Interpreting the Results of the "Consumer Survey on Carbon Neutrality" ~ Current Status of Carbon Neutrality Penetration and Future Outlook ~ (Part 1)

With urgent action needed to combat global warming and climate change, achieving a decarbonized society is a major challenge. Dentsu Inc. regularly conducts a "Consumer Survey on Carbon Neutrality," with the Sustainability Promotion Office and Dentsu Team SDGs—which drive sustainability projects across the Dentsu Group Inc.—serving as the survey's principal investigators.

We reported on the latest sixth survey results in this article. Here, we interview Mr. Yu Hayashi of Dentsu Inc., a project member who conducted the survey. We discuss key findings and future outlooks revealed by the results. This content provides insight into Japan's "current status regarding carbon neutrality."

"Carbon Neutrality" Has Caught Up to "Decarbonization"

Q. What is the background and purpose behind conducting this "Consumer Survey on Carbon Neutrality"?

Hayashi: In December 2020, the Ministry of Economy, Trade and Industry formulated the "Green Growth Strategy for Carbon Neutrality by 2050," and in April 2021, it announced its goal of reducing greenhouse gas emissions by 46% (compared to 2013 levels) by fiscal 2030. This is a very ambitious goal, and considering the movements in Europe and the United States, which are ahead of Japan, it was possible that the business models of companies and the lifestyles of consumers would change significantly. Therefore, the "Consumer Survey on Carbon Neutrality" was launched with the desire to properly understand how decarbonization and carbon neutrality would permeate the Japanese people. The survey has been conducted approximately every two months since its first iteration in April 2021, with a total of six surveys completed as of June 2022.

When we started this survey, there was almost no official data available on decarbonization or carbon neutrality. Furthermore, compared to decarbonization, carbon neutrality was a newer concept, and very few people were aware of it. We felt it was crucial to closely monitor the progress of this concept's spread.

Q. As mentioned earlier, what exactly is the difference between decarbonization and carbon neutrality? At first glance, they seem to mean the same thing...?

Hayashi: It's certainly a confusing point. The root cause is global warming. Since this is driven by increasing carbon dioxide, we must live with as little carbon dioxide emissions as possible. In a sense, decarbonization is the ultimate form of this goal.

So, how do we achieve decarbonization? One straightforward approach would be to "stop burning fossil fuels." However, that might sacrifice economic growth. When it comes to using fossil fuels, "power generation" is a major example. Nuclear power generation, which doesn't rely on fossil fuels, has seen a significant drop in output since the nuclear accident following the Great East Japan Earthquake. Furthermore, solar power, a form of "renewable energy," faces challenges in Japan due to its limited flat land, making significant increases in installations unlikely. Wind power, thriving in Europe, is also said to have limited potential in Japan because strong winds are relatively uncommon. In other words, Japan's industries would struggle to survive if we focused solely on "not emitting carbon dioxide."

Consequently, there is now a growing movement to adopt a plus-minus-zero approach: "If carbon dioxide is emitted, it must be absorbed or effectively utilized in some form." This approach can contribute to mitigating global warming, and the efforts themselves could become a source for creating new industries and technologies. The methodology for achieving this decarbonization is carbon neutrality.

Considering Japan's future, it is essential to promote corporate efforts by spreading the new concept of carbon neutrality. This will drive the development of various carbon dioxide-handling technologies and enable their export overseas, thereby achieving both decarbonization and economic growth. Therefore, it is crucial to accurately gauge not just decarbonization, but also how deeply the methodology of carbon neutrality has penetrated Japan.

In the first survey, awareness of decarbonization stood at 51.9%, while awareness of carbon neutrality was 42.0%—nearly 10 percentage points lower. By the latest sixth survey, decarbonization reached 60.7% and carbon neutrality 58.2%, showing nearly identical scores. This demonstrates how the term "carbon neutrality" has gained traction over the past year.

How much additional cost burden associated with "carbon neutrality" is tolerated?

Q. What aspects of this survey's results did you find particularly noteworthy or distinctive?

Hayashi: The key highlight is that "approximately 40% of consumers accept 'additional cost burdens' resulting from corporate carbon neutrality initiatives" (Figure 1). Since consumer acceptance of price increases is crucial for advancing carbon neutrality, we continuously monitor this in our surveys.

Hayashi: In this survey, we asked respondents to choose between two options: "I accept that decarbonization/carbon neutrality considerations may lead to slightly higher prices" or "I prefer lower prices (without cost increases) even if decarbonization/carbon neutrality isn't prioritized." Whether the figure "40% of consumers accept additional cost burdens" is seen as significant or still insufficient is likely to be a point of debate. What is certain, however, is that there are currently "differences depending on the industry or category." Categories where the link to carbon emissions is clear—such as "airfare," "car/motorcycle purchase costs," "gasoline costs," and "electricity bills"—show a higher percentage willing to accept price increases. Conversely, categories often perceived as unrelated to carbon emissions—like "beverage costs," "medical expenses," and "book costs"—show a lower willingness to accept price hikes. Since carbon emissions are an issue affecting all activities, the fact that tolerance varies by category suggests that a true understanding of "carbon neutrality" is still developing.

The fact that "about 40% of consumers accept 'additional cost burdens' resulting from corporate carbon neutrality initiatives" means, from a corporate perspective, that 60% of end-users prioritize price. On the other hand, as mentioned earlier, Japan has set a very ambitious target: "reducing greenhouse gas emissions by 46% compared to 2013 levels by fiscal year 2030." Considering this goal, the fact that 60% of consumers are not yet fully on board makes me personally feel we need to drive this forward a bit more. I also believe that strengthening information dissemination would certainly motivate people to act.

For categories like electricity and automobiles, where acceptance is already high, continuing information dissemination focused on "differentiation" and "global strategy" seems effective. Conversely, for industries or categories where the connection to carbon neutrality isn't yet apparent, we must start by communicating the fundamental question: why is this industry relevant to carbon neutrality? For example, the mobile phone industry actually consumes a significant amount of electricity, yet its relationship to carbon neutrality doesn't seem widely recognized. I believe disseminating this kind of information will also become crucial.

Decarbonization, a major goal that could be key to halting global warming, and carbon neutrality as a methodology. The "Consumer Survey on Carbon Neutrality" revealed that while awareness of carbon neutrality is increasing, understanding of its core essence may not yet be fully established. In the second part, we will explore in detail what is important for advancing understanding of carbon neutrality, examining it from two perspectives: "businesses" and "consumers."

*1 Quoted from the Dentsu Group Corporate Site release: " Dentsu Japan Network Conducts Sixth 'Consumer Survey on Carbon Neutrality' "

• Interpreting the "Consumer Survey on Carbon Neutrality" Results: Current Status of Carbon Neutrality Penetration and Future Outlook (Part 2)