Regulatory Developments Although the Government of Japan is placing increasing importance on environmental protection, energy-saving, recycling, global warming and other environmental issues, there has been relatively little progress towards a comprehensive strategy to deal with the numerous environmental issues in the area of pollution, soil remediation, waste removal and water treatment. The regulatory regime governing environmental protection and the environmental business is relatively weak in terms of consistent application and enforcement of rules, especially in regards to soil remediation. Legislation, such as the new dioxin emissions standards introduced in 2002, is enacted on a piecemeal basis, leaving many questions unanswered about how the Government intends to address its long-term environmental challenges. In the private sector, certain Japanese companies are world leaders in developing innovative environmental technologies to improve fuel efficiency and reduce pollution, yet public and private entities remain hesitant to divulge their challenges in terms of the environmental problems they face today and expect in the future. This weakens the interest of European companies, greatly experienced in this field, in investing in Japan and bringing the benefit of their expertise to the market. The EBC is encouraged by a number of recent developments that bode well for the future of the soil remediation sector. The new Soil Contamination Measures Law, for example, creates a strict new environment for the remediation of contaminated soil sites, which will likely result in increased interest in soil remediation technologies in the immediate future. However, the long-term impact of this reform will depend to a large extent on the ability of the regulatory authorities to effectively implement these new guidelines. The EBC also remains concerned about the regulatory environment governing the soil remediation practices themselves. The Japanese Government has yet to develop clear guidelines regarding site characterisation standards, sampling and testing procedures, risk-based decision models for determining remediation urgency, and a comprehensive timeframe for cataloguing and cleaning up polluted sites. Many testing methodologies differ substantially from accepted international practice, and testing costs are much higher than in Europe. The EBC feels that increased competition in site assessment and testing services would benefit the environment and help society by reducing the costs associated with remediation. The EBC believes that Private Finance Initiatives (PFI) and Public-Private Partnerships (PPP) represent a way forward for Japan to enhance the development and delivery of such services and attract European companies specialising in this field. Revision of the Water Law in 2002 enabled delegation of the management of drinking water and wastewater services to private professional operators through PFI/PPP schemes, but take up of this new provision has been limited. The EBC therefore urges the Japanese government and the EU to unite on principles and practices of PFI/PPP. Prospects for EU-Japan Economic Integration Japan's environmental technology market accounts for 16% of the global market, making it the second largest market in the world. The mere size of the market implies tremendous opportunities for foreign companies with innovative environmental technologies, machinery or services. However, foreign firms trying to enter the market are hampered by a closed government procurement system. The environmental industry and technology are to a large extent created and developed through environmental regulations and large-scale investment plans of governments. Government policies are therefore crucial for opening up the market to efficient and innovative services. Priorities
Key Issues and Recommendations ■ Attitudes towards environmental remediation Yearly status report: no progress. In Japan, environmental problems such as the illegal dumping of waste, high levels of soil contamination, low levels of plastic recycling, and an aging waste management infrastructure pose significant health and financial risks. Environmental remediation should not be regarded as an expense. The development of new technologies to combat environmental problems generates important economic benefits, and these should be emphasised. Recommendation:
■ Regulatory structure Yearly status report: no progress. While the regulatory regime governing environmental protection and environment-related businesses is highly developed in Japan, it is not always conducive to the introduction of innovative solutions to environmental problems. Recommendation:
■ Government procurement Yearly status report: no progress. Private Finance Initiatives (PFI) and Public-Private Partnerships (PPP) are gaining popularity in Japan. These means have long been applied in Europe for the funding of entities traditionally financed, managed, and operated by public authorities. European firms specialising in this field would like to enter the Japanese market, but conservative attitudes towards alternative service delivery continue to obstruct these initiatives. In the water sector, for example, public works development continues to be dominated by equipment manufacturers and construction firms. Private companies are not yet able to provide comprehensive operational management to help boost performance. This has resulted in high initial capital investment, high running costs, over-capacity, and a growing debt burden on municipalities. Recommendation:
|
