June 13, 2009 Director, Policy Coordination/Evaluation and

1. The Innovation for Green Economy and Society － Green Innovation Japan－ June 13, 2009 Director, Policy Coordination/Evaluation and Public Relations Division, Government of Japan Hidetoshi KIMURA

2. Contents I Japan’s Policy to Establish Sustainable Society • Comprehensive measures that integrate the three aspects of sustainable society • Legislative frame work of environmental protection • The third basic environment plan • The second fundamental plan for establishing a sound material cycle society • The Kyoto target achievement plan • The third national biodiversity strategy II The Innovation for Green Economy and Society • Process of making “Green Innovation Japan” • Outline of “Green Innovation Japan” • Policy package to address economic crisis • Amount of the national budget and tax reform to go towards environmental presentation matters in FY2009 • Future development strategy • Growth initiative towards doubling the size of Asia’s economy

3. I Japan’s Policy to Establish Sustainable Society

4. Climate change and energy/ resources A Sustainable Society Cyclical use of resources through the 3Rs Reduce GHG drastically Climate change and ecosystems A Society in Harmony with Nature Ecosystems and the environmental loads Enjoy and pass on nature’s blessings Comprehensive measures that integrate the three aspects of sustainable society A Sound Material-Cycle Society Coexist in harmony with the Earth’s ecosystems and realize an economic society with enjoying sustainable growth and economic development A Low-Carbon Society From “Becoming a Leading Environmental Nation in the 21th Century” (June 30, 2007: Cabinet Decision)

5. Legislative Framework of Environmental Protection Fundamental Environmental Law (1993~) (1st 1994~ /2nd 2000~/ 3rd 2006) Basic Environmental Plan Law Concerning the Promotion of the Measures to Cope with Global Warming • Other Environmental Regulation Laws • (i.e.) • Air Pollution Control Law(1968~) • Water Pollution Control Law(1970~) • Chemical Substances Control Law(1973~) • Law Concerning the Rational Use of Energy (1979~) • etc. Fundamental Law for Establishing a Sound Material-Cycle Society Basic Law Concerning Biodiversity (2000~) (2000~) National Biodiversity Strategies (1998~) Fundamental Plan for Establishing A Sound Material-Cycle Society Kyoto Protocol Target Achievement Plan • Nature Conservation Law (1972~) • Natural Park Law (1957~) • Wildlife Protection and Proper Hunting Law • Invasive Alien Species Law (2004~) • Law for the Promotion of Nature Restoration • Low for the Promotion of Eco-tourismetc. Waste Management and Public Cleansing Law (1970~) Law for Promotion of Effective Utilization of Resources (1991~) Law for Recycling of Container and Packaging, Home Appliances, Construction materials, Food Waste, End-of -life Vehicles

6. (April 17, 2006 Cabinet decision) The structure of the third basic environment plan Current environmental status and directions for environmental policy development Specific implementation of environmental policies in the present quarter century ①Efforts for global warming issues ①Integrated improvements of the environment, economy and society ②Efforts to establish a sound material cycle society ②Formation of sustainable national land and nature ③Efforts to secure a good air environment in urban areas ③Enrichment of R&D and measures considering uncertainly ④Efforts to secure an environmentally sound water cycle ④The new role of national and local governments and citizens, and the promotion of their participation and collaboration ⑤Efforts to reduce environmental risks from chemical substances ⑤Strengthening of efforts with international strategies ⑥Efforts for the conservation of biodiversity ⑦Building a system where values of the environment are activity evaluated in the market (i.e. Emission trading system, carbon offset) ⑥Formation of policy measures from a long-term perspective ⑧Promotion of fostering human resources and communities for environmental conservation Effective implementation of the plan ⑨Improvement of infrastructure such as science and technology, environmental information and policy method with a long-term perspective Strengthening environmental consideration and coordination by each entity Monitoring the Plan’s progress by numeric indicators, etc ⑩Contribution for the formulation of international frameworks and rules

