Japan: Climate Change and Energy Round-Up – June 2012

British Embassy Tokyo

Summary

Nuclear: PM Noda decides to restart 2 reactors in Western Japan. Progress on establishment of new nuclear agency.    

Climate Change and Energy Policy: GoJ’s energy mix debate begins to find consensus while Western Japanese regions are exposed to risk of summer power shortages.

Low Carbon Growth: METI looks into green growth market opportunities in domestic and overseas markets. FIT promotes new entrants in the power generation business.

Detail

Nuclear

Government plans to restart reactors

The combination of PM Noda’s declaration on the safety of KEPCO’s reactors 3 and 4 at Ohi and Diet agreement in principle on the Bill establishing  the new safety agency, makes restarts in time for the hot summer period look more realistic. Fukui’s Governor is likely to give his consent in mid June after local assemblies have expressed their approval.

This has provided some relief to Kansai based industries although they will still need to save more electricity than last summer. Public concerns over safety remain and will continue to make wider restarts challenging – local consent for Ohi restarts is on the basis that they will be idled again after the summer peak.

PM Noda has been clear on the importance of nuclear energy in order to sustain the livelihood of the Japanese people, but he has steered away from announcing views on Japan’s future energy mix so as not to prejudge the work of the committees looking into this.

Other News

• Political parties have agreed on the framework to establish the new regulatory body. The Nuclear Regulatory Commission (NRC), led by five expert commissioners, will have considerable independence and authority to make critical decisions about a plant in the case of emergencies. The new Nuclear Regulation Authority (NRA), being created under Ministry of the Environment, will act as a secretariat to the NRC. The work of the Embassy through assistance from ONR in the UK has fed into this work. The government plans to establish the NRC by August/September to set new safety standards (by summer 2013) against which the restart of other reactors will be assessed. 

• Nuclear Fuel Cycle likely to take ‘hybrid’ approach: some reprocessing, some direct disposal. Atomic Energy Commission (AEC) and DPJ’s Energy Project Team have concluded that a mixture of reprocessing and direct disposal would be a sensible future nuclear fuel cycle policy. The AEC have suspended policy discussion for now in response to public criticism of  an AEC Subcommittee holding a ‘secret meeting’ on fuel cycle policy among pro-nuclear members. The Commissioners will resume discussion once the energy mix is decided and the role of nuclear has been made clearer.

• Maintenance costs of idled nuclear power plants are JPY 1.2 trillion per year according to the Government. This is not very different from the running cost of the reactors for 2010, which was JPY 1.7 trillion.

• 30 US companies dealing with decontamination activities in Fukushima (including Shaw Group, Energy Solutions and Los Alamos) will visit Japan in June to present their products to the Japanese Government.  The government is willing to collaborate with the companies in its decontamination activities, which begin this summer.

Climate Change and Energy Policy

Japan’s future energy and environment strategy

The ministerial-level Energy and Environment Council has reached a consensus on the direction of Japan’s energy and environment strategy to be adopted by end-August. METI’s Advisory Committee, MOE’s Central Environment Committee and the Atomic Energy Commission presented their interim reports on energy mix, climate change measures and nuclear fuel cycle respectively.  The Council selected three scenarios for the proportion of nuclear: 0%, 15% and 20-25%. All will require an increase in gas and coal in the short-term as well as strong long-term measures to enhance renewables, power saving and co-generation to replace nuclear power.  Further assessment is needed as realistic measures on renewables and power saving are yet to appear. The METI’s Advisory Committee targets are ambitious. 

A draft proposal by MOE’s Committee included a GHG emissions target for 2020 and 2030 compared to 1990 levels, based on varying degrees of nuclear.  For 2020, the estimated GHG emissions cut would be 5% with no nuclear, between 11-15% with 15% nuclear, 12% with 20% nuclear and 13% with 25% nuclear. Although these figures were purely based on domestic measures without CDM or REDD+, the prospects of achieving a 25% target by 2020 look slim.  Japan will maintain its (conditional) 25% pledge until a new energy and environment strategy has been finalised in the summer. A drastic reduction of nuclear will clearly make the 25% pledge unrealistic.

In other developments, Government decided on voluntary power saving targets for Western Japan to respond to expected electricity shortages this summer. Kansai will be asked to cut power usage by 15%, Kyushu 12%, Hokkaido 7% and Shikoku 5%. 4 power companies in the regions are preparing for rolling blackouts.  These preparations might be revised if Ohi nuclear power plant is reactivated in time for summer peak demand. TEPCO and Tohoku electric areas are excluded from the plan.

Low Carbon Growth

Low Carbon and Environmental Goods & Services sector shows growth

MoE announced the result of a survey on market growth in the domestic Low Carbon and Environmental Goods & Services (LCEGS) industry. It proved that the size of the Japanese LCEGS market was worth 69.2 trillion yen in 2010, a 3.7% year on year rise. The number of jobs in the industry increased to 1.84 million in 2010 (a 2.7% increase from 2009).  The survey highlighted growth associated particularly with climate change measures, such as renewable energy and energy saving appliances/homes sectors.

The LCEGS industry is expected to grow further domestically, supported by subsidy programmes for energy saving, the FIT schemes being introduced in July and decommissioning of Fukushima nuclear power plants. The Japanese Government cites the LCEGS industry as one of the pillars of promoting infrastructure exports overseas as emerging Asian countries also forecast a significant rise in LCEGS markets. The Chinese LCEGS market will expand to 26 trillion yen by 2020. METI has set up a study group to discuss how to enhance Japanese business and foreign investment opportunities in the energy sector. Their report will be produced in July.

Elsewhere it is reported that MHI developed the world largest CCS facility which could collect as much as 3,000 tons of CO2 per day. MHI will go into markets such as the US and the Middle East.  MHI has been operating a CCS facility in Alabama, US which collects 500 tons per day since last June.

Japanese Industries are looking into business opportunities from the FIT scheme. About 40 companies have reviewed their articles of association in order to deal with power generation business such as building mega solar power generation facilities. The companies planning to enter the power generation business are from different categories, including Lawson (convenience store chain) and Kintetsu Corporation (a railway company).

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