68th Session Of The United Nations General Assembly Continues

Not much time has passed since Yoichi Masuzoe, backed by Japan’s ruling Liberal Democratic Party, won Tokyo’s gubernatorial election in January 2014 against two candidates who were running on the promise to phase out nuclear power. In his victory speech he uttered: “The Fukushima disaster has left me without words, but reducing our dependence on nuclear power needs to be done gradually.” Tokyo is the biggest consumer of electricity among Japan’s 47 prefectures with about 10% of Japan’s total. In a country shaken by the 2011 Fukushima nuclear catastrophe – tens of thousands of people are still displaced and live in shelters – this ballot was perceived as a test for Japan’s public opinion on nuclear energy.

Finally, last week Prime Minister Shinzo Abe followed Mr. Masuzoe’s statement up by announcing details of a draft plan that expresses the government’s commitment to nuclear power as an important long-term electricity source. This new Basic Energy Plan outlines Japan’s new medium- and long-term energy policy and calls nuclear power an “important base load power source.” Here, the Japanese newspaper Yomiuri Shimbun adds an interesting nugget of information by noting that “in the preliminary draft, nuclear power plants were described as an ‘important base power source’ that would serve as the foundation of a stable supply of electricity. [Meanwhile,] in the latest draft, the phrase was changed to ‘important base load power source’”. The difference is more than just semantics because by referring to nuclear as “base load power source” the draft elegantly shifts the justification for reverting back to nuclear energy to the next consequential step – the expansion of renewables – and in this way also tries to address the public’s concerns after Fukushima.

It is in this context that Toshimitsu Motegi – Japan’s minister of economy, trade and industry – stresses that the energy plan still commits the country to “reducing its reliance on nuclear power as much as possible,” the Financial Times reports. The former phrase “important base power source” would have been interpreted as in line with pre-Fukushima long-standing Japanese energy policy; namely, granting nuclear power generation an elevated ‘primus inter pares’-like status based on the still valid argument that if nuclear power is discounted, Japan has the lowest energy self-sufficiency ratio with a mere 4 per cent among the major industrialized countries. Note, the energy self-sufficiency rate indicates how much of a country’s energy needs it can meet on its own.

Currently, given that nuclear power’s contribution is zero, the discount is no longer relevant, making Japan’s energy security reality dire and very expensive.

Energy Self-Sufficiency Ratio 2003

Energy Self-Sufficiency Ratio 2010

Source: The Institute of Energy Economics, Japan (IEEJ)

The above two charts visualize Japan’s unfavorable situation as a resource-poor country and nuclear energy’s role in that equation. Take France, which basically shares Japan’s fate but decided to bet on nuclear power for its country’s economic well-being. With the necessary political willingness, France could probably afford to reduce its nuclear power generation capacity for the simple fact that the EU has ample grid interconnections (power grid and pipelines) to make up for lost capacity without a devastating impact on France’s economy. No such network exists in Northeast Asia.

Grid Interconnections in Europe

Source: The Institute of Energy Economics, Japan (IEEJ)

As for Germany, the charts illustrate the country has a substantial indigenous natural resource endowment in the form of coal – 4.7% of the world’s total proven reserves – and can rely on EU grid interconnections to enhance its energy supply. Germany can, therefore, actually phase out its nuclear power plants – given the political willingness as well as the population’s willingness to pay higher energy costs – and still have more options than Japan. Keep in mind, both countries are dominant global export nations.

Lastly, the charts also show the stunning global energy transformation witnessed in the last decade. While the UK’s energy self-sufficiency ratio decreased markedly from 106% (2003) to 73% (2010) due to higher domestic energy demand as North Sea petroleum resources depleted. During the same period, the U.S. embarked on a shale gas and oil revolution facilitated by hydraulic fracturing and market conditions, which helped the US overtake the UK in energy self sufficiency. The American energy self-sufficiency ratio increased from 72% (2003) to 78% (2010) and likely increased further into 2014. Rex Tillerson, CEO of ExxonMobil, told CNBC in January 2014: “I think it is realistic that the U.S. could be energy self-sufficient by the end of this decade.”

Further, the Yomiuri Shimbun reports the draft plan also stipulates the government’s policy to restart idle nuclear power plants once assured by the Nuclear Regulatory Authority – the regulatory agency set up after the Fukushima catastrophe – the plants can be safely operated at their current site and do not require additional retrofitting. As of December 2013, the Institute of Energy Economics (IEEJ) expects up to 16 nuclear reactors with pending applications to restart by the end of FY2014 generating 82 TWh of electricity.

Depending on the application submitted by electric utilities – e.g. for safety re-certification of reactors – and then depending on what the inspection by the Japanese nuclear regulatory agency will entail, IEEJ projects a first group of restarting nuclear plants to take about nine months for assessment, with the following groups taking six months. Most interestingly, the Yomiuri Shimbun writes that simultaneously with a nuclear power reduction – called for in the draft plan – “the government would ‘carefully consider the scale of the nuclear power plants’ it would maintain.” This wording leads Yomiuri Shimbun to conclude that “new nuclear power plants may be built or existing power plants expanded in the future” – meaning that an even broader Japanese nuclear renaissance may be in the cards.

Finally, the draft also avoids quantifying nuclear energy’s share in Japan’s energy mix, leaving the ‘optimal’ numerical target to be determined at a later date. According to the World Nuclear Association, Japan’s pre-Fukushima 50-plus main reactors provided about 30% of its electricity, and that share is expected to increase to at least 40% by 2017. At this stage, the World Nuclear Association notes that “the prospect is for about half of this, from a depleted fleet of no more than 48 reactors.”

Nuclear Power Plants in Japan 

japan nukes

Source: World Nuclear Association

To date, this draft plan is PM Abe’s biggest push to resuscitate Japan’s nuclear energy program, which was put on hold pending safety reviews of the entire reactor fleet. It is also his attempt to redefine regulatory measures taken as part of the Japanese government’s post-Fukushima nuclear energy and macroeconomic policy – so-called “policy costs”- that significantly impact energy prices paid by Japanese industry. Any nuclear restarts must be approved by the Nuclear Regulatory Authority as well as local governments. The Financial Times labeled the policy shift a “U-turn” and quoted Toshimitsu Motegi, Japan’s Minister of Economy, Trade and Industry as saying a “zero nuclear” option is not “a responsible energy policy.”

PM Abe’s departure from his predecessor’s “zero nuclear” policy constitutes a strategic shift in direction. But even though he supported building a new regulatory highway with an independent regulator and tightened oversight, he never lost sight of his main policy objective, which is to enable Japan to benefit from nuclear power’s positive attributes. That means a return to an amended 2006 Nuclear Energy National Plan: “a return to energy security, [with the] re-recognition of the importance of energy security in industrialized nations.” Why the 2006 plan? Interestingly, PM Abe held the Prime Minister post for one year in 2006-2007, and in August 2006 his government proposed an energy policy plan which may help gauge where his new 2014 Basic Energy Plan is heading in a post-Fukushima environment.

A follow-up article will address the role “policy costs”, reflected in current Japanese electricity prices, play in Abe’s calculation to close Pandora’s ‘Zero Nuclear’ Box again, and instead, initiate a gradual reduction of Japan’s nuclear power dependence – likely with compensatory capacity increases for renewables.