7. Overview of the 2nd Fundamental Plan for Establishing a Sound Material Cycle Society (March 28, 2008 Cabinet decision) Current situation and Issues Activitiesof stakeholders • All three indicators; “resource productivity”, “cyclonical use rate” and “final disposal amount” improves towards year 2010 targets set by the 1st fundamental plan and are expected to achieve the targets. However, reduction of household waste progresses rather slowly. • Need to respond to global environmental issues such as worldwide resource limitation as well as global warming • Thus, it is necessary to further develop sound material cycle societies both domestically and internationally by implementing the 3Rs thoroughly ○Partnership and Collaboration Mutual collaboration of every stakeholders to establish sound material cycle society ・Prevention of illegal dumping and implementation of the 3Rs ・Advanced waste management, inter-industrial collaboration ○Businesses ・Campaign of life style change such as “my chopsticks” and “my bag” ○Citizens ○NGO/NPO and Universities and others ・Interface of collaboration and partnership ・Accumulation of knowledge and reliable information ○Local governments ・Partnership with stakeholders and implementation of nation-wide activities Mid-to-long term image of SMS ○National government ・Partnership among stakeholders and implementation of nation-wide activities • Realize “Sustainable Society” by integrating with activities to realize “low carbon society” and “nature harmonious society” • Realize “Stock-based Society” by stocking and utilizing goods to achieve wealthy society • Regionally-characteristic SMS(Spheres of sound material cycle) , Lifestyle along the concept of Mottainai, Collaboration and partnership between stakeholders, and dissemination of the 3Rs into economic activities including manufacturing ①Integrated efforts with low carbon and nature-harmonious society（waste power generation and biomass utilization）、 ②Establishment of “spheres of sound material cycle”, ③National campaign on the 3Rs, ④Promotion of sound material cycle business through various measures such as green purchasing, ⑤Development of 3R mechanisms focusing on reduction, ⑥Advanced 3R technology and system, ⑦Information gathering and development of human resources, ⑧Establishment of international sound material cycle society based on action plan to promote global zero waste societies, East Asia vision of sound material cycle society, or improving resource productivity Indicators and targets 【2 Indices related to effort】 【1Material Flow–based Indicators】 （a）Waste generation per capita per day 　（b）Household generation per capita per day 　（c）Generation of commercial waste (1) Numerical target setting（FY 2015） ① 「Input」：Resource Productivity → 420 thousand yen/ton 　　　　　　　　　　　　　　　　　（60% increase from FY2000） ② 「Recycle」：Cyclical use Rate → about 14-15% 　　　　　　　　　　　　　　　 （40-50% increase from FY 2000） ③ 「Output」：Final Disposal Amount → about 23 million tons 　　　　　　　　　　　　　　　　（about 60% reduction from FY2000） (2)Setting supplementary indicators such as indicators on Collaboration with the action for low carbon society (3)Setting indicators to monitor progress such as “Hidden flow and TMR” to promote awareness on global environmental problems (1)Numerical target setting 　　①　Reduction of municipal solid waste 　　②　Reduction of final disposal of industrial waste → About 60% reduction from FY 2000 　　③ Changes in awareness and actions of citizens 　→　awareness: about 90% actions: about 50% 　　④ Promotion of Sound Material Cycle Businesses → Double the market for Sound Material Cycle businesses from FY 2000 (2)Indicators to monitor progress of stakeholders efforts such as “refuse rate of plastic bag” and “ranking of municipalities active in the 3Rs”

8. Material Flow Indicators: Indices to set a target The 2nd Plan ●Target in the previous plan ●The target for 30% improvement in FY 2005 In FY 2000 → In FY 2015 ・Resource productivity 26 million yen per ton → 42 million yen per ton ( about 60% improvement ) ・The cyclical use rate 10%　→ 14～15% ( about 40~50% improvement ) ・The Final disposal 5.700 million ton → 2.300 million ton ( 60% reduction ) Resource productivity & The cyclical use rate 　（42） ●Result in 60% improvement in 15 years （37） 30% increase （33） (14～15） （26） (14） (12.2） ●The target for 20% improvement in FY 2005 The 1st Plan The target year in the previous plan In FY 2000 → In FY 2010 ・Resource productivity 26 million yen per ton → 37 million yen per ton ( about 40% improvement ) ・The cyclical use rate 10%　→ 14% ( about 40% improvement ) ・The Final disposal 5.700 million ton → 2.800 million ton ( 50% reduction ) The base year Current situation The target year in the new plan ●World-class results in reducing the final disposal amount The final disposal amount 109.09 M tons ●Target in the previous plan -70% Approx. 23 M tons 57.10 M tons 32.41 M tons -30% ●Aiming to reduce by another 30%, compared to the current level Approx.28 M tons 2010 1990 2000 2005 2015

