what it all comes down to and we have to work together. In Japan, there is industrial technology, but we still need to develop. We cannot be complacent. We have to do more with IoT, robotics, and AI. After we develop this, it will eventually become global technology and we are working with people in the US to do it.
The government of Japan wants to increase the number of players that are using the JCM. Right now, the government is working with 16 countries on this initiative, and the more advanced and developed countries who participate in it, the better it will play out in the long run.
Why is now the time that the world’s leaders need to act decisively in order to sustain the long-term health of our planet?
Oil is at a very low price right now because of the shale gas issue, the Middle East and Iran issues, and other issues. But no matter the case, fossil fuels are limited; they are finite. We want to create economic development that does not rely on these finite fossil fuels. We want to work with renewable energy, and energies that do not generate CO2, such as hydrogen technologies. We want to take energy and energy development in that direction.
This is going to involve coming up with an economic growth strategy and a global warming strategy that are together both sustainable. That is what is going to be needed. The timing of the great success of COP21 is very important. As I said before, there are policies, measurements, and a lot of things out there, but what it all comes down to is innovation and technology.
Without one or two big innovation achievements of new technologies then I do not think we can succeed. The important thing is to put our efforts into innovation.