Carbon Neutrality and Japan’s Automotive Industry: Towards Green Supply Chain Networks

Résumé:

Purposes:
-to examine Japan’s Carbon Neutral (CN) policy in the automotive sector
-to analyze Japanese OEM’s vehicle powertrain strategies under the CN policy
-to investigate the establishment of green supply chain networks in Japan

Methodology:
-to use a qualitative method by employing various depth interviews with automotive experts in Japan and Europe.

The main results:
-Japan’s CN policy in the automotive sector is based on life cycle assessment (LCA).
-The Japanese government opens powertrain options for OEMs toward carbon neutrality.
-Each Japanese OEMs have different strategies towards carbon neutrality.
-Japanese OEMs, as well as parts suppliers, will introduce a new method to visualize CO2 emission from material, parts, assembly, and energy input by employing LCA.

Significances:
-Unlike EU’s tailpipe (tank to wheel) method, Japan has started using well to tank/LCA method to tackle carbon neutrality.
-CO2 emission will be one of the main determinants in the trade relationship between OEMs and suppliers in Japan in the future.

Abstract:
This study examines Japan’s automotive industry from the perspective of carbon neutral (CN) policy and strategy. As a sectoral policy, the Japanese government advocates a multi-pathway policy to tackle carbon neutrality, which promotes not only battery electric vehicles (BEVs), but also various types of powertrain vehicles including hybrid electric vehicles, plug-in hybrid vehicles, fuel cell battery vehicles, and hydrogen internal-combustion-engine vehicles. In short, a variety of vehicle powertrain options is open for automotive producers (OEMs). Importantly, this policy is based on the concept of the Life Cycle Assessment (LCA) method that calculates the total CO2 emissions of a whole automotive supply chain network (from energy sources, material production, parts production, vehicle production, and driving process to recycling), rather than commonly used the Tank to Wheel method that calculates CO2 emissions only during the driving process (therefore, BEVs are Zero Emission Vehicles). As a sectoral CN strategy, the Japanese automotive industry is aiming to establish green supply chain networks based on LCA, through visualization of CO2 emissions. Currently, Japanese OEMs and suppliers are making CO2 emission databases for each component that enables OEMs to calculate CO2 emissions per vehicle. Until today, trade relationships between OEMs and suppliers are determined by three factors: quality, cost, and delivery. However, shortly, new criteria for CO2 emissions per component will be introduced as the 4th trade factor in the Japanese automotive industry.

Keywords:
automotive industry, multi-pathway policy, green supply chain networks, LCA, Japan