What were the biggest similarities in actions taken/ methods of industrialization in japan & egypt?

Prices of crude oil (Arabian Light) more than tripled in less than half a year in the first oil crisis that began in October 1973. This also triggered the transfer of the right to determine crude oil prices from the European and American oil majors to the oil-producing countries. Following the second oil crisis of January 1978, crude oil prices doubled between 1979 and 1981 due to price increases by the Organization of the Petroleum Exporting Countries (OPEC).

These crises made the stable supply and volume of energy a top priority and spurred interest in energy conservation measures and policies for introducing alternatives to petroleum. In the medium term, crude oil prices fell after OPEC lowered the official price by five dollars per barrel in 1983. The soaring price of crude oil had led non-OPEC countries to increase their production of oil, and Saudi Arabia abandoned its role as swing producer (adjusting production) in July 1985. In that sense, the policy question of how to address the crisis was temporary.

Nevertheless, the comprehensive energy policy system that had been developed to decrease Japan’s dependence on oil exerted a significant influence on public policy. The policy had three pillars: (1) securing a stable supply of oil, (2) promoting the development and introduction of petroleum energy alternatives, and (3) promoting energy conservation. This represented a shift from the rapid-growth era’s pursuit of “abundant, inexpensive, and stable” supplies to “securing a stable supply as the priority policy issue.”

In other words, “energy security” (ensuring the stable supply of energy) became one of the so-called 3 E’s of energy policy, along with “environment” (adapting it to the environment) and “economy” (utilizing the market principle). This remained the case into the twenty-first century.4

As mentioned earlier, the Natural Resources and Energy Agency, established as a MITI affiliate in the July 1973 organizational reform, played the role of promoting a unified energy policy. The organizational reform had been based on the Industrial Structure Council interim report, which had laid out the need for a comprehensive and integrated approach to (1) the expansion of the economy and concomitant increase in demand for energy resources; (2) the changing conditions of resource and energy supplies; and (3) the establishment of comprehensive natural resources and energy policies (Kikkawa 2011, p. 41).

4.1.2 The Two Basic Laws on Oil

The Kakuei Tanaka Cabinet, which decided on the Guidelines for Emergency Measures for Oil at the November 6, 1973 Cabinet meeting, called for conserving consumption. At the same time, it took up urgent legislation to prevent unfair profiteering and the spread of inflation due to piggybacking price hikes, and established the Petroleum Supply and Demand Optimization Law and Act on Emergency Measures for Stabilizing Living Conditions of the Public (the so-called Two Basic Laws on Oil) (Kikkawa 2011, p. 120).

The Law on Optimizing Oil Supply and Demand stated (1) that the Prime Minister, following on a decision by the Cabinet, would implement measures to deal with the shortage of oil supplies, and (2) that MITI, following on the said Cabinet decision, was responsible for notifying petroleum contractors of the oil supply targets and of the plans for the production, import, and sale of oil. The authority was given to the MITI Minister to make changes, if necessary; it was also declared that oil consumers should not use more petroleum than the quantities specified by Cabinet order. The MITI Minister was further given the authority to order the implementation of restrictions on sales methods in order to conserve the use of light oil, and likewise to order the sale and delivery of oil to oil dealers to ensure a “supply of petroleum to businesses and activities indispensable for the protection of the people’s lives.” In this way the government (MITI) was given powerful controlling authority, a reflection of the sense of crisis in the government and related organizations.

Although the emergency measures themselves were removed as of September 1, 1974, efforts to stockpile oil proceeded, and technological development was undertaken in energy-savings and new energy. This will be discussed in greater detail below. The Petroleum Reserve Law enacted in December 1975 required oil companies to maintain oil reserves.

The law was enacted in response to international obligations. The International Energy Agency (IEA), which was established in November 1974, required member countries to maintain petroleum reserves: private oil companies were required to maintain a 70-day stockpile of petroleum, and following the second oil crisis, that requirement was raised to 90 days’ worth. Meanwhile, the Japan Petroleum Development Corporation Law was revised to become the Japan National Oil Corporation Law in June 1978 in order to enable national government organs to stockpile petroleum, with the Japan National Oil Corporation bearing responsibility for building the reserve. As demand for LPG rose in the 1980s, LPG reserves also began to be considered a priority, and in 1991, the Petroleum Reserve Law was revised to require private LPG importers to stock a 50-day supply of imported LPG.

