The push to move away from nuclear power because of the crisis at the Fukushima No. 1 power plant has propelled demand for gas on a global basis — and the subsequent rise in its prices will inevitably hurt Japanese buyers, according to a department head of an Edinburgh-based research and consultancy firm.
“There is an impact (by antinuclear movements) on gas demand because gas and coal will end up replacing some of the nuclear generation that is lost,” Noel Tomnay, head of global gas research at Wood Mackenzie Ltd., said in Tokyo.
“At the global level, no one can build renewable sufficiently fast enough to remove the need for either fossil fuels or nuclear generation. Consequently, you are making a political choice between carbon emissions and nuclear generation,” said Tomnay, who is on a one-week visit to the country to hold conferences and meetings with his clients amid growing demand for gas.
Domestically, the trouble at the Fukushima plant and the suspension of the Hamaoka nuclear plant in Shizuoka Prefecture in line with the government’s request have prompted efforts to beef up procurement of liquefied natural gas as an alternative to nuclear energy.
Tomnay said that due to rises in transportation costs triggered by higher crude oil prices and an increase in demand in other parts of Asia, Japanese buyers would need to pay more to attract LNG cargoes.
Wood Mackenzie has projected that nuclear power generation capacity will be about 40 gigawatts less by 2020 than it had previously expected and about 70 gigawatts less by 2025 due to expected delays and suspensions of nuclear power plants worldwide.
He said gas prices rose particularly in Europe as the Fukushima accident rekindled strong memories of the 1986 Chernobyl disaster and its impact, fueling antinuclear movements, including in Germany, where a moratorium on nuclear power was decided on shortly after the Fukushima accident struck.
Such a rise in gas demand in Europe “could continue for a couple of years, and if it does, gas prices in Europe will rise significantly,” Tomnay said.
Amid such rises, Tomnay said, it is “understandable” and “sensible” that Japanese firms are ensuring the diversity of LNG supplies, such as from North America, where it is cost competitive with Australia, one of the major suppliers of LNG to Japan.
Chubu Electric Power Co., two Japanese gas firms and an incorporated administrative agency agreed to join in Mitsubishi Corp.’s shale gas project in Canada earlier this month.