Law Concerning the Rational Use of Energy (Energy Conservation Act) (Law No.49 of 1979)

The Law is the pillar of Japanese energy conservation policy as well as one of the two key climate law. It was enacted in 1979 in the light of the oil shock with a purpose of promoting effective and rational use of energy. It covers the following sectors: energy management in the industrial, commercial, residential and transportation sectors; energy efficiency standards for vehicles and appliances. The subjects of the Law are factories and workplaces that consume more than 1,500kL of oil equivalent energy annually. Among factories, there are two categories: Factory I that uses more than 3,000kL equivalent; and Factory II that uses between 1,500-3,000kL equivalent. Currently, it covers approximately 90% of the operators in the industrial sector.

Energy defined under this Law covers energies derived from oil, natural gas, coals, heat (fossil-derived) and other sources of energy derived from the above. Electricity derived from renewable sources such as solar PV, wind and biomass are not subject for this Law. Designated businesses are required to produce reports (regular reporting for Factory II, both regular and mid-term reporting for Factory I) to the Energy Agency of the Ministry of Economy, Trade and Industry. The purpose of this is to report amount of fuel, heat and electricity used in the subject period. Reduction target of 1% on average is set out under the law, with a fine up to JPY1m (USD8,495) according to the violation.

This Law also mandates an appointment of licensed energy managers for the designated businesses. Other measures include energy efficiency standards for vehicles and appliances, energy conservation labelling, energy regulation for housing and building and Positive Evaluation of Action to Reduce Peak Demand Electricity.

The Top Runner Programme was introduced in a 1990 amendment, which certifies manufacturers and other entities that satisfy “Top Runner” criteria. Criteria for the energy-saving performance regarding their products within the target fiscal years (within 3 to 10 years) are set based on the performance of the products with the highest (according to latest level) energy consumption efficiency (top runner performance). The programme applies to machinery, equipment, and building materials, as well as LED lamps and three phase induction motors. The last amendment, in November 2014, added windows to the programme.

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