The November 1976 Act on the Quality Control of Gasoline and Other Fuels required distributors to be registered and to carry out quality control measures. The Advisory Committee for Energy’s Petroleum Subcommittee issued a report in December 1975 titled “About petroleum refining and sales” out of the desire to see the consolidation of primary distributors. Structural reform along these lines was sought because light-oil distribution companies were struggling, and the distribution of low-quality light oil was becoming a social concern. Thus, in the face of the challenge of the oil crisis, policy evolved from the adjustment of demand that accompanied legal measures, to long-term policy making aimed at a stable supply of energy, as for example in the June 1979 Act on the Rationalization of Energy Use.

4.1.3 “The Energy Stabilization Policy of the Showa 50 s [1975–1985]” Report

After the 1973 oil crisis, the first comprehensive examination on how best to implement energy policy was undertaken by the Coordination Subcommittee of the Advisory Committee for Energy beginning in February 1974 (Kikkawa 2011, p. 67). The subcommittee was tasked with considering (1) prospects for the primary energy supply in FY 1980 and FY 1985, and (2) international energy strategy and the securing of financial resources.

The interim report “Energy stabilization measures, 1975–1984” was compiled in August 1975, presenting the four pillars of energy stabilization policy: (1) reduction of dependence on oil and diversification of non-petroleum energy, (2) securing the stability of petroleum supply, (3) promotion of energy conservation, and (4) promotion of research and development of new forms of energy (see Table 7 below). MITI evaluated the measures on supply and demand as a whole and determined the desired allocation of energy conservation and of various supply capabilities from the point of view of achieving a stable supply of energy. This approach differed slightly from prior versions and represented a new philosophy aimed at securing a stable supply of energy through diversification of energy sources and energy conservation. The report was also notable for raising awareness that the cost burden of developing the oil stockpiles and new energy sources needed for a stable supply of energy would be borne by the beneficiaries.

Furthermore, in relation to downgrading the earlier policy aim of maintaining “low-cost energy,” the report pointed out that keeping energy prices low over the long term would weaken the energy industry and thereby compromise the foundations of a stable supply of energy. It further noted that while other countries were beginning to relax their environmental regulations in order to promote energy conservation, one of Japan’s national goals remained stronger regulation. In other words, it pointed to a number of contradictions among the various policies and called for consensus to be formed among the people as quickly as possible (Table 8).

On April 25, 1975, the Ministerial Council on Comprehensive Energy Policy was established to formulate comprehensive energy policies for the future, evincing the Cabinet’s strong concern about the issue. The Council’s mission was to unite the Cabinet ministers so as to enable formulation of the “Economic Plan for the first half of the Showa 60 s [second half of the 1970s],” which was already in its first year. Energy policy, as one of the underpinnings of the Economic Plan, needed to be considered, and decisions were required on the appropriate economic growth rate with due consideration for the resource and energy restrictions that had followed the oil crisis.

The Council focused most on the issues surrounding the creation of a central body for nuclear-power administration, created to “promote nuclear-power generation.”

Having reviewed the Long-Term Energy Supply and Demand Plan and the interim report on comprehensive energy policy, the Ministerial Conference agreed on a policy outline titled “Basic direction of comprehensive energy policy” on December 19, 1975. The basic aim was “to advance a reduction in dependence on imported oil and the diversification of non-petroleum energy as the basis for securing a stable supply of energy.” This rested on four conceptual pillars: (1) effective utilization of domestically produced energy and promotion of quasi-domestic nuclear energy, while diffusing the risk by diversifying Japan’s overseas energy sources; (2) efforts to ensure the stable supply of oil, which would remain central to the energy supply for the time being; (3) promotion of energy conservation to reduce the demand-side burden on the energy supply; and (4) promotion of new energy development with a longer-term perspective extending beyond the 1980s. The following policies clarified the details: (1) developing domestic resources such as continental-shelf petroleum, hydropower and geothermal power, stabilizing domestic coal mining operations, and promoting LNG and overseas coal development and imports; (2) developing nuclear energy and improving the nuclear energy administration system; (3) strengthening the foundations of the petroleum industry and promotion of 90-day oil reserves; (4) securing the supply of secondary energy such as electricity and city gas; and promoting (5) energy conservation, (6) technology development, and (7) international cooperation. These constituted the government’s long-term energy policy initiatives.

4.1.5 Formulation of an “Energy Strategy for the Twenty-First Century”

In August 1976, the IEA reviewed the energy conservation policies of each of its member countries and recommended prompt government implementation of energy conservation in concrete measures, with the necessary budget to fund them. MITI took the opportunity to point out the urgency of the matter: “If the current energy supply and demand structure remains unchanged, people’s lives and industrial activities in this country will be extremely unstable with the risk of catastrophic dislocation in the future.” The Ministry had begun preparing comprehensive measures for energy conservation in February 1976, and the Coordination Subcommittee’s “Long-term vision of industrial structure” included the development of new energy as one of the conditions for realizing a “6% growth-rate economy.”

