The New Zealand Herald

Taking a risk in clean energy boom could recharge Japan

- William Pesek — Bloomberg

As Japanese Prime Minister Shinzo Abe looks for ways to reboot Abenomics, he could do worse than heed the advice of Kurt Kelty. Delivering a public speech on a recent evening in Osaka, Tesla’s director of battery technology captured all that’s wrong with the Japanese economy.

“We need to take risks, otherwise there will be no prosperity in business,” Kelty said in fluent Japanese. “We take risks, but it seems not the case in Japan.”

Japanese are often sensitive when outsiders (known as gaijin) criticise their country, but Kelty’s criticisms couldn’t be ignored. He’s a 15-year veteran of the revered energy solutions lab at Panasonic, Japan’s iconic electronic company.

Panasonic, in fact, was an exception to Kelty’s tough love remarks — which is no accident. Tesla recently announced that it’s partnering with the company in creating a so-called gigafactor­y to produce high-tech car batteries.

Panasonic is the rare Japanese company that has taken chances and profited from them. Started in 1918 in a two-storey home in Osaka, it eventually became a multinatio­nal electronic­s powerhouse. After falling behind Apple and Samsung in recent years, it eventually made a decisive pivot — in 2013, it abandoned the plasma television market and began focusing on batteries and solar panels. That decision paid off massively with the Tesla partnershi­p.

Tesla isn’t alone in tapping Japan’s tech prowess. Apple, for example, is opening a new research and developmen­t centre in Yokohama. But Tesla is spotlighti­ng Japan’s most lucrative future industry.

Since the late 1970s, when Kyushu University helped develop the dual carbon battery, Japan has been a leader in the field.

And demand for batteries is expected to soar in the years ahead, with high-range batteries expected to replace fossil fuels in cars, aeroplanes, ships and even buildings. In addition to helping save the planet, they could also help save Japan’s economy.

Politicall­y, the timing of Tesla’s Japan collaborat­ion couldn’t be better. With executives of Japan’s biggest companies predicting deteriorat­ing growth and more deflation this year, Abe can evoke the partnershi­p to get his economic programme (known as Abenomics) back on track.

Since taking office in December 2012, Abe has increased public works spending and engineered a 29 per cent drop in the yen. But he’s made scant headway in increasing Japan’s competitiv­eness or in cultivatin­g a more entreprene­urial culture that creates wealth and attracts investment.

As Kelty pointed out in his speech, Japan has all the ingredient­s for success — just not the policies to realise it.

Abe should seize the opportunit­y to announce new tax incentives for start-ups, especially in the renewable energy sector — batteries, solar, wind and geothermal power.

The Government should also create a series of venture capital pools and safety nets that support would-be innovators and incentivis­e them to take risks, and sponsor training programmes to inspire more entreprene­urship among young Japanese.

Next, he should accelerate his Government’s timetable for starting so-called special enterprise zones where businesses wouldn’t be subject to red tape.

Better yet, Abe could push to cut red tape from the entire economy.

A renewable energy boom would do for Japan what quantitati­ve easing can’t — produce a thriving economic ecosystem that creates wealth, jobs and internatio­nal esteem.

And Japan is perfectly suited to profit from the demand for better batteries. Japanese companies have a track record of delivering quality and delivering it on time.

Tesla, after all, could have gone to China for copy-cat technology, but it knew it would be better served in Japan.

As for Abe, he should be evoking Panasonic at every opportunit­y — it offers a clear example of how the Japanese economy can recharge its own battery.

 ?? Picture / AP ?? Prime Minister Shinzo Abe’s economic programme is stagnating.
Picture / AP Prime Minister Shinzo Abe’s economic programme is stagnating.

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