Seko: Moving forward, addressing climate change will not be an undesirable, expensive effort, but rather a source of further growth for business sectors. We need to create growth and innovation in the environmental sector.

To that end, finance is essential. It will be extremely important to have proper financing in place for climate-related innovation.
Each company should be required to disclose information on what efforts they are taking in terms of innovation in the environmental arena.

What’s also fairly important is to make a system where companies’ efforts are appropriately assessed by financial institutions and finance is properly mobilized.

Question: How would METI support such a movement?

Seko: The government formulated the TCFD Guidance (TCFD: Task Force on Climate-related Financial Disclosures, established by the Financial Stability Board in 2015) last December to promote proactive corporate disclosures on climate-related efforts. Japan was the first government in the world to publish such guidance.

Moreover, as a platform for dialogue for industrial and financial sectors, the TCFD Consortium was launched at the end of May with the participation of companies that support TCFD. The consortium seeks to revise the TCFD Guidance by adding new sectors for sector-specific explanations and best practices of disclosure, and newly create a guidance for green investment for financial sectors.

Through formulating two guidance for companies and financial sectors and holding discussions at the consortium, I hope to prompt dialogues between the industrial and financial sectors on green finance, creating a virtuous cycle.

Question: Would you tell us your plan on how to engage with foreign delegates at international discussions so that the contributions and strengths of Japanese companies receive recognition?

Seko: Efforts to engage in TCFD in Japan have been slow, but these days we’ve seen a growing number of firms supporting TCFD. Globally, supporters of TCFD include many financial institutions, while in Japan, there is much support from industrial sectors such as manufacturers, which, I think, is creating a virtuous cycle.

I’m hoping to share the contents of the consortium’s discussions with the world, rather than limiting such information domestically. As one of the relevant efforts, I’d like to hold a TCFD summit in Japan in the fall this year, calling for participation of leading corporations and investors from around the world.

Additionally, I’d like to promote discussions on the importance of dialogue between the industrial and financial sectors, taking advantage of the opportunity of the G20. I’m considering specifically voicing such a message at the ministerial meeting.

I’d like to share the insight from discussions conducted in Japan on how to incorporate views and opinions from the industrial sector into disclosure and evaluation, which will help Japan lead a global conversation on green finance.

Utilization of hydrogen

Question: Following the Hydrogen Energy Ministerial Meeting held in 2018, how would you like to further discussions on energy transitions and decarbonization at the G20?

Seko: In seriously pursuing energy transitions and decarbonization, we need to have disruptive innovation, which could create a “great leap” forward, rather than relying only on the continuity of incremental innovation that we usually see now.

An advisory panel of experts on Japan’s long-term strategy under the Paris agreement has placed hydrogen as one of the important elements for the country’s future energy vision. The government’s long-term strategy, to be adopted later, considers including a goal to reduce hydrogen cost to less than one-tenth of the current cost by 2050; doing so would make it much cheaper than natural gas.

Japan is the only country in the world thoroughly equipped with a series of hydrogen-related technological capabilities, from production, to storage and transportation, to utilization.

It is very important that Japan, which has such a background, lead the world on this front. We successfully organized the Hydrogen Energy Ministerial Meeting in October and announced the Tokyo Statement. While the progress of the efforts to implement the statement has been widely observed in the world, I hope to organize the second hydrogen ministerial meeting in Tokyo in September.

At the G20 ministerial meeting on energy and the environment, I’d like to hold discussions with participating countries on the importance and possibilities of using hydrogen, which may serve as a key technology for energy transitions and decarbonization.

Until about two years ago, I had the impression that it was solely Japan that was engaged in hydrogen, but the situation has largely changed. Through Japan’s efforts to explain the significance of hydrogen, the world has become very interested in the possibilities and opportunities it offers.

Hydrogen received a lot of interest at this year’s World Economic Forum annual meeting, where I was the lead speaker at one of the sessions. That is a testament to the growing attention on hydrogen and I think Japan is becoming recognized as a leader in this field.

The occasion of the G20 is an important opportunity to further this cause, and I’d like to create a movement to involve countries from around the world toward a common goal. For fossil fuel exporting and importing countries alike, introduction of hydrogen offers considerable trade and investment possibilities. As many energy-producing countries participate in the G20, I’d like to continue to engage them in the hydrogen discussion.