However, although the Ministry sought to pursue policies for “escaping oil dependency,” and although the Ministerial Conference, too, saw nuclear power as an important energy alternative to oil, public consensus was likely to be longer in coming. Because of the time involved in obtaining public approval, the electricity industry asked MITI to lower the goals for nuclear-power generation stipulated in the Long-Term Energy Demand and Supply Plan. Within 18 months of the plan’s formulation, deviations from it were already under way.

MITI therefore decided to review the plan early in January 1977 and to begin formulating a long-term comprehensive energy policy adapted to the new international energy situation, and the Energy Supply and Demand Subcommittee of the Advisory Committee for Energy compiled the “Provisional prospects for the long-term supply and demand of energy” by June. On that basis, the Consultative Council on Fundamental Energy Issues issued an interim report, “Promoting a comprehensive energy policy that is consistent and effective,” that strongly urged the importance of an effective comprehensive energy policy, based on funding and public agreement.

MITI meanwhile solidified its plans to add an Energy Diversification Temporary Measures Act and an Act on Temporary Measures to Promote Change in Energy Sources to the existing Energy Conservation Act (provisional names). The first of these focused on construction of power plants that were not fueled by oil and the second on diversifying industry’s demand for energy. MITI regarded these as the “three basic laws on energy” and as the pillars on which to build a long-term energy strategy of reduced reliance on oil and increased savings and efficiency in energy use. Japan’s dependency on imported oil dropped from 73.3% in FY 1975 to 57.1% in FY 1980.

About 14 months after the October 25, 1978, interim report, the General Affairs Committee of the General Energy Research Committee clarified the background to the framework described above and compiled a more detailed review of concrete measures in a report titled “Energy strategies for the twenty-first century.” This report posed the basic issues as follows: on the demand side was the promotion of energy conservation policies, and on the supply side were (1) securing the stable supply of imported oil, (2) developing and introducing alternatives to petroleum and developing energy technologies, and (3) promoting the siting of power plants.

It also proposed concrete measures on developing and introducing petroleum alternatives (number 2 above), namely, the promotion of (1) nuclear energy development, (2) coal utilization, (3) introduction of liquefied gas, (4) domestic energy (hydro/geothermal), (5) power-source diversification. The emphasis was on the technological development necessary for developing and introducing petroleum alternatives.

Under the category of “developing new technologies,” the first priority was promotion of the Sunshine Project: solar cooling, heating, and hot water supply systems (the so-called solar house) were almost ready for practical application, and the report called not only for evaluation and research on improvement through experiments in trial houses, but also other concrete measures such as the construction of solar thermal power pilot plants, and R&D in solar power generation and hydrogen energy technology. It also stressed the need for R&D on nuclear fusion and for international technical and economic cooperation on new energy and called for significant state funding to develop nuclear and new energy technologies.

Thus Japan’s energy policy shifted its emphasis after the first oil crisis from promoting an oil orientation to pursuing a stable supply of energy, and from petroleum dependency to a departure from dependency. The new priorities remained following the second oil crisis of August 1979 (see Table 9).

The oil crisis triggered new hardships for the electric power industry. Multiple challenges struck simultaneously, including high crude-oil prices, sluggish demand for electric power, a decline in load factors, severe locational and environmental problems, and a sharp rise in financing costs.

Demand for power had been shifting from industrial (large- and small-scale electrical power) to civilian use (electric lights, electricity for commercial purposes) since the 1960s; from 1973–1985, demand for large-scale power decreased in textiles, chemicals, steel, other metals, and mining. The decrease was especially steep in such large consumers of power as the aluminum and ammonia industries. Meanwhile, the large-scale electricity usage by the machinery industry doubled, while demand in the commercial sector and for electric lights also grew steadily (Kikkawa 2011, p. 262).

The changes in electricity demand aggravated the problem of peak summer daytime hours. The load factor of each of the nine electrical power companies fell sharply in the first half of the 1970s and remained low thereafter. The decline in the load factor caused costs to skyrocket and worsened the performance of the power companies. Also contributing to their deteriorating performance was the rising cost of capital, due to soaring fuel costs and declines in the depreciation rates that covered them. Depreciation and amortization costs were the main internal collateral for the electric utilities, and the declining depreciation rate lowered their capacity to self-finance construction and thereby raised their reliance on interest-bearing debt such as corporate bonds and borrowing. Thus the cost of capital began to influence their performance.

As their performance declined, the utilities became unable to sustain a low-cost electricity supply. The nine utilities together raised their electricity rates three times in succession: in June 1974, June to August 1968, and February to April 1980. Hokkaido Power also raised its prices on its own in October 1981. The price hikes were not high compared to the increases in other public utilities, but customers nevertheless spoke of the end of low-cost electricity and the social antipathy to the rate revisions was strong.

