The future shape of Japan’s energy policy

by Takamitsu Sawa

Japan’s energy policy now stands at the most crucial crossroads since the end of World War II. The government’s fifth Basic Energy Plan declares that Japan will strive to achieve the composition of electric power sources by 2030 stipulated by the fourth basic plan and will prepare the grounds for making renewable energy sources a principal source of power supply.

Although it is not clear what is meant by a principal power source, the latest energy plan reaffirms that renewable energy will account for 22 to 24 percent of the nation’s total electricity generation.

The plan stresses three fundamental points that must be kept in mind in choosing energy sources: (1) the experiences of the 2011 disaster at Tokyo Electric Power Co.’s Fukushima No. 1 nuclear power plant, and introspection on and lessons from it must never be forgotten; (2) self-sufficiency has consistently been the guiding principle for postwar Japan in selecting energy sources; and (3) Japan must follow the global trend toward decarbonization pursuant to the Paris agreement on climate change.

All of Japan’s nuclear power plants were shut down from September 2013 to August 2015 in the aftermath of the Fukushima disaster. Although this led electricity rates to rise somewhat, there was not a single case of a large-scale blackout during that period. There was little to no inconvenience or discomfort in people’s daily lives and there were no visible signs that the power shortage caused a serious impediment to industrial growth.

In short, an unintended social experiment served to prove the feasibility of reducing the nation’s reliance on nuclear power to zero. Having learned this, the energy plan’s target of having nuclear power account for 20 to 22 percent of the nation’s electricity supply in 2030 — while stating that Japan will try to reduce its reliance on nuclear energy as much as possible — appears contradictory. But in fact that may not be the case.

A key to resolving the contradiction lies in the future treatment of coal-fired thermal power, which is recognized as a baseload power source along with nuclear power. In fiscal 2017, coal-fired plants accounted for 30.4 percent of the power supply. For each kilowatt-hour of electricity generated, coal-fired plants emit nearly twice as much carbon dioxide as natural gas-fired plants. Reducing coal-fired thermal power is indispensable to the efforts to cut carbon dioxide emissions.

The energy plan calls for continued use of coal in high-efficiency coal-fired power plants that would have a less adverse impact on the environment. The energy-saving law, meanwhile, requires each power company to raise the average conversion efficiency of its thermal power plants to at least 44.3 percent by 2030. Thus, inefficient coal-fired thermal plants will have to be phased out, the plan says.

At the moment, the technology for elevating the conversion efficiency of coal-fired thermal power plants is still in the development stage. While two demonstration plants currently use the integrated coal gasification combined cycle (IGCC), their conversion efficiency rate stands at 42 percent, short of the targeted 44.3 percent. The integrated gasification fuel cell cycle (IGFC), regarded as the most advanced means of generating power by burning coal, is still in the demonstration stage with government subsidies and it will probably take at least another 10 years before the IGFC can be used commercially.

The plan appears to be aiming to lower the share of coal-fired thermal power to about 10 percent of total electricity in line with the fundamental policy of promoting decarbonization while at the same time recognizing coal as an important baseload power source. To achieve that end, coal power plants with low conversion efficiency will have to be phased out and it will be mandatory to shift to coal-fired power generation with much greater efficiency, which is more costly. This will inevitably push the share of coal-fired power in total electricity from the present 30 percent down to around 10 percent.

Nuclear energy is the only power source that can fill the gap created by the reduced share of coal. It will cost more than ¥1 trillion to build a new nuclear plant or expand an existing one to meet the updated safety standards. But the energy plan makes no mention of building new nuclear plants. Nor will there be any power company that can afford such costs. If so, the only choice left will be either expediting the construction of two nuclear plants currently under construction or to restart idled reactors.

The revised nuclear reactor control law, put into force in July 2013, in principle limits the operation of reactors for power generation to 40 years. But it says that the term may be extended only once if approved before the expiration of the initial period, and stipulates that such an extension may not exceed 20 years.

Applications for the extension will be screened and the length of the extensions will be decided on a case-by-case basis. It was initially believed that the one-time extension of up to 20 years will be an exception. But unless such exceptions are permitted for virtually all existing plants, it will be impossible to raise the share of nuclear power to 20 to 22 percent by 2030.

No nuclear power plant can have a service life exceeding 60 years. Fortunately, as of 2030, a large majority of the existing nuclear plants will not have reached the age of 60. But almost all of the existing plants will be decommissioned by 2050. It will not be socially acceptable to ease the safety standards to lower costs and encourage the construction of new plants and reactors. That will force nuclear power to be phased out between 2030 and 2050. How, then, will electricity be supplied after nuclear power ceases to exist?

First, there will be no alternative but to make renewable energy a principal power source both in name and reality. Only when the share of renewable energy sources in power generation is raised to 50 percent can Japan claim that they are its principal power source. To overcome the problem of an unstable power supply from renewable sources, Japan must endeavor to develop low-cost power storage batteries and enhance regional self-sufficiency of renewable energy.

Second, natural gas-fired and high conversion efficiency coal-fired thermal power generation must be pushed to reduce carbon dioxide emissions and supplement renewable energy sources. Decarbonization will no longer be a dream if the carbon capture and storage (CCS) technology becomes a reality.

When it comes to the composition of power sources in 2050, moves toward less nuclear power will be inevitable, with renewable energy playing the principal role and low-carbon thermal power generation taking on a supplementary role. Such a change will only be the natural outcome of rising costs of nuclear power generation and the falling costs of renewable energy.

Takamitsu Sawa is a distinguished professor at Shiga University.