RENEWABLE ENERGY INVESTMENT RISK ANALYSIS FOR LOW-CARBON CITY... 13costs of solar PV and wind power remain higher than the market cost
at 19.5 JPY/kWh and 11.5 JPY/kWh, respectively (Nishio et al. 2007 ;
CAS 2012 ). These figures indicate that solar PV and wind sources of
energy are more expensive than waste energy sources. In RPS markets,
less expensive technologies such as waste and wind power sources are pre-
ferred over other energy sources. Therefore, if targets are not established
in a sector, the installation of renewables focuses only on cheaper forms
of power generation. With the introduction of RPS, electricity generation
from wind power and waste biomass energy increased from 0.9 to 2.6
GW (from 2.2 to 4.3 TWh in the electricity generation) and from 1.3 to
2.3 GW (from 1.4 to 4.6 TWh in the electricity generation), respectively,
from 2004 to 2011 (METI 2012a, b). However, the RPS approach can
present risks when governments make policy and regulatory changes that
affect future RPS targets.
2.2.2.2 Green Power Certificate
Green power certificates are other method to promote renewable energy.
The differences between RPS and the green certificates are that while
RPS is imposed to power suppliers, the certificate is used by the energy
consumers who are willing to purchase cleaner energy or trade such as
under emission cap and trade programmes. For instance, Tokyo metro-
politan employs a green power certificate under its cap and trade system
(Tokyo Metropolitan Government 2010 ). A mandatory emissions trading
scheme, the Tokyo cap and trade programme was initiated in 2011 and
imposes total greenhouse gas (GHG) emissions reductions on companies
that consume fuel or electricity quantities totalling more than 1500 kl of
crude oil per year. These companies are required to reduce GHG emis-
sions independently or otherwise trade emissions by purchasing green
power certificates or by helping small- to medium-sized enterprises to
reduce energy use levels. In another example, Yokohama introduced the
“Y partner system” as a way of collecting funds for wind power generation
purposes, wherein a company donates funds for wind power generation
by purchasing green power certificates.^1 When using renewable energy
supplied from a power company, users pay a premium on environmental
value-added electricity by purchasing green power certificates.
However, there are certain identified drawbacks of green power certi-
fication in Japan (Suwa and Jupesta 2012 ). Green power certification in
Japan imposes no obligations on users and thus differs from a quota pur-