Demand-Side Environmental Business:An Analysis of the Energy Market

No.089
August 2000
Research Fellow Takafumi Ikuta

1. Environmental friendliness has taken on "product value", and growth of environmental business is promising. The growth of the boundaries of environmental business and a rise in demand has contributed to the rapid expansion of the scale of the environmental business market, but in order to realize the development of environmental business, the construction of an administratively led market and the growth of demand-side environmental business that meets consumer needs is indispensable.
2. Businesses involved in renewable energy and energy conservation-i.e. the green energy field-are one example of an environmental business market with expected future growth. As a result of global environmental problems and a demand for stable energy sources, the field of green energy has attracted much attention; with the increasing opacity of nuclear power schemes, attention to green energy will continue to rise. Promotion of energy conservation will lead to radical innovations in lifestyles and the structure of energy consumption, but the diffusion of renewable energy calls for the improvement of economic, potentiality, and stability issues. In both cases, the growth of business that responds to customer needs is necessary.
3. Customer needs relating to green energy include not only renewable energy and green energy approaches by the customers themselves, but also the purchase of renewable energy produced by others, investment in green energy projects, and the trading of environmental value brought about by green energy. More and more, businesses that can respond to these demands are emerging, and include information services and consulting that support approaches by the customers themselves, machine vendors, engineering, and finance businesses, as well as green electricity-providing services, green funds, renewable energy developers, and green energy trading companies.
4. Excluding manufacturing and engineering departments, the current state of Japan's green energy business is lagging behind that of the U.S. and Europe in the so-called service-providing field. In order to invigorate Japan's demand-side style green energy market, the existence of a place where customers can choose green energy of their own volition, the existence of intermediary and agent businesses, the creation of tradable environmental value, and systemic support are crucial.

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