Energy Policy in the Post-3/11 World

The Need for Nuclear Power

Politics Economy Science Technology

Securing a stable energy supply is vital to resource-poor Japan and may well determine its viability as a nation. In this article, Toichi Tsutomu argues that even in the midst of the anxiety and anger surrounding the Fukushima nuclear disaster, the government needs to calmly work out its future energy policy.

The disaster at Fukushima Daiichi Nuclear Power Station abruptly raised the level of distrust in nuclear power throughout Japanese society. During the time that has elapsed in trying to get the situation under control, momentum has gathered for a move away from nuclear power. The severity of the accident has naturally led people to reconsider the safety of this energy form. And the situation has made it necessary to alter the direction of Japan’s energy policy, which had been heading in the direction of increased reliance on nuclear power. But the authorities cannot shape the country’s future energy policy based solely on the stance adopted toward nuclear power. Rather, they must ask what goals Japan is seeking to achieve through its energy policy and what conditions are necessary to achieve those goals, while carefully considering the array of risks involved. 

For resource-poor Japan, securing reliable supplies of energy is crucial to its future viability as a nation. This recognition must always be the core consideration in determining government policy. Bearing this in mind, I want to begin by offering an overview of the energy policies Japan has pursued since the end of World War II.

Stable Energy Supply Crucial to Japan’s Future

After the war, the first step Japan implemented on the path to reconstruction was to step up its production of domestic energy resources to help mend the devastation of the economy and deterioration of people’s livelihoods. Toward this end, using the priority production system it had adopted, the government focused the country’s economic resources on coal production development and routed much of the coal procured into the production of steel, which was channeled back to the coal expansion effort. In this way, the coal and steel industries became the foundation for rebuilding Japan. At the same time, large-scale hydropower stations were developed to further enhance the electricity supply.

The energy situation changed dramatically with discovery from the mid-1950s through the 1960s of vast oil reserves in the Middle East. The United States at the time, hoping to ensure a stable Japan within the Cold War order, adopted a policy of giving Japan access to inexpensive Middle Eastern oil. The shift from an energy-supply structure centered on domestically produced coal to one dependent greatly on imported oil moved with astonishing speed. In little more than a decade, Japan came to be nearly 80% dependent on oil for its energy supplies. The entire economy became virtually soaked in oil, which basically became the driving force of the period of high-tempo economic growth.

The situation reached another turning point when the first oil crisis, resulting from an oil embargo proclaimed by the members of the Organization of Arab Petroleum Exporting Countries, hit the world in 1973. This “oil shock” made it urgent for Japan to somehow secure stable supplies of oil while seeking to wean itself off oil. With its 80% reliance on this source of energy, however, the nation was unable to shift course in a short period of time. As interim measures, accordingly, the government increased its oil stockpiles to prepare for any potential supply disruptions, supported overseas petroleum exploration and development carried out by Japanese corporations, and promoted policies to diversify oil procurement to include areas beyond the Middle East. In addition, as part of the move away from oil, the government gave support to energy-saving efforts and technologies and promoted the development and introduction of alternatives to oil, including nuclear power, natural gas, coal, and new energy sources. The second oil crisis occurred later in the 1970s, underscoring the need to focus on securing stable energy supplies.

Japan’s energy situation underwent another major change following the 1985 