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Post tsunami, Japan faces a whirlwind of energy policy decisions

2013 February 26

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Before the terrible tsunami and Fukushima Daiichi nuclear power plant disaster in March 2011, Japan produced 30% of its electricity from nuclear and had plans to increase it up to 50%. In the wake of the disaster, Japan shut down all but two of its reactors and sought to completely phase out nuclear power by 2040, according to the new energy plan that was released by the Democratic Party of Japan (DPJ) in September of last year.

Yet, the plan which was promoted by the DPJ was reportedly a “desperate election gambit” in the run up to December’s election – an attempt to cater to the anti-nuclear voting public. It was the Liberal Democratic Party’s Shinzo Abe who won the election to become Prime Minister, however, and he is in favor of turning the reactors back on.

This move speaks volumes of the power of the business lobby, which does not want to see increased power prices and would like to keep as much cheap nuclear power online as possible. Post Fukushima, electric utility giant Tepco is in an enormous amount of debt, and Japan is in a dangerous position in terms of energy security and costs. It has to import the large majority of its fuel, be it coal, natural gas, or oil. Bloomberg reported last November that Tepco would invite bids for 12.5 gigawatts of new coal fired power. UC Berkeley’s Richard Muller, author of Energy for Future Presidents, relayed to me the danger of such a move in a recent interview:

Switching to coal is terrible is many ways from the mining pollution to the coal ash pollution to the global warming issues. The dangers of coal are far worse than those of a nuclear reactor. And they would have to import the coal, too. They lose on the national security issue… It makes so much sense for Japan to turn its nuclear reactors back on, and that is what I believe Japan will do. They will do it quietly… They give the impression it’s only temporary, but I think the alternative of coal would be far, far worse.

Indeed, reliance on imported coal and natural gas will remain an expensive option, running up Japan’s trade deficit while continued consumption cuts hurt its recovering economy.

One promising alternative is renewable energy, namely solar and offshore wind. The world’s largest offshore wind farm may be built off the coast of Fukushima. Japan’s new feed-in tariff scheme for wind and solar could see a cumulative 20 gigawatts of wind and solar capacity by 2014, according to Bloomberg New Energy Finance. While Japan benefits as a “latecomer” in solar PV deployment with prices having fallen precipitously in recent years, a significant penetration of offshore wind and solar will still be a costly option. Turning on idle nuclear units in the short-term may buy some time for further cost reductions and technological advances in the renewables arena.

As the world’s third largest economy and an island nation, Japan is certainly providing an intensified test-bed for the energy policy decisions many countries will face as energy security and climate change become center stage issues.

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