Reclaiming pragmatism in Japan’s energy policy

Author: Jun Arima, University of Tokyo

March 2021 was Japan ten years after the great earthquake in eastern Japan on March 11th and the Fukushima nuclear disaster. All nuclear power plants in Japan have been stopped and only a handful have been restarted after meeting new and stricter standards for nuclear safety. This has resulted in a significant loss of base load electricity, which has been largely offset by natural gas and coal. Since Japan has no domestic fossil fuel resources, its energy self-sufficiency rate has fallen to the lowest level among OECD economies. As an island nation, Japan has no pipeline or network connections to neighboring countries. All of this puts Japan at greater geopolitical risk.

At the same time, the fight against climate change is becoming more and more urgent. However, because of its already high energy efficiency, Japan’s marginal costs for reducing greenhouse gas emissions are much higher compared to other countries. Japan’s industrial electricity tariff is already very high, 1.5 to 2 times higher than in the USA, China and South Korea.

Overall, Japan is the only country facing so-called fourfold challenges: lack of domestic resources, high dependency on the Middle East, high energy costs and high costs to further reduce its greenhouse gas emissions.

In 2015, Japan submitted its Nationally Determined Contribution (NDC) under the Paris Agreement, which aims to reduce greenhouse gas emissions by 26 percent compared to 2013 by 2020. This goal was underpinned by an energy mix of 44 percent non-fossil fuels (22-24 percent from renewable energies, 20-22 percent from nuclear power) from total electricity generation.

This energy mix was designed to meet three requirements: restoring energy self-sufficiency to the pre-September 11th level of around 25 percent, lowering electricity costs and setting a target for reducing greenhouse gas emissions comparable to other industrialized countries. Japan’s NDC has been designed to lower fossil fuel import costs by restarting nuclear power plants and increasing renewables, absorbing the expansion of FIT (feed-in tariff) costs.

Progress towards these goals has been mixed. On the one hand, the share of renewable energies has increased significantly thanks to generous FITs, but the subsidy costs have also increased. On the other hand, restarting nuclear power plants has been slow. Out of 50 nuclear reactors, only nine were restarted. If nuclear power stagnates and Japan continues to intend to reach its NDC, its share of renewables will have to grow, which will inevitably increase the already high FIT costs. Higher electricity prices would also affect the international competitiveness of the Japanese manufacturing sector.

In October, Prime Minister Yoshihide Suga announced Japan’s carbon neutrality target for 2050 and has joined more than a hundred countries since March 2021. After the Paris Agreement, countries are under increasing pressure to announce their carbon neutrality targets for 2050 and improve their NDCs, Japan’s Ministry of Economy, Trade and Industry (METI) has the green growth strategy as a blueprint for achieving the above stated goals. The strategy envisages decarbonising the electricity sector through a mixture of renewable energies (50 to 60 percent), nuclear power and heat, as well as carbon capture (30 to 40 percent) and hydrogen (10 percent).

The role of offshore wind is also highlighted, with launch targets of 10 GW by 2030 and 30–45 GW by 2040. Offshore wind looks promising and should definitely be explored, but Japan’s wind geography is not as random as some regions like the North Sea with an annual utilization rate that is 20 percent higher. Upward revisions of the NDC for offshore wind will inevitably lead to even higher electricity prices. While Japan has abundant geothermal resources, not all of them can be used as many are located in national parks and have severe development restrictions.

Japan is currently in the process of formulating its 6th Strategic Energy Plan. All of this will inevitably affect this process and lead to revisions of the current NDC. Japan is likely to further refine its plan by attending a US-hosted climate change summit this month.

The Japanese energy policy debates after March 11th were distorted by a dichotomous argument between renewable energy and nuclear power. Reality calls for a more pragmatic approach that incorporates both aspects and leverages their respective advantages. Together with renewable energies, Japan should accelerate the restart of nuclear power plants in the short to medium term. Building new and more advanced nuclear power plants should be an option for the 2050 CO2 Neutrality Plan. It is also vital to preserve and develop Japan’s nuclear technologies and human resources.

There is no doubt that stricter safety regulations increase the cost of nuclear energy. However, a significant volume of stable zero-emission power supply is a powerful tool for achieving decarbonization. Nuclear energy does not have the same system integration costs as renewable energies.

There is no such thing as a perfect energy setup. Japan’s reality does not allow him to count on one source of energy or another while ruling out other options. Finding the best diversified mix is ​​the right answer, and it is time Japan returned to that pragmatism in its energy debate.

Jun Arima is a professor at the Graduate School of Public Policy at the University of Tokyo. He is a former Japanese official and negotiator for the United Nations Framework Convention on Climate Change.

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