Question: In March, METI revised the Strategic Roadmap for Hydrogen and Fuel Cells to include a goal of hydrogen usage, seeking to drastically reduce the price of fuel cell vehicles, setting an ambitious target. How do you view this plan?

Seko: I instructed (ministry officials) to compile the road map with a strong will to achieve the goal. I think we managed to send out a concrete message to society.

Regarding the fiscal 2019 budget for measures relating to hydrogen, we increased it by about 50 percent. An increased hydrogen budget shows how serious the government is to this end.

Seko: While the internet connects the world and economic activities go global, certain disparities can be created and worsened. This in turn can lead to a backlash against digitalization and globalization. With political populism on the rise, the world has seen the emergence and expansion of protectionism.

In particular, restrictive trade measures that the world’s two biggest economies have implemented have created a sense of uncertainty for the global economy, the growth of which has, in fact, slowed. In addition to such protectionist moves, distorted industrial structures, which have seen the advent of such issues as steel excess capacity, have also negatively affected the global economy. As a flag-bearer of free trade, Japan needs to do everything it can to ensure stability amid unstable times.

Question: What role do you think Japan should play when the confrontation between the U.S. and China becomes a global risk?

Seko: Japan has been highly evaluated globally as the country took leading roles in coordinating both the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the economic partnership agreement between Japan and the European Union.

With that background, it is extremely important that Japan makes efforts to retain and develop free, fair and rule-based international trade frameworks. Protectionist moves won’t eradicate the root cause of trade friction. I believe the road to resolve issues is one paved by fair and competitive conditions through abolishing industrial subsidies that can distort markets.

Meanwhile, innovation has been rapidly advancing thanks to the “Fourth Industrial Revolution.” An important source of innovation these days is data. The whole process of collection and flow of data becomes a wellspring for innovation.

In that sense, data flow has increased explosively. At the same time, privacy and security concerns have grown, and there is a need to address these issues appropriately. On the other hand, some may seek to contain data or disallow data flow. Since these new issues have arisen in trade, I’ll take the lead to promote active discussion at the G20 ministerial meeting on trade and digital economy as chair.

Promoting WTO reform

Question: Some people are concerned about the decline in the function of the World Trade Organization that plays a central role in the multilateral trading system. What is your view?

Seko: If the WTO is not functioning properly, it would be one of the biggest issues that needs to be addressed.

It is important for Japan as a flag-bearer of free trade to commit to WTO reform. It is also important to have a firm commitment from the rest of the world. Unfortunately, however, some members seem to prefer solving issues through bilateral channels.

The Japanese government attaches great importance to the trilateral meeting of the trade ministers of the United States, Japan and the European Union, a forum in which all ministers have been actively participating. We have conducted this meeting five times and discussed topics including rule-making with regard to industrial subsidies, forced technology transfers and the digital economy.

In an extension of these discussions, the U.S. has shown its willingness, to a certain degree, to let this trilateral group take the lead in reforming the WTO. For example, the U.S., Japan and the European Union jointly presented a proposal on compliance of notification obligations such as industrial subsidies. Utilizing the opportunity of the G20 ministerial meeting, we will strive to gain support from other countries on WTO reform.

Question: What is the current situation on efforts regarding electronic commerce within the framework of the WTO?

Seko: We need to create trade rules that can address digitalization. So, Japan, Australia and Singapore became co-chairs to launch a joint statement initiative at the WTO ministerial conference in December 2017. At the World Economic Forum annual meeting in January, volunteer countries issued a joint statement to confirm the intention to commence WTO negotiations to that end, and 77 countries, including the U.S. and China, have signed it.

There is a growing momentum for creating trade rules related to digitalization and e-commerce within the WTO framework.

In his speech at this year’s Davos conference, Prime Minister Shinzo Abe declared his intention to launch the Osaka Track on the occasion of the upcoming G20 summit in Osaka toward international rule-making for digital trade. At the ministerial meeting preceding the summit, we’d like to support the negotiations on e-commerce in the WTO.