9. Ensure achievement of 6% reduction commitment under the Protocol Steady implementation of a continuous as well as long-term GHG emissions reduction on a global scale The Aims of the Kyoto Target Achievement Plan (April 28, 2005 Cabinet decision) 21st Century is a century of the environment. Climate change is a common issue to all human beings. The government of Japan, as one of the most advanced countries across the globe in implementing measures on climate change, is aspired to take a leading role in the international community.

10. The Framework of the Kyoto Target Achievement Plan Measures and Policies for Achieving Targets Targets of Greenhouse Gas Emissions and Removals • 1. Measures and Policies relating to Greenhouse Gas Emissions Reduction, Removal, etc. • (1) Measures and Policies relating to Greenhouse Gas Emissions Reduction • [Examples of Primary Additional Measures]  Promotion of voluntary action plans  Increased energy-saving performance of houses and buildings  Improvement of energy efficiency of equipment that meets Top-runner Standards, etc.  Ensuring thorough energy management at factories and offices, etc.  Improvement of automobile fuel efficiency  Promotion of emissions reduction measures amongst small and medium-sized enterprise  Measures for the agriculture, forestry and fisheries, water and sewage, traffic flow, etc.  Measures for urban greening, waste, and Three Fluorinated Gases (HFCs, PFCs and SF6), etc.  Promotion introduction of new energy sources • (2) Greenhouse Gas Sink Measures  Forest management such as tree thinning, promotion of the “Beautiful Forest Building National Campaign” • 2. Cross-sector Policies  Systems for Calculation, Reporting and Public Disclosure of Greenhouse Gas Emissions  Development of national campaigns • Issues needing to be addressed promptly  Domestic Emissions Trading System  Environment tax  Departure from late-night work and lifestyles  Introduction of daylight savings (*) As a target guide for emissions, a maximum predicted effect and a minimum predicted effect for reduction measures have been established. Naturally, the goal is to try and achieve the maximum effect; however, even if only the minimum effect is achieved, it has been formulated so that it will at least meet Japan’s targets under the Kyoto Protocol. For definite progress towards 6% reduction commitment under the Kyoto Protocol, all measures, including sink measures and Kyoto mechanisms, will be implemented.

11. The Outline of the Third National Biodiversity Strategy （November, 27, 2007 Cabinet Decision） 【Importance of Biodiversity】 【Challenge】 Biodiversity supports life and livelihood Crisis 1: Species and habitat degradation due to excessive human activities Crisis 2: Degradation of satochi-Satoyama due to insufficient level of management *Satoch-Satoyama: Rural landscapes formed by sustainable use of natural resources Crisis 3: Ecosystem disturbances caused by the introduced alien species and chemical contaminations ①Basis for existence of all life on earth 　②Use value including future options 　③Basis for enriching culture ④Security of livelihood Crisis caused by Climate Change ・Huge potential for species extinction and ecosystem collapse 【Long-term perspective】 Grand design, targeting 100 years ahead ・Ground design of the national land from the viewpoint of biodiversity is presented as the “Centennial Plan,” which aims to recover the nations’ ecosystem over the next century 【Involvement of various stakeholders 】 Involvement of local governments and the private sector ・Needs for efforts by local governments and businesses are emphasized with a view to linking biodiversity conservation to local areas Four Basic Strategies

12. Four Basic Strategies Mainstreaming Biodiversity in our daily life Securing linkages among forests, countryside, rivers and the sea • Realizing the ecological network at national scale • Promoting a comprehensive review of national and quasi-national parks, and promoting nature restoration • Studies on marine protected areas to secure sustainable fishery activities • Launching “our life on biodiversity” project which aims to enhance the involvement of local governments, businesses, NGO and the public • Hands-on nature experiences for school kids, and primal experiences to “feel with the five senses” Taking action with global perspective Re-building sound relationship between man and nature in local communities • Hosting COP10 of the convention on biological diversity • Conducting a country-wide comprehensive ecosystem assessment (Japan biodiversity outlook) • Proposing the “SATOYAMA Initiative” to the world • Consideration of mitigation and adaptation measures for climate change in the context of biodiversity • Selecting “important satochi-satoyama areas have to be inherited by next generation” • Developing communities coexisting with wildlife through separating habitat and capacity building • Promoting sound activities of agriculture, forestry and fisheries • Managing habitat for endangered fauna and flora; combating alien species issues