Meanwhile, the environmental issues around power-plant location became more serious. From the 1970s into the early 1980s, the implementation of the Electric Power Development Coordination Council’s development targets never exceeded the targets themselves. There were significant delays in deciding on locations for thermal power plants in the first half of the 1970s and for hydropower in the late 1970s into the 1980s, and consistently across the years in the case of nuclear power. The Three Mile Island nuclear power-plant accident in March 1979 had a particularly strong impact. In response to the delays of power development, the government adopted the Power Source Location Act and related measures in June 1974.

These included: (1) The Electric Power Development Taxation Law, which imposed a development promotion tax on general-purpose electric utilities, (2) the Law on Special Accounts for Electric-Power Development Acceleration Measures, and (3) the Law on the Development of Areas Adjacent to Electric Power-Generating Facilities, which provided grants for the improvement of public facilities near power-supply sites. These were all aimed at making the process of selecting locations for power plants a smooth one by eliminating the difficulties arising from the fact that any given power plant might bring little direct economic benefit to its immediate area. The policy was expanded in October 1971 with the establishment of a special subsidy system for power plant locations. Power-supply development thus lost some of its autonomy, instead becoming part of broader policy coordination efforts.

4.3 The Energy Conservation Act

Japan’s total energy consumption rose almost consistently, but the rate of increase was lower than the rise in GDP, meaning that energy efficiency was advancing (Kikkawa 2011, p. 369). During this period, energy use changed from a 4:1:1 ratio of industrial, civil, and transportation sectors in 1973 to 4:3:2 in the early 2000s. This reflected the high efficiency of energy use in Japan’s industrial sector, the result of post-oil crisis energy conservation policy.

The government established a national conservation campaign based in the Headquarters for the Campaign to Care for Our Resources and Energy following on an August 1974 Cabinet Decision taken in response to the first oil crisis. MITI, recognizing the need for energy conservation policy, also considered drastically expanding the existing Heat Utilization Law into an Act on Promoting the Rationalization of Energy. The Act called for targets for reducing unit consumption of energy and for drafting industry-specific implementation plans. The Act was strongly colored by the preference for control that arose out of the sense of crisis, and for this reason did not reach the Diet floor. But improvements in unit consumption were promoted through the special measures later taken in taxation (such as special depreciation of energy-saving equipment) and the creation of loan systems indicated in the basic guidelines of energy conservation policy.

“The need for and challenges of energy conservation policy,” compiled in November by the new Energy Efficiency and Conservation Subcommittee in the Comprehensive Energy Research Committee, called for the following: (1) responding to the instability and high costs of energy by reducing the growth in energy demand as much as possible without substantially affecting the economic growth path, and (2) improving all sectors of economic society to orient them toward an energy-conserving model, and (3) promoting legislation and regulations for energy conservation. The Act on Promoting the Rationalization of Energy (Energy Conservation Act) was passed in June 1979.

The basic framework of the act included the creation of guidelines for the rationalization of energy use in factories, construction materials, and machine tools, and guidance when needed to ensure the implementation of the guidelines, but left out the measures with the strongest “control” aspects. The framework for implementing energy conservation policy, although premised on industry’s making its own conservation efforts, was thus strengthened to include set guidelines for rationalization and measures for enabling guidance and recommendations to help achieve them.

4.4 Coal and Resources Policy

4.4.1 The Development of Coal Policy

Although domestic coal production shrank in the 1960s, coal’s role as an energy resource did not decline. Imports of coking coal, which had rapidly increased in quantity before the first oil crisis, remained high in its aftermath, and imports of fuel coal sharply increased in the 1980s. The shift from domestic to overseas supplies of coal raised the need for structural adjustment policies for the domestic coal industry as the aim shifted from the industry’s maintenance and rationalization to its gradual contraction. It also required maintaining a stable supply of overseas coal, and promoting the development and dissemination of clean-coal technology (Kikkawa 2011, p. 207).

Structural adjustment measures on coal began with First Coal Policy in 1963, and continued through eight stages until 2001. In the Third Coal Policy from 1967 to 1969, the target for domestic coal production target was set at 50 million tons per year, and even with promotion of the “Fluid Energy Revolution,” various policy instruments were used to try to reach that target.

The Fourth Coal Policy (1969–1972) was the first not to set production targets, indicating that the shift toward the gradual contraction of and exit from the industry was under way. The production targets were revived in the Fifth Coal Policy of 1973–1976 but sharply scaled down to 20 million tons. The Sixth Coal Policy (1976–1982) modified the targets slightly upward due to the oil crisis, a level that was retained in the next stage (1980s).

