After limping along for the last 6 months, Japan’s Prime Minister Naoto Kan announced his resignation today, paving the way for the country’s sixth leader in just 5 years. He was in power for 449 days – relatively long when compared to any other prime minister since Koizumi.

Prime Minister Kan has been under some pressure to leave.

Dubbed by the Japanese press as “The Activist” on account of his history of civic crusading, he came to power as a reforming figure and not as a member of the political blue-blood families whose power in the Diet he wanted to curb.

His initial approval ratings of 60-70% began to crumble when he suggested hiking consumption tax, sank lower over the Senkaku island chain dispute with China, and finally came totally unstuck when his leadership in the response to the Great Tokoku Earthquake was judged as tepid. His final approval ratings were in single figures.

For the last three months Kan has effectively been a caretaker, having promised to step down after overseeing the stabilization of the situation in Fukushima and getting the reconstruction effort underway.

After he temporarily survived calls for his resignation in June, he then reached further. The writing was on the wall, and, as many politicians do at times like this, his thoughts turned to legacy.

He set three conditions for his leaving – three bills which must be passed through parliament before he left the building. The first was a new budget, the second was a bill to allow the government to issue deficit-covering bonds, and the third was a bill to promote the use of renewable energy.

This strikes me as a strange situation – lame-duck PM’s usually cannot pass anything through parliament. They bumble along at the mercy of newer and stronger political powers until finally being put out to pasture. However Kan played a blinder and used the clamours for his leaving as a lever to push through three very important (and difficult) bills. He saw a chance to turn weakness into strength and he seized it with both hands.

Now, onto the renewable bill. Setting aside for a moment the horrors of the quake and tsunami, it would be difficult to overstate public concern over the meltdowns at the Fukushima nuclear plant. Worries about nuclear power have long been in the psyche of the Japanese people for obvious reasons, but until Fukushima it was thought that the nuclear phenomenon was thoroughly tamed for peaceful and useful purposes.

Not now. Whilst Japanese society has been ‘eco-aware’ for ages (I have to sort my household rubbish for recycling into 6 different bins), energy policy was not really on most sensible people’s radar.

The press dissected Fukushima with ferocity, the public became very conscious about how their energy arrives at their homes (and also how energy production is linked to food and water safety), and Japan’s long-term nuclear future is now under severe threat.

My local power station, in the next prefecture along, was ordered by government to shut down over concerns that it was too close to the sea and therefore at risk from tsunamis. Overnight, my city Nagoya (Japan’s third largest metropolis) suddenly had 25% less electricity supply then it did the day before. I have since had three power cuts – only short ones, but the first I have experienced in three years of living in Japan. It was a big talking point with my neighbours: something must be done.

So Kan, to some extent, saw a chance to ride one current of public opinion and pursue a renewable energy bill which extends and elevates existing feed-in-tariffs. I should point out that this was by no means universally popular. Heavy and light industry opposed it, citing higher energy costs in a climate where it hard enough to export anything given the strength of the yen. Many members of the public opposed it, saying in tough economic times they do not want to pay higher electricity bills. But a significant amount of the public supports the drive.

Whilst a last-minute deal between Kan’s centre-left government and the opposition allowing 80% or more of the surcharge to be waived for heavy electricity users (representing a watering-down of Kan’s original blueprint), there is nonetheless a real opportunity for Japan now to boost its clean energy sector whilst taking steps to reach it’s new goal of 25% greenhouse gas emissions reduction by 2020 from the 1990 level.

Japan’s domestic solar market in particular has been squeezed by imports from China recently. Kan hopes that this trend can be reversed by giving the Japanese cleantech industry a moral-boosting shot in the arm.

There are obvious economic possibilities for Japan inc. in pushing its cleantech sector. Big industry has been developing solar and fuel cell technologies for years and holds technological leadership in many areas. If highly generalized reputation means anything, Japan supplies the upper end of the cleantech market, though at a price. What supporters of Japanese industry hope is that moving the clean energy sector to centre stage will inspire it to redouble its efforts, not only along its traditional performance vector, but also along the cost-reduction vector. Stimulating domestic demand will have a profound effect on this.

In terms of new installation of cleantech, since the quake, a number of clean energy ‘heroes’ have arrived – I can see the manga now – led by Masayoshi Son of Softbank and Hiroshi Mikitani of Rakuten. These figures very much represent what many think is the future of Japanese business – running as they do companies that embrace modern media like the internet and mobile telecoms rather than making electronic devices or heavy machinery. They have become household names, like Richard Branson in the UK but without the transatlantic ballooning adventures and tropical island getaways. This would not be The Done Thing over here.

The future's bright for Masayoshi Son. Pic: Washington Post

Son in particular has gone high-profile. He runs Softbank, a comparatively new entrant into Japan’s mobile telecoms sector which has left more traditional rivals breathless. He recently and suddenly announced that, in a massive departure from his telecoms business, he was going to build 10 massive solar plants – because he wants Japan to stop using nuclear power and switch to a clean and safe alternative.

He shouted at the government (he can do that), and within a month had assembled a list of 12 prefectures willing to give him the land and permits needed for his solar farms idea. Achieving this at all, let alone in four short weeks, is nothing short of incredible. And as people think Son is a very shrewd man and habitual winner, people have begun to think that there might just be something significant in this renewable power sector.

This came before today’s renewable bill was passed, of course. I don’t know if the likes of Son directly influenced Kan (I suspect Kan had his mind made up before), but cumulatively it all sets the tone for an invigorated Japanese cleantech sector.

Whether Japan becomes a new target for the international clean energy investment community, as frequently happens when a new FIT scheme is introduced somewhere, it is too early to tell. Similarly, whether Japanese clean energy manufacturers can drive down costs and turbocharge their exports, I also do not know. Achieving the ambitious CO2 emissions targets will be tough too.

I am, however, cautiously optimistic for all of these questions. Kan hopes that his bill will green Japan’s future, propel its cleantech sector back up the global rankings, whilst avoiding harm to the nation’s economy. If this eventually proves to be the case, I think history might be a little less harsh on The Activist than he fears.

- Mike Hugh