13. II The Innovation for Green Economy and Society

14. The Process of making “Green Innovation Japan” Gather Public comments （From June 16 to February 16） ＜Total 823＞ Related to Low-Carbon Society：459 Related to Nature：67 Related to Sound Material-Cycle：88 Others：455 Exchange ideas with specialist s ①Environmental Specialists ②Economists ③Mayors Mayer of Sakai City, Toyama City, Shimokawa City, and Yusuhara City (Parts of 13 Eco-model Cities) ④Representatives of the economic world Cooperate with other related Ministries Future Development Strategy (April 17, 2009 Decision of Council on Economic and Fiscal Policy) 1. Low-Carbon Revolution 2. Healthy and Long-lived Society 3. Promote Attractiveness of Japan Announced the draft of "The Innovation for Green Economy and Society" at the council on economic and fiscal policy. Policy Package to addressing Economic Crisis (April 10, Cabinet and government party) Supplementary Budget Ministrerof the Environment Proposed “The Innovation for Green Economy and Society on April 20, 2009 Economic and Fiscal Reform 2009

15. Delay in measures for climate change will cause the serious environmental crisis which will bring the collapse of our social activity and the enormous expense for adaptation Environmental investment all over the world （Green New Deal） Biggest and worldwide economic crisis since the war ＋ • Japan’s World- Class Environmental Resources • World-leading environmental technologies • Beautiful seasonal changes of natural scenery • The spirit of “mottainai” Become a forerunner of overcoming the environmental crisis Create present and future demand and jobs The investment to keep Japan’s advantage and continue to be the environmental superpower for the future Integrated improvement of environment and economy Integrated realization of a “low carbon society,” a “sound material-cycle society,” and a “society in harmony with nature” Basic idea Participate every actor Best-mix of policy Measures for Asia and whole world

16. 1. Innovation toward green social capital 2. Innovation toward green local community 3. Innovation toward green consumption Point of “the innovation for green economy and society” 5. Innovation toward green technology 4.Innovation toward green investment 6. Contribution for green Asia • The proportion of renewable energy in total energy consumption will be 20% • The volume of solar power generation will be 20 times of today’s level • Half of new cars sales will be Eco-cars Promote energy-saving home appliance, next-generation vehicles and energy-efficient houses Use local wood for building materials World-leading industry introduced high efficient facilities and management systems The goal of this innovation In 2020 Realize compact city and beautiful land Full utilize local resources and talents Secure resource and energy by promoting 3R and renewable energy Environmental market will increase from 70 to 120 trillion yen and environmental jobs will increase from 1.4 to 2.8 million by 2020 in Japan

17. 1. Innovation toward green social capital Create the demand through “green public works.” Eco- reform across the nation starting with public facilities such as schools Eco-reform in cities and transportation • Develop eco and human friendly compact cities • ・Produce “cool cities”　・Utilize unused resources and energy • Install photovoltaic systems in schools and public facilities around Japan and use them for environmental education. • Realization of a “Kasumigaseki Low-carbon Society” then expand it to other national buildings (ex. Increasing the use of wood, Promoting renewable power generation. etc.) • Promote eco-reform in local government’s facilities. • Develop eco-friendly transportation infrastructure • ・Maintenance sidewalk and bicycle roads • ・Promote wireless LRV(Light Rail Vehicles) • ・Strengthen function of “Super-hub Port” • ・Energy-saving transportation system using GPS Produce good urban environment exploit “water” “green” and “wind” LED lighting Photovoltaic power generation installed in the school Maintenance sidewalk and bicycle road Clean up our land Save beautiful nature and waterside • Untying illegal dumping • ・Treat past illegally dumped waste • ・Strengthen watching and patrolling • Maintenance of national park • Secure beautiful waterside • ・Regenerate and preserve water- friendly riverside • ・Maintenance the Moat of Imperial Palace • Untying marine litter Collect marine litter • Measures against PCB and Asbestos • ・Treatment of waste electric machinery containing small amounts of PCB • ・Promoting the detoxification of Asbestos The Moat of Imperial Palace ・Promote wastewater treatment system such as septic systems Maintenance and preserve forest to mitigate climate change Measures to adopt abnormal climate caused by climate change ・Forest maintenance such as thinning ・Proper management of preservation of reserved forest ・Use local wood for housing ・Promote the use of wood biomass