Meanwhile, summit talks between Japan and Australia, which had an export ban, led to the launching of Australian coal exports to Japan. Japan also sought to stabilize its import supply by offering subsidies and technical cooperation to coal-producing countries (Table 10).

The Mining Industry Council Subcommittee on Mining laid out the direction to be taken by policy on mineral resources in its June 1972 “Basic direction of future mining policy” (Kikkawa 2011, p. 235). This served as the foundation for exploration and development of mining in close alignment with anti-pollution measures. The Act on Special Measures for Pollution Caused by the Metal Mining Industry was issued to address damage caused by abandoned mines. Reorganization of the Metallic Minerals Exploration Promotion Agency followed, with a 1973 expansion into the Metal Mining Agency of Japan (MMAJ). MMAJ became responsible for an overall policy on mineral resources resting on the following: (1) promotion of domestic exploration, (2) support for the development of overseas resources and cooperation with developing countries on resource development, (3) improvement of the rare-metal stockpiling system, and (4) prevention of mining pollution originating in abandoned mines.

MMAJ’s predecessor had since 1964 been conducting detailed surveys of geological structures in order to identify the most stable sources of mineral resources and to discover superior mines. The surveys, which consisted of three stages—regional geological surveys, then detailed surveys, then corporate exploration—were carried out nationwide and are regarded as having achieved significant results. Nine of the survey cases resulted in the development or expansion of mines; the initial regional surveys led to the 1981 discovery of gold deposits in the Hokusatsu/Kushikino area of Kagoshima Prefecture, and became the Hishikari mine run by Sumitomo Metal Mining Co., Ltd.

The major policies for supporting the development of overseas resources included: (1) an overseas exploration financing loan system and debt guarantee system (implemented beginning in FY 1968), (2) overseas geological structure survey system (from FY 1968) and overseas joint geological structure survey subsidy system (from FY 1974), and (3) basic research on resource development cooperation. The overseas geological structure survey subsidy system was designed to subsidize up to one-half the expenses borne by Japanese corporations undertaking surveys in collaboration with foreign corporations. By FY 2005, 71 projects had been conducted under the overseas geological structure survey system and 42 projects under the subsidy system. The basic research was aimed specifically at enabling the government to support mineral-resources development in developing countries, with 180 regions in 46 countries surveyed by FY 2006. These policies for supporting overseas resource development have steadily achieved results.

4.5 Large-Scale Industrial Technology Development and the “Sunshine” and “Moonlight” Projects

4.5.1 An Emphasis on Basic Technology

In December 1974, the Agency of Industrial Science and Technology established the Research Group to Formulate Long-Term Strategies for the Development of Industrial Technology as a private advisory body of the director general. Its final report, “Technical development initiatives for the future” (National Institute of Advanced Industrial Science and Technology, ed., 1977), cited the importance of “cultivating basic abilities” both because “Japan has in the past been criticized for using the results of research undertaken by other countries free of charge” and in order to build a framework for following up on breakthroughs in research (Sawai 2011, p. 25). The research group’s conclusions were passed on to its successor (Research Group on Long-term Planning of Industrial Technology Development), which was also established as a private advisory body of the director in September 1977. The interim report of August 1980 continued to point to the importance of “basic technology,” leading to the launching of the Research and Development Project of Basic Technologies for Future Industries in October 1981.

The recognition that technical problems are not merely matters of technology but part of industrial policy as a whole, and requiring promotion as such, led to the establishment of the Industrial Technology Council, the 1973 successor to the Industrial Technology Commission. The “Progress report on new energy technology R&D,” “Summary of promotion of new energy technology R&D,” and “On ways of promoting new energy technology development,” which were issued almost immediately upon the Council’s establishment (in October and December 1973 respectively), produced results in the form of the Sunshine Project. The February 1975 report, “On ways of developing energy conservation technologies,” was the occasion for the launch of the Moonlight Project in FY 1978. The interim report of August 1975, “On ways of advancing future industrial technology policy,” presented the basic direction of industrial technical policies toward the late 1970s and explained that: (1) Since Japan’s industrial technology had reached the level of that in Western countries, Japan could now make the shift from dependency on foreign technology to self-directed technological development, and that (2) whereas Japan’s technological development had hitherto been more private sector-led than that in the advanced countries of Europe and America and had mainly focused on improving technologies introduced from overseas, the government’s role of developing industrial technology would henceforth become increasingly significant.

