The International Energy Agency's 2003 review of Japan's energy policies and programmes.  This edition finds that Japan has ratified the Kyoto protocol and is implementing its 2002 climate change plan.  The country has developed an impressive range of policies to address rising CO2 emissions from the energy sector. Some of the measures could be strengthened however, and made more cost-effective. Industry’s use of Kyoto flexible mechanisms could also reduce costs. Nuclear power plays a key role in Japanese energy policy, but the government’s objective of increasing nuclear generation has been impeded by safety-related incidents in recent years. It is vital to restore public confidence, to clarify the role of nuclear power in the liberalised electricity market and to improve the performance of the existing nuclear units. Japan has begun to reform its electricity and natural gas markets, but little competition has developed. The report finds helpful new government measures to further reform markets, but points out that the markets should be closely monitored. More effective measures may be necessary if competition does not develop.