18. 2. Innovation toward green local communities Activate “local power” Measures by local government Measures by local communities • Preserve and utilize nature resources • 　・Preserve “Satoyama” • ・Divide the living area for wild animals and human • Financial support by the establishment of “local Green New Deal Funds” • Develop Eco-friendly transportation system by introducing the community bicycle program etc. • Develop active local communities using various human resources • 　・Establish local consortiums to train and utilize Eco-specialist • 　・Support environmental NPO and environmental actions by private company • ・Support for utilizing local environmental activities • Prevent pollution such as water and air pollution Capital Reduce & absorb CO2 emissions utilizing wood biomass and forest maintenance CO2emissions from companies and local governments District heating and cooling system Growing rape blossoms by students of Nishi-yodogawa high school; Offsets Velib in Paris Develop healthy forest and active farm, mountain, and fishing village J-VER Growing sunflower by students of Nakashibetsu Agricultural high school • Maintenance and preserve forest with using urban power • 　・Utilize “Carbon Offset” Preserving “Satoyama” Establishing sound material-cycle society • Activate sound material-cycle communities • ・Recycle of raremetal • Promote “reduce” and “reuse” • Circulatory utilization of biomass • Promote circulatory use of water • New challenge utilizing dormant faculties of agriculture and farm village • Promote circulatory use of nitrogen and phosphorous 18

19. 3. Innovation toward green consumption Support the creation of the green demand from household Promote purchasing energy-saving home appliances simultaneously Promote energy-saving houses and buildings • Dramatically popularize energy-saving home appliances • Promote energy-saving home appliances using the “Eco-point” • Support the thermal insulation • Make LCA guideline for remodeling buildings • Promote “200-year housing” • Promote fuel cell and heat pomp • Promote green purchasing and contract • 　・Secure reliability of products labeling by the “test of products” • 　・Secure proper products labeling by guideline for environmental labeling Double-glazed window Apartments introduced the heat pumps Promote next-generation vehicles etc. • Introduce proper regulation of biofuel • ・Find problems and examine standard through practicing models • Promote next-generation vehicles by subsidies, tax incentive, etc. Model projects in Miyake island • Stipulating measures to curb GHG emissions relating to the work of the government • ・Promote national measures and support local measures Nanbu Clean Center (Kyoto city)

20. 4. Innovation toward Green Investment Foster leading-edge environmental industries responsive to the green demand Create systems encouraging green economic activities Finance fostering green investment • Establish an interest-free environmental finance system • Expand the investment in environmentally sound businesses • 　・Promote proper public information • 　・Promote green investment by public pensions • 　・Promote NPO bank, community fund, and fund for • environmental projects • ・Develop the scheme to evaluate company’s • environmental consideration “Kankyo-ryoku” • Examine the domestic emission trading system • 　・steady operation of trial practice (including JVETS) • ・Utilize the domestic CDM scheme • Greening the tax system • Promote carbon offset and carbon foot-print Promote environmentally sound management Promote green IT Wind turbine using civil investment • Promote ISO140001, Eco-action 21, and other environmental management system • Promote environmental communications such as environmental reports • Make the guideline for private companies to forward the preservation of biodiversity • Green IT using advanced telecommunication with leading edge environmental technology • ・Achieve an international consensus and standardization of technology and evaluation for GHG reduction using telecommunication • ・Environment-oriented country by ubiquitous Greening energy structure • Aim for the superpower of renewable energy • 　・introduce ambitious goal about the introduction of renewable energy • 　・Introduce “Feed in tariff” • 　・Massive introduction of renewable energy such as solar power, wind power, biomass, and small hydraulic power • ・Demonstrate the “smart grid” Foster sound material-cycle industry • Improve system and technology for recycling • 　・Resolve the “miss-match” of recycling market • 　・Promote recycling of “rare metal” small hydraulic power plant • Improve reliability and transparency of sound material-cycle business • Measures utilizing local resources • 　・Wooden pellet utilizing waste and thinned wood • 　・Promote small hydraulic power • 　・Utilize waste heat of hot spring • Foster the low carbon waste treatment • 　・Introduce high-efficient waste-to-power generation • Safe and secure nuclear power plant • 　・Increase the equipment utilization rate • 　・Steady construction of new generation • ・Establish nuclear fuel cycle and early realization of the fast breeder reactor → Nuclear power generation Waste- to-power generation