4.5.2 The Large-Scale Industrial Technology R&D System

The Industrial Science and Technology Agency launched the National Research and Development Program (“Large-Scale Project”) in 1966 (Sawai 2011, p. 130). Based on a November 1966 report by the Industrial Structure Research Advisory Council’s Industrial Technology Committee in November 1963, it had been created to facilitate the shift from dependency to self-reliance in technological development, to carry out the government’s leadership role in the process, and to formulate a plan for priority technology development and the promotion of research cooperation by industry, academia, and the government. The Large-Scale Project promoted 31 projects before being restructured in FY 1993. Its budget trended upwards until peaking at 16.8 billion yen in FY 1981. It was greatly reduced to 11 billion yen in FY 1984, and then leveled off to about the 15 billion yen level (Table 11).

The Large-scale Technology Subcommittee of the Industrial Technology Council and of the Subcommittee for each project (1) selected the projects and (2) formulated and evaluated plans for their R&D and implementation, while the Large-Scale Industrial Technology Committee (organized by the Agency of Industrial Science and Technology) selected the parties for outsourcing and carried out evaluation of the R&D.

Project leaders included researchers at the National Research Institute and the director and executive director of the Research Association for Mining and Manufacturing Technology. The candidate R&D themes were proposed by the original departments or the testing laboratory based on the needs of the public and of industry. Themes were then selected from among these proposals based on budget and other constraints, and a scrap-and-build approach was taken to maintain the projects and the National Research and Development Program as a whole.

The number of participating companies in the Large-Scale Projects came to 479 for a total of 31 projects. Eight of these companies participated more than 10 times. The main companies involved were in general electric manufacturing, general machinery, steelmaking, and the like.

A 1985 evaluation of the Large-Scale Projects by the General Coordination Department Development Program Office concluded that they had four advantages. First, the projects were not restricted by technical subject or field and important or urgently needed technologies could be developed. Second, the program enabled technological development that could not be done by the private sector because of the long lead time and excessive risks involved. Third, the links among industry, academia, and government were advantageous. Fourth, the projects could launch domestic implementation of international research cooperation in areas such as advanced robotics.

However, the evaluation also pointed out the need to respond to the changing environment by upgrading Japan’s international standing, improving Japan’s technological level, improving the R&D potential of Japanese companies, and raising social interest in advanced and basic technology. To do so, changes were needed in operational areas such as: (1) responding to internationalization, (2) research cooperation with other institutions and systems, (3) strengthening ties with industrial policy, (4) implementing intermediate evaluations, and (5) strengthening of the surveys of technical trends.

By field, the Large Scale Projects were as follows: in the petrochemical industry, “new production methods for olefin” (1967–1972) and “production methods for making olefin from heavy oil” (1975–1981); regarding the shortage of industrial water, “seawater desalination and by-product utilization” (1976–1977); in resource development, “manganese nodule mining systems” (1981–1989). Besides these, projects included: technologies such as “extreme work robots” (1983 to about 1990), expected to be useful in fields such as nuclear power and marine science and disaster prevention; and the first international joint-development project, “propulsion systems for hypersonic transport” (1989–1998).

4.5.3 The “Sunshine” and “Moonlight” Projects

Proposals on solar energy and hydrogen energy were submitted when the Industrial Technology Institute asked for Large-Scale Project themes in February 1973. Project budget limits and time constraints made it hard to pursue them within the Large-Scale Project framework. The Research and Development Office of the National Institute of Advanced Industrial Science and Technology therefore sought other approaches. The Sunshine Project was launched in August 1974 following the Industrial Technology Institute’s report to promote research in solar, geothermal, hydro, and coal gas as part of the new energy developments being undertaken by the Institute (Sawai 2011, p. 246).

The Sunshine Project was conceived prior to the October 1973 oil crisis, and based on the philosophy stated in MITI’s July 1973 New Clean Energy Technology Development Plan: “The Sunshine Project will replace existing petroleum-based energy systems with permanent clean energy systems by utilizing pollution-free and inexhaustible energy supplies such as solar energy, hydrogen energy and geothermal power…. It is an ambitious national technology development plan to develop the technologies necessary for overcoming the energy crisis that will be caused by depletion of oil resources by the year 2000.”

The plan was advanced with the cooperation of the private sector, centering on the Sunshine Project Promotion Committee established in April 1974, but limits to this approach became apparent as the projects moved from the basic research stage to the launching of research at pilot plants. In April 1977, the task of implementing the work was consigned to the Electric Power Development Co. As the effort grew in scale, a more specialized organization became necessary, and the New Energy and Industrial Technology Development Organization (NEDO) succeeded to the role of the Electric Power Development Co.

