Unlike the manufacturing sector, the residential/commercial sectors of Japan struggle to meet their environmental requirements. For instance, their CO2 emission levels have increased tremendously since 1990. This research estimates energy and 'exergy (available energy)' efficiencies in Japan's residential/commercial sectors during the period 1990-2006. Since an exergy analysis reveals 'available energy losses', it is an effective tool to achieve sustainable societies. The primary objective of this paper is to examine the potential for advancing the 'true' energy efficiency in Japan's residential/commercial sectors-by observing energy and exergy efficiency disparities. The results show large differences between the overall energy and exergy efficiencies in the residential (60.12%, 6.33%)/commercial sectors (51.78%, 5.74%) in 2006. This implies great potential for energy savings in both sectors. Furthermore, this research suggests that the residential sector may face more difficulties than the commercial sector, although the latter appears to be less energy-efficient, according to recent statistics. This is because the disparity between energy and exergy efficiencies has expanded in the residential sector since 2000. This study illustrates the importance of exergy analyses in promoting sustainable energy policies and new adaptation strategies. (C) 2009 Elsevier Ltd. All rights reserved.