Economic Survey Shows Promising Outlook for Environmental Businesses in Japan

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According to a survey of Japanese private companies holding 20 million yen or more in capital, environmental businesses are enjoying favorable economic conditions, with a positive ten-year outlook as well. Here are some highlights from the Ministry of the Environment (MOE) survey.

Since December 2010, MOE has been conducting the “Kankyo Tankan” survey, a biannual economic survey of about 12,000 companies in Japan on their views and confidence in environmental businesses. The results of the latest survey, conducted in December 2014, were published by MOE on March 2, 2015.

According to the results, the diffusion index (DI) of business confidence-the percentage giving “positive” replies minus the percentage giving “negative” replies- was plus 22 (+22) for environmental businesses. This value is unchanged from the previous survey of June 2014, but is higher than the DI for all businesses overall (+11), showing continued economic strength in environmental businesses. As for future prospects, environmental businesses are expected to grow, with the DI reaching +23 in six months and +25 in ten years.

By major environmental business categories, the DI was +12 for Category A (Pollution Management), +31 for Category B (Countermeasures against Climate Change), +14 for Category C (Waste Management and Efficient Use of Resources), and +5 for Category D (Natural Environment Management), which highlights the contribution of Category B to the overall business confidence. As for the ten-year projection, the survey predicts that the DI will be +19 for A, +30 for B, +19 for C, and +24 for D. With the DI of B almost unchanged, the increases in A, C and D buoy the business confidence as a whole.

Regarding environmental sectors that look promising in Japan, Energy-Saving Vehicles ranked first, followed by Air Pollution Control (equipment & facilities), Solar Power Generation Systems (equipment & maintenance), and then Renewable Energy. In the six-month forecast, Energy-Saving Vehicles tops the list, followed by Renewable Energy, but Renewable Energy overtakes Energy-Saving Vehicles in the ten-year projection. Both at present and in the future, industries categorized as Countermeasures against Climate Change ranked high in the promising businesses list. It is worth noting that in this survey, Solar Power Generation Systems is not included in the Renewable Energy group, but is instead treated as a separate item.

When asked about environmental businesses that the respondent companies want to launch in the future, businesses categorized as Countermeasures against Climate Change dominated the higher ranks, with Renewable Energy at the top since the survey in June 2011, regardless of industry type or business size. The second and third places for all businesses were Smart Grids and Energy-Saving Consulting, respectively, while among manufacturers, second and third went to Other Business Products for Pollution Management (equipment & facilities) and Rechargeable Batteries, and among non-manufacturers, were taken by Energy-Saving Consulting and Smart Grids, respectively.

As for environmental business opportunities, 492 companies responded across the nation and expressed their intention to launch a total of 558 businesses. Of these, 147 businesses are planned for the Kanto region, followed by the regions of Chubu: (81), Kinki (57), Tohoku (51), Kyushu (39), Chugoku/Shikoku (37), and Hokkaido (30), as well as overseas (29).