With the second oil crisis of 1978–1979, the Agency of Industrial Science and Technology hoped that the Sunshine Project would make preliminary contributions to yield about 5% of the total energy supply by FY 1990 (the total at that time was 1.6%). R&D promotion was therefore accelerated. Financial support was provided based on the Law Concerning Promotion of Alternative Energy Development and Introduction of Alternative Energy of May 1980, which secured the budget under a special account.

“About new developments in the Sunshine Project,” the August 1982 mid-term report of the Industrial Technology Trial/New Energy Technology Development Committee noted that there had been a gradual relaxation of oil supply and demand. That conclusion was based on the unchanged expectation that the supply of new energy would increase over the long term. Of particular importance was the emphasis on three methods of new power generation: solar power (including amorphous solar cells), which had high potential for practical application; liquefaction/gasification of coal; and large-scale deep geothermal heat. In other words, the emphasis shifted not to photovoltaic generation but to solar thermal power generation. NEDO decided to launch R&D on power amorphous solar cells in FY 1983. This thinking prioritized continuity in the Sunshine Project, but also showed that the sense of urgency tended to fade as energy supply/demand pressures eased (Table 12).

Meanwhile, plans were made for the Moonlight Project based on conservation measures put together by the Industrial Technology Institute in November 1977 and on the report compiled by the Energy Efficiency and Conservation Subcommittee (Sawai 2011, p. 259). The Large-Scale Projects on “waste-heat utilization systems technology” and “Magneto Hydro Dynamics, MHD power generation” were incorporated into the Moonlight Project in FY 1978, its first year. The same year also saw the launching of a new “high-efficiency gas turbine” project. The National Research Institute was in charge of carrying out basic research, while private sector companies directed the systems development. Project implementation took many forms. Before NEDO’s establishment in May 1980, the Agency of Industrial Science and Technology directly entrusted implementation to companies in some cases, and in others to Technology Research Associations that it organized.

Research on waste-heat utilization technology, for example, relied on the former approach, and development of a high-efficiency gas turbine the latter. The structure of the Moonlight Projects rested on the following six pillars: (1) large-scale energy conservation measures, (2) the development of leading basic energy-conservation technology, (3) international research cooperation efforts, (4) the establishment of and surveys on methods to achieve comprehensive effectiveness in energy-conservation technologies, (5) assistance to private-sector corporate development of energy-conservation technology, and (6) standardization of energy conservation. The first of these included the “New Battery Electric Power Storage System” project (total budget 17.5 billion yen) of 1980–1991 for R&D on storing off-peak electric power in a new kind of battery and then discharging that power during peak hours so as to equalize the load on the system (Table 13).

The Industrialization Test Grant system was established in 1975 to provide grants and subsidize part of the expenses incurred by private enterprises for research and development for important technologies (Sawai 2011, p. 295). Priority technology subsidies had been expanding with the growth of additional subsidies for large-scale core technologies, but the budget decreased year by year in the 1980s. In FY 1988, the “priority technology subsidies” were abolished because of steady improvement in corporate technological capability and the extension of the R&D outsourcing system promoted by the government in forms such as the Large-Scale Projects.

Even with the shrinking of “priority technologies,” however, various subsidy systems were created in the 1980s, including the Subsidy System for Practical Development of (non-petroleum) Alternative Energy Technology (FY 1980), the Subsidy System for Practical Development of New Power Generation Technology (FY 1981), the Subsidy System for Industry Revitalization R&D Expenditures (FY 1983), and the Subsidy System for Practical Development of Technology for the Rationalization of Energy Consumption (FY 1983). However, because subsidy policies during these years tended to face review or elimination in response to international criticism, the FY 1996 Subsidy System for the Development of Technologies for Creating New Industries suggested reevaluating their effectiveness as tools for addressing the urgent need to generate new industries.

Meanwhile, based on the Law on Research Associations for Mining and Manufacturing Technology (May 1961), the Mining and Industrial Technology Research Association System addressed the issue of efficient utilization of human and financial resources in research through joint experimental research on industrial production technology (Sawai 2011, p. 312).

The plan was to give such associations corporate status in order to promote collaborative research by industry. The associations operated on a philosophy of mutual aid.

This method was also used in the framework of Large-Scale Projects and Important Technologies, and many research associations were established by the year 2000. The pace of association establishment weakened from the 1990s on, however. A policy document prepared by the Legal Review Committee in April 1993 stated that “technical innovations by companies were rather more hindered than otherwise by collaborative research” and called for a “review of the National Research Institutes, especially of the regional laboratories” and “reviews of the Large-Scale Projects and other R&D by Research Associations and expansion of the subsidy system for industry-university collaborative research.”

