Japan will strengthen efforts to support shifts by Asian countries away from coal to use of liquefied natural gas in power generation to reduce carbon emissions, in the hope of lowering procurement costs for the energy source, the industry ministry said.
As the world’s largest LNG consumer, Japan expects increased demand for the fuel — which is less polluting than coal — to lead to greater production by countries in the region and a diversification of suppliers, the Ministry of Economy, Trade and Industry said.
Tokyo is looking to broaden LNG procurement from the nation’s main suppliers, such as Australia, Qatar and the United States, to include more Asian producers, which mostly do not have sufficient infrastructure for exports.
The efforts to reduce purchasing costs and ensure stable supply come after the country faced a depletion of LNG stocks amid unseasonably cold weather this winter.
The world’s third-largest economy relies on LNG for nearly 40% of total power generation, and doubled its public-private investment initiative to $20 billion in 2019 to help Asian countries build LNG terminals, storage tanks and other facilities necessary for shipments overseas.
LNG is mostly traded under long-term contracts with prices linked to those of crude oil. Such trading makes it difficult to buy LNG in a timely manner at prices based on supply and demand conditions.
The government hopes increasing the number of producers and buyers will make it possible to establish an LNG market with flexible pricing.
Coal is still a major fuel source for rapidly growing economies in Southeast Asia, such as Indonesia and Vietnam, due to its affordability. But LNG produces around half the carbon dioxide emissions that coal does when burnt for power generation.
If seven Asian countries — India, Indonesia, Vietnam, the Philippines, Malaysia, Thailand and Myanmar — shift from coal-fired to gas-powered plants, carbon dioxide emissions would be reduced by around 864 million tons, equivalent to 71% of Japan’s annual greenhouse emissions, according to ministry data.
It is estimated that such a shift would create additional LNG demand of 166 million tons, more than double the nation’s annual imports, the data shows.
Imports of LNG rose sharply in the absence of nuclear power generation following meltdowns at the Fukushima No. 1 nuclear power plant triggered by the devastating earthquake and tsunami in the northeast of the country in March 2011.
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