Commentary / Japan

Abe's clean energy opportunity

by William Pesek

U.S. President Donald Trump’s betrayal of the Paris climate accord provoked something extraordinary from Tokyo: criticism. Since the start of his presidency in January, Prime Minister Shinzo Abe’s Japan turned a blind eye to Trump’s bluster and unilateralism. America shirking its environmental responsibilities, though, proved an indignity too far for its most important Asian ally.

Environment Minister Koichi Yamamoto minced no words about Trump’s “decision to turn his back on the hard-won wisdom of humanity.” Yet there’s another bit of hard-won wisdom that both Abe and Yamamoto must internalize, and fast: how Trump’s coal fetish is a huge opportunity for Japan.

The conventional wisdom is that China is the big winner as President Xi Jinping fills the global leadership void. It’s sad, but true, that by dragging America back to the 20th Century, Trump is ceding the renewable-energy arms race of the 21st to Chinese solar, wind and battery companies. It’s also true that Japan is uniquely positioned to help China, India, Indonesia and other upstarts avoid choking on their rapid growth — and profit greatly amid the process.

Just ask Tesla billionaire Elon Musk, who turned to Panasonic for help launching his $5 billion lithium-ion gigafactory in Nevada. Musk views Panasonic’s expertise as key to accelerating a solar-energy revolution that could render obsolete the fossil fuels Trump holds so dear. Or ask Softbank billionaire Masayoshi Son, who wants to build a regional electricity “super grid” using at least $200 million of his own money for starters. The catalyst: the Fukushima nuclear crisis that turned a majority of Japanese against reactors.

If Abe has noticed these efforts, he seems unimpressed. Sure, his team pays lip service to energy efficiency and sustainability. But the Liberal Democratic Party’s obsession with nuclear power appears only slightly less retrograde than Trump putting coal mines ahead of invention. Abe’s ambivalence conflicts with his goals to increase Japan’s global status and revive a moribund economy. After all, no industry holds greater promise than devising new energy sources. And few countries are better equipped to lead the charge. What Japan lacks in fossil fuels, it makes up for in solar, wind and geothermal resources and a track record of energy innovation.

Trouble is, the force is strong with the “nuclear village.” Even before Abe returned to power in December 2012, predecessor Yoshihiko Noda backed away from plans to phase out nuclear power by 2040. Unless reactors can be built atop huge shock absorbers or constructed from rubber, seismically active Japan is just courting future nuclear disasters. Abe, too, bowed deeply to Japan’s business lobbies, pushing reactor restarts against public resistance. He’s made selling nuclear technology on behalf of Hitachi and other companies a staple of diplomatic trips to India, Turkey and beyond.

Yet the LDP’s slavish devotion to the village of pro-nuclear regulators, companies, academics and investors results in a costly blind spot. For insights, Abe could look to his mentor, Junichiro Koizumi. The former prime minister rarely misses an opportunity to slam Tokyo’s nuclear addiction — or highlight the Fukushima disaster, an issue the LDP is desperate to avoid. Abe’s team was enraged last September when Koizumi said “it’s a lie” that radiation leaks 240 km north of Tokyo are under control. Here, Abe’s minister overseeing Tohoku reconstruction did him no favors in April when he said he was glad the 2011 earthquake that precipitated the nuclear crisis happened there rather than in Tokyo (he promptly resigned).

But Koizumi is thinking about Japan’s economy, too. “The nuclear power industry says safety is their top priority, but profit is in fact what comes first,” he said. “Japan can grow if the country relies more on renewable energy.” By supporting new generations of renewable-energy startups, in other words, Abe would create the millions of high-paying jobs that have eluded his Abenomics push.

To date, Abenomics has targeted old-economy exporters via a weaker yen. It’s done very little to incentivize an energy Manhattan project, if you will, that offers Japan alternatives to producing cars, electronics and machine tools that South Korea, China and others can produce more affordably. Why not divert some of the tens of billions of dollars going toward the 2020 Olympics into a public venture-capital mechanism for entrepreneurs? And why not take the innovative energy bubbling up in places like Fukuoka national? Abe should adopt the city’s “Startup Visa” program giving foreign innovators six-month exemptions from hiring and investment rules. It’s a win-win for a nation in need of fresh brainpower and a demographic boost.

Tokyo seems headed in the other direction. Faced with public opposition to reactor restarts, it seems keener on approving new coal-mining facilities than following Koizumi’s lead. Nor are bureaucrats rising to the challenge. Son’s regional power project, for example, is stymied by regulatory reluctance to open the national power grid to the private sector. There’s no use producing energy if you can’t store it. Son, meanwhile, is investing tens of billions of dollars in India and elsewhere. Abe’s team would be wise to create the conditions for visionaries to invest that cash in Japan.

Trump is doing his worst to turn the clock back on progress and economic logic. That should be Japan’s cue to fill, and profit from, Washington’s own-goal. It would recharge Abenomics and help Tokyo reclaim the global leadership voters crave.

William Pesek is a Tokyo-based journalist and the author of “Japanization: What the World Can Learn from Japan’s Lost Decades.” Twitter: @williampesek