The special tax measures for promoting R&D included the Increased Research and Research Tax Deduction System established in 1967. This was a tax deduction for a certain percentage of expenses exceeding the previous highest R&D expenditures. A 1973 revision added support for expenses for advanced technical training related to computers and information processing. In FY 1985, the Tax Program for Promoting R&D in Basic Technologies (high-tech taxation system) further extended this system. Tax deductions were recognized for the depreciable assets needed by corporations to conduct test research if they met certain requirements. The Special Tax Credit System for Test Research was established in 1993, making tax deductions permissible in order to promote public and private research and research on innovative environmental technologies.

The Japan Development Bank (“the Bank”) established a long-term, low-interest loan system in 1968 to finance new domestic technologies and the promotion of businesses for new products and the commercialization of products.

In March 1980, the financing system was expanded based on the Industrial Structure Council’s “Industrial policy of the 1980s.” What the Bank had called “financing to turn new technologies into businesses” became “loans for new technology development.” The Bank also made improvements such as adding infrastructure construction and acquisition to the targets for financing loans with the goal of “business development” as a preliminary step in corporate planning. Also, in FY 1985, it added funds for technological development (financing for non-equipment uses) to the financing for general corporate technology development (“new technology development”).

However, industrial technology promotion lending amounts provided by the Bank declined sharply after peaking at 92.8 billion yen in FY 1992. This was in part because companies expanded their own financing and diversified the sources, both domestic and international, of their funding, but it is also true that the Bank came under pressure to review its traditional policy methods.

4.5.5 Patent Law Revision

The four industrial property rights laws regulating Japan’s intellectual property system (Patent Law, Design Law, Trademark Law, Utility Model Law), fully revised in 1959 (effective in 1960), provided the foundation of the subsequent framework. Nevertheless, the rapid increase in applications accompanying rapid growth made it difficult to respond promptly enough either in granting accurate rights or in aligning them internationally. The patent law was revised in 1970 and again in 1975 and 1978, and further reforms took place after 1980 (Nakayama 2013, p. 199).

The 1970 revision began with the 1st Industrial Property Legislation Revision Deliberation Council held in December 1962. The Council put together a report in July 1965 and urged that a revised law be submitted to the Diet, but the proposal was scrapped without substantive deliberations.

In November 1966, the Industrial Property Council was once again consulted and discussion continued. The Council again made a report in November 1968, and in May 1970, the Partial Amendment of the Patent Law was passed. Amendment of the review system, including the adoption of a non-examination system, came under discussion but was not realized, and it was in the 1993 revision that a simplified examination method was adopted in the utility model system. Meanwhile, large institutional measures for prompt vesting of rights, such as the introduction of the Early Publication System and of the Examination-on-Demand System, have promoted large institutional measures toward early vesting, and practical improvements were made for speeding up the appraisal and appeal process and for clarification, including time limits for amendments and the introduction of pre-assessment reviews in cases of appeals after patent refusals.

Moreover, because of the gains Japan made in technical capability due to rapid growth, patents on chemical substances were considered necessary for protection, and the argument was gaining strength that non-patent status could itself be motivating.

Three areas gained access to patents as a result of these changes: inventions of chemical substances, inventions of foods and beverages or of flavors, and pharmaceutical inventions or inventions of manufacturing methods whereby two or more existing pharmaceuticals are combined to make one new one. The multi-claim system permitted multiple patent claims for one invention, and was in use in many countries. However, Japan had been using a single-claim system—one patent per item invented—ever since the patent law of 21 years earlier. While the Industrial Property Council had discussed reexamining the question, as mentioned above, its deliberations were not reflected in the system’s revision, but because members of the 1970 Patent Cooperation Treaty (PCT) were required to adopt the multi-claim system, Japan was forced to consider its introduction. In other words, ratification of the PCT challenged Japan to adopt a multi-claim system for the sake of international coordination and the harmonization of the international system as a whole.

Trademark law was also amended in 1975 (Nakayama 2013, p. 243). This was first because the number of applications for trademark registration had by 1973 increased by 5.3 times its level in 1960, the year the law came into effect. Second, Japan was considering joining the Trademark Registration Treaty (TRT), which created an international registration system for trademarks, and shortening of the application process was indispensable for that purpose. The “report on the revision of the trademark system” compiled by the Trademark Subcommittee of the Industrial Property Council System Reform Committee in December 1974 emphasized that the rapid processing of the trademark application system was the most urgent task of trademark administration and that in addition to requiring legal reform and improvements in the operation of the system, the government should ask industry for cooperation in, for example, adopting self-restraint when submitting applications for registrations that are not immediately needed. There were four main revisions of the law, including revisions to the regulations on renewal registration. Attempts were made to speed up the process.

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From: Japan’s Industrial Structure: Forced to Change (1973–1982)

1. Source Hasegawa (2013, p. 31)