Hello,

I was wondering if I could pick the brains of people who have been watching Japanese policy develop for a lot longer than I have.

I am conducting research on renewable energy policy, with Japan as a case study. Japan has implemented during 2003-2012 a policy instrument for renewable electricity called a renewable portfolio standard.
Roughly speaking, this instrument obligated certain entities (mainly, but not exclusively, Japan's famous
10 regional electric utilities) to have a given government-determined percentage of their electricity sales come from renewable energy sources - either in-house or purchased from somebody else, like an independent wind farm for instance.

This instrument was around for a long time and I think it is fair to say that it was universally loathed by all stakeholders - if for very different reasons. (The meeting minutes of one METI working group I have read reveal an amusingly disgruntled bureaucrat calling it a "kawaisou na houritsu".) As such, there was no shortage of attempts to change it - but METI stuck to its guns.
One of the most consistent inputs into the policy process was the power companies' plea to NOT raise their obligations. The argument went as follows: Japan does not have enough renewable electricity installations (or potential, etc.), so THAT MUCH renewable electricity cannot be produced, so don't force these targets on us, they are too high, we are struggling to meet them as it is and (here is where it gets interesting) THERE IS A PENALTY IF WE DON'T MEET THE OBLIGATION, so please do not put us in an impossible situation where we would have to pay the penalty because we could not meet the obligation because there wasn't enough renewable electricity around to begin with.

What is weird about the argument is that the penalty is actually quite small. I do not have the exact passage of the law on hand, but it was of the order of 1 million yen - FLAT! Regardless if an obligated entity missed its target by 1 kWh or 1 MWh, the penalty was still the same. Such a small fee would hardly be a significant deterrent to behemoth companies such as a regional utility. My question to this forum would then
be:

Are there examples from other industries/policy areas in Japan where obligated entities have felt compelled to comply with a regulation even though doing so incurred higher costs than simply paying the nominal fine set out by the government?

Thank you very much,

Alex Luta,
PhD Cand,
Tokyo Institute of Technology.