Energy Storage Benefits from Carbon Neutrality: Japan's Path

This document explores how the energy storage industry can benefit from carbon neutrality targets, focusing on Japan's demand-side emission reduction pathways. It presents comparative research scenarios from the Japanese Multi-model Integration Project (JMIP2), analyzing energy demand trends under transition and new growth points for energy storage under net-zero constraints. Global battery energy storage installed capacity has grown exponentially, from 1 GW in 2013 to over 85 GW by 2023, with projections reaching 760 GW by 2030 under stated policies and 1,200 GW under net-zero scenarios. The document highlights benefit dimensions of energy storage, including carbon emissions assessment for product premiums, market access, and policy support, driven by transnational supply chain carbon footprint disclosure, mandatory carbon market expansion, and green credit requirements. It also examines Japan's challenges in achieving carbon neutrality by 2050, including difficulties in reducing emissions from energy-using and power sectors, and uncertainties in CCUS, electrification, and clean electricity supply. The JMIP2 model scenarios assess technology assumptions such as default technology, unlimited CDR, cheap imported clean energy, and cheap renewables, showing that under net-zero constraints, Japan's renewable energy generation could reach ~60% of total, with wind and solar accounting for 50%. The document concludes with an analysis of Japan's energy storage market, noting structurally high costs averaging $433/kWh for utility-scale battery systems in FY2024.