21. 5. Innovation toward green technology Strengthen leading-edge environmental technologies Technology development considering dramatic GHG reduction in 2050 Basic research for improve and develop both environment and economy • Develop high-efficient and low-cost solar batteries • Develop low-cost and easy-to-use electric car • Promote the research on environment and economy for policy development • Make middle and long term roadmap for building a “Low carbon society” • Research about CCS and Methane hydrate • Develop distributed energy system, and hydrogen production from non-fossil fuel • Utilize nuclear fusion and space light energy Promote and utilize environmental technology • Promote leading edge technology and utilize existent technology • 　・Aggressive participation on international standard • 　・Modify and promote technology to developing countries • 　・Announce the result of Ibuki’s observation internationally Greenhouse gases observing satellite “Ibuki” Technology development considering practical use within 10 to 20 years • Technology for renewable energy such as PV, solar heat, biofuel, wind power, small hydraulic power, geothermal, substantiation of CCS (Carbon Capture and Storage) Electric Bus • Energy efficient technology such as LED lighting, non-fluorocarbon and high-performance insulation, and energy-saving refrigerators, freezers and air conditioners using low-GWP(Global Warming Potential) refrigerant 　・Advance research of environmental technology Promote monitoring, administration, and information gathering and offering • Expand the area and target of monitoring and environmental administration Research about the adaptation of climate change • Preparation for the 10th Conference of the Parties to the Convention on Biological Diversity (COP 10) • Research about the impact on local water environment by climate change • Research and development about adaptation • 　・Predict and evaluate the impact of climate change focused on food, water, ecosystem, disaster prevention, and so on

22. 6. Contribution for Green Asia Prosperous societies constructed together with a sustainable developing Asia Develop strategic, systematic, and local based environmental cooperation Establish environmental morel city in Asia • Choose some cities and islands as environmental model city or island, and support their activities • Promote Japan’s advanced environmental technology to Asian and Pacific countries • Promote measures based on “Clean Asia Initiative” • Integrated introduction of talents, technology, and system • Make “Asian standard “of environmental technology • Promote international cooperate research • Partnership and cooperation with various subjects such as universities in Asian countries Indonesian cement factory equipped with destruction equipment for fluorocarbon with Japan’s support Promote “co-benefit approach” Support for building environmentally sound water cycle society • Establish platform for information sharing with various subjects • Promote long-term utilization of talent and technology • Promote “Good water governance” • Cooperation with international institutions such as “Network of Asian River Basin Organization” Found Asian sound material-cycle society • International cooperation through Asia 3R promotion forum • Promote septic system and human waste treatment facilities • Support the practice and improvement of waste treatment and 3R in Asian countries Found society in harmony with nature in Asia • Popularize SATOYAMA initiative • Support for making national biodiversity strategies in Asian countries Decentralized sanitary sewage system Polluted Asian river Measures against trans-boundary air pollution • Make and practice the strategy for international coral reef network • Investigate air pollution in East Asia and support the measures against the pollution • Promote the measures against illegal cutting, forest fire and reforestation • Support the measures against yellow sands such as reforestation

24. Size of the Policy Package to Address Economic Crisis Government Expenditure （Trillion yen） Concerning Low-carbon revolution 1,580 （billion yen） ○Promote Photovoltaic Power Generation 610 　　・”School’s New Deal” Plan 490 including ・Eco-friendly renewal of school building260 　 ・The creation of an ICT-friendly school210 　・Support to introduction of solar power (Offices and residential sector)500 ○Promote fuel-efficient cars and energy -efficient home appliances870 　・Support for eco-friendly vehicles370 　 ・Dissemination of eco-friendly home appliances (TVs, air conditioners, and refrigerators) by “eco point” scheme 290 ○Revolution in transportation and infrastructure30 ○Turning Japan into resource-rich country70

