The Green Giant? It May Be Japan

Two decades ago, Japan was choking on its own filth. Acrid clouds of photochemical smog from car and factory emissions assaulted residents of major cities. Then, two oil crises led to energy shortages and sent prices spiraling. That walloped Japan, a huge oil importer, harder than other industrial countries. Something had to be done.

So the government enacted draconian measures to clean things up. Other laws fostered energy efficiency--a byproduct of which is less pollution. Now, after years of investments that produced dramatic gains at home, Japan is looking abroad. Mitsubishi Heavy Industries Ltd. and Hitachi Ltd., among others, are criss-crossing Europe, Asia, and the U.S., striking deals on equipment or licensing their approach in everything from plant design to waste-water and air-pollution control. The Japanese have a lead over the U.S. and Germany in pollution technology for basic industry, and Tokyo is spending $4 billion a year to broaden the country's environmental skills. Jerry D. Newton, Far East marketing manager for environmental and geographic information systems at Digital Equipment Corp., has just returned from surveying such efforts. Japan, he confirms, "is starting to target the environmental market."

SEAWEED POWER? The green technologies being developed in Japan span a broad range of industries. Steelmakers, who spew out 25% of the country's carbon dioxide, a greenhouse gas, have slashed energy consumption per ton of steel by 20% since the mid-1970s. Already, the world's most energy-efficient producers, these companies hope to cut energy use a further 10 points with a new process, called direct iron-ore smelting, which is due out in 1994. Meanwhile, Toyota, Nissan, Honda, and Mazda are pushing hard to raise fuel efficiency and slash emissions. And Tokyo Electric Power recently unveiled an electric car that broke two world records. It hit a peak of 109 mph and drove 340 miles on a single battery charge at 25 mph--much farther than U.S. models go.

Innovation isn't limited to smokestack industries. Construction giants Taisei Corp. and Kajima Corp. have integrated systems for sorting and transporting waste within office buildings and complexes. Sanyo, Sharp, and Matsushita Electric Industrial dominate the world market for solar batteries, and Fuji Electric Co. leads in fuel-cell technology. Last year, Matsushita Battery Industrial Co. commercialized the world's first mercury-free alkaline batteries. It licensed the technology to Rayovac Corp., the No.3 U.S. battery producer.

Now, the Japanese government is funding more exotic projects. The latest, led by the Ministry of International Trade & Industry (MITI), aims to use biotech to make hydrogen, the cleanest-burning of all fuels and one that experts think is the great hope for the 21st century. Making hydrogen now requires huge amounts of electricity to separate the gas from water. MITI's idea is to use gene-splicing and other techniques to boost the productivity of hydrogen-producing microbes and seaweed. If this works, MITI says, the benefits could far exceed those of solar cells and other energy sources it has backed so far.

Whenever possible, Japan is focusing on integrated systems that minimize waste--and create new markets. Nippon Steel Corp., for example, is converting coal ash to zeolite, a mineral used in water treatment. Researchers at the Japan Atomic Energy Research Institute, Chubu Electric Power Co., and Ebara Corp. are working on a project to convert sulfur and nitrogen oxides--the chief causes of acid rain--into ammonium sulfate and ammonium nitrate, which can be used in fertilizers. The technique has been licensed to research groups in the U.S., Poland, and Germany.

To be sure, Japan faces plenty of obstacles. U.S. and European competitors haven't been standing still. Japan produces some of the world's most advanced incinerators, for instance, but relatively few of the 2,000 in operation are rigged to produce electricity. The U.S. has the lead in such cogeneration systems, and the Energy Dept. funds leading research in a broad range of advanced energy technologies.

Moreover, as with earlier efforts in semiconductors and consumer electronics, Japan is starting from a small base. Domestic orders for environmental equipment last year totaled just $5.8 billion, and exports of such gear account for less than 10% of Japan's industrial production. Still, by the year 2000, Japanese companies will be cranking out $12 billion worth of waste incinerators, air-pollution equipment, and water-treatment devices a year, predicts the Japan Association of Industrial Machinery.

To expand overseas, Japan's strategy is to use joint ventures. In the U.S., Mitsubishi Heavy Industries has teamed up with Corning Inc. in Durham, N.C., to use chemical catalysts to remove nitrogen oxides from coal-fired power plants. Ebara has tapped Zurn Industries Inc. in Erie, Pa., to build industrial waste incinerators--and Ebara director Yoshio Hirayama expects U.S. sales of $160 million a year by 1993. Ishikawajima-Harima Heavy Industries has licensed its nitrous-oxide-removal technology for industry and power plants to America's largest boilermaker, Foster Wheeler Energy Corp.

SCRUBBING UP. Still, U.S. factories have a weak incentive to buy all this, given cheap energy prices and, by Japanese standards, loose air-quality laws. In fact, although the U.S. gross national product is only twice as big as Japan's, America's total emissions of sulfur and nitrogen oxides were many times those of Japan in 1990, says the Organization for Economic Co-operation & Development. The U.S. also accounts for 25% of the world's carbon-dioxide emissions, vs. less than 5% for Japan. "The need for new technology is apparent," says Katsuya Sato, senior technical officer at Japan's environment agency. "But the gap in energy prices and pollution standards will be a barrier." Even so, the Japanese see opportunity in the new Clean Air Act, which will take effect this decade.

In Europe, where companies such as Asea Brown Boveri Inc. have stayed on the technological cutting-edge and where inplants are often better equipped than in the U.S., the Japanese have also been signing joint ventures. Ebara recently licensed its incinerator technology to Abfall Beseitigungs Technologien (ABT), which already has orders from the cities of Berlin and Macomer, Italy. And Mitsubishi is working the frontiers. "We're very interested in Northern Europe, as well as Poland and Czechoslavakia," says Mitsubishi Heavy general manager Kazuhiko Kusakabe.

Asia, however, is Japan's top priority. The goverment has earmarked Official Development Assistance (ODA) funds to subsidize environmental projects there. Last summmer, for example, MITI proposed bundling aid projects aimed at energy development in China, Malaysia, and Indonesia with ODA subsidies for Japanese environmental equipment purchases.

As competition in environmental technologies heats up, Japan's moves could spark new trade tensions. But then again, maybe not: Competitors will be hard-pressed to claim unfair trade when the issue is aiding the survival of planet Earth.

      Japan is making a major effort to develop and export pollution control gear and 
      With limited space for landfill, Japan builds powerful, low-emission 
      incinerators for every type of solid and liquid waste
      GREENING THE AUTO INDUSTRY The less fuel burned, the less CO2 released. Japan's 
      auto companies are racking up `green' innovations, from lighter body materials 
      to lean-burn engines and better catalytic converters
      MANAGING STEEL PLANTS Steelmakers produce 35% of Japan's industrial waste, more 
      than any other industry. So the most modern plants are designed to recycle much 
      more heat and waste product
      TREATING WASTE WATER Japan's heavy industrial companies are exporting 
      sewage-control and sludge-treatment equipment and expertise to other Asian 
      CREATING ALTERNATIVE ENERGY The best solution to global warming? Cease all 
      greenhouse gas emissions. Japan is the world leader in solar and fuel cell 
      REMOVING CO2 The government and electric-power companies are doing exotic 
      research, such as using genetically engineered micro-organisms to gobble up CO2
      NEUTRALIZING FLUE GASES A dozen Japanese companies sell equipment to remove 
      sulfur oxides and nitrous oxides from the stacks of steel and electric-power 
      DATA: BW