25. Amount of the national budget and tax reform to go towards environmental preservation matters in FY 2009 (billion yen) Nature conservation 261.2 Global environment management 867 ・Policies to reduce carbon emission ・Measures for carbon sink of climate change ・Promoting Long-life housing ・Maintaining urban parks and natural parks ・Restoration of nature Air environment management 234.2 Others 78 ・Environmental improvement of roadside, surrounding of airport ・Preparing facilities for road safety ・Establishing evaluation system of carbon footprint ・Promoting and developing environmental technologies Water, soil and ground environment management 743.2 FY2009 Tax Reform ・Preparing sewage-works and rural community sewages ・Protecting fishery • Investment tax reduction for the investment in energy-saving and new-energy facilities and in production facilities for goods such as energy-saving home electric appliances • Introduce new measures to allow tax deduction for housing investment relating to newly built long-term quality houses at one’s own expenses and renovation aimed at improving energy conservation and barrier-free • Temporarily reduce tax burden on the automobiles that have passed higher environmental standards Waste management and recycling 114 ・Exploiting local biomass ・Promoting sound material-cycle society ・Preparing ocean oriented waste treatment facilities Management of chemicals 8.2 ・Research for the risk of chemicals ・Inspecting environmental safety of chemicals

26. Future Development Strategy (J Recovery Plan) Japan will become a nation that plays world-leading roles through low-carbon emission revolution, a nation where all the citizens, irrespective of age and gender, are able to lead an active life without anxiety, and a nation where citizens and local communities are able to fully exercise their potentials and attractive characteristics at home and abroad. Future Vision for the Year 2020 Basic policy concept: Smart investment • Selecting a project with double-barreled effects: Pulling out from economic recession in the short run and encouraging sustainable economic growth in the medium- and long-run • Aiming at “J”-shaped economic recovery and economic growth (J recovery) • (2)Identifying the potentially competitive sectors of Japan(“underlying strength”) that will yield significant positive economic impacts and have great significance in the society, rather than simply taking economic-stimulus measures • Working on concentrated investments and accelerated reforms for the next 3 years • (3)Achieving sustainable growth by breaking away from recession, expanding domestic demand, and drawing on energetic economic performance in Asia and dynamism of the world economy • Offering ideal future societal models to Asian nations that are facing constraints from environmental/resource perspectives Sustainable growth Taking off from economic recession [Year 2020] Gross domestic product (GDP): up \120 trillion Job creation in strategic sectors: 4 million jobs * Estimated by the Ministry of Economy, Trade and Industry (METI) [Economic impacts in the next 3 years (on a cumulative basis)] Demand creation: \40–60 trillion Job creation: 1.4–2.0 million jobs

27. Three Pillars <Low-Carbon Revolution>A series of projects for leading low-carbon revolution ○　Further beefing up the highest environment energy technologies of the world such as energy-saving, new energy, eco-car,, and water treatment technologies ○ Taking a leading role in “low-Carbon Revolution” through the renewal of lifestyles and infrastructures ○ New “three holy durables” will generate new market demand and job opportunities [Examples of main projects] ■New programs for purchasing solar-generated electricity ■Encouraging photovoltaic facility and energy-saving refurbishing works at public facilities, schools, etc. ■Explosive diffusion of the new “three holy durables” ■Developing technologies on next-generation batteries, superconducting linear motors, etc. ■Constructing/improving three major belt freeways: Elimination of missing links ■Developing urban mines (recycling of mobile phones) <Promoting the Attractiveness of Japan>A series of projects to take advantage of the “underlying strengths” of Japan fostered by rich traditions and cultural background ○　Turning into a job creative and growing industry the agriculture, forestry,, and fisheries industries that support local economies ○　Sending out the soft powers of Japan overseas, including fashion, media videos, and animations ○　Achieving the status of a “Tourism nation” through the traditional “hospitality” mindset of Japan ○　Awakening the hidden potentials of Japan by investing in human resources and thoroughly making use of IT solutions [Examples of main projects] ■Recovering a quarter of cultivation abandonment farmland (approximately 100,000 ha) in the next 3 years Tripling plant factories (24-crop system) ■Expanding contents industry to overseas markets ■Selectively investing in elimination of electric poles in tourist spots ■Significantly shortening the waiting time of immigration examination process at Narita Airport and halving access time between Haneda Airport and Narita Airport ■Providing the top-level research environment of the world (making use of post-doctoral researchers and research assistants) <Health and Longevity>A series of projects that take advantage of medical and nursing-care demand for expanding domestic demand ○　Improving medical/nursing-care services to dispel anxieties about the future and encourage consumer confidence ○　Creating new job opportunities in the medical/nursing-care sector and festering the sector to a domestic demand-oriented industry ○　Encouraging innovations in medical-related industries to create a new high-value added market [Examples of main projects] ■Emergency measures for improving labor conditions of nursing-care staff ■Concentrated investment in municipalities forming alliance in medical services ■Reinforcing neonatal intensive-care units and emergency medical care centers and beefing up seismic retrofitting works for hospitals ■Supporting intensive research programs for anti-cancer curative drugs, granting quicker approvals for non-approved anti-cancer curative drugs, and developing technologies of iPS and livelihood support robots ■Shortening examination process for medical drugs and medical equipment ☆The new “three holy durables:” 　・Energy-saving houses equipped with solar panels; 　・Eco-cars (electric cars, etc.), and 　・Environmental-friendly consumer electronics

28. Low-Carbon Revolution The environment, natural resources, and energy fields, encompassing activities such as tackling global warming through energy conservation and new and renewable forms of energy; 3R; and water treatment systems, should be seen not so much as placing restrictions on Japan’s development as providing opportunities for the nation’s growth. Japanese technology, among the world’s most advanced, is a pioneer in the establishment of “low-carbon, sustainable society” models, and in providing such models to other countries in Asia and other regions. Japan will become both a leader country for “Low-Carbon Revolution” and a “Resource Power” as a result of its development of “urban mining” and of marine resources. • Plan to become the world’s number-one Solar Power and Energy Conservation Nation • In regard to the proportion of renewable energy (including heat pumps, etc.) in its final energy consumption, Japan has the target of achieving 20% more than the current level by 2020, referring to the EU methodology (approx 10% in 2005). • It is also planned to increase the output of solar power to 20 times the current level by 2020. In order to do this, the Japanese government will support the development of advanced technology that enables the realization of a stable electric power supply, such as power control systems. • ■ Establish a “new purchasing system of solar power.” Write-off from creating demand. The cost of power generation will be halved in 3 to 5 years through existing policies and innovation. • ■ Set up solar panels in public schools and buildings (54,000 places). (immediate priority in the next 3 years) • Acceleratezero-emission buildings. Check energy conservation and conduct repairs of public buildings (immediate priority in the next 3 years) • Accelerate house modernization (modernizing more than 50% by 2019) • Promoting replacement of home appliances with energy-saving appliances (green appliances) • Future-oriented energy social system model project (enhance next-generation energy park and select 100 projects) • Promote cooperative research, demonstration and standardization in the fields of photovoltaic cells, fuel cells, superconductivity, and so on. (demonstration in USA, etc.) • The first nation to popularize Eco-Cars • - Attempt to make half of new car sales be eco-cars(electric cars, hybrid cars, etc.) by 2020 • Promoting replacement of official cars with eco-cars • Promoting replacement of old cars with eco-cars • Starting electric car advanced model areas (approx. 10 places) • Low-carbon transportation and urban revolution • Fastest development and popularization of low-carbon transportation in the world • Implementation of practical evaluation for free-gauge train by the summer of 2010 • Establish practical application technology for cell-type tram by 2012, superconductive linear by 2016 • Concentrate measures for low-carbon infrastructure development • 　－Build ring road system for three large urban areas and resolve missing links • 　－Charging infrastructure to avoid idling in ports for ships • Resource power • Developing institutions for correcting old mobile phone (100 million mobiles = 3 tons of gold) →　urban mining • Promoting waste plastic recycling (attempt to achieve a recycle rate of at least 90% by 2020) • Entering world water market (establish first Japanese major water company and support its business overseas) • Enhancing support to secure upstream interest, strengthen development of resources that lie in adjacent waters (methane hydrate)

31. Thank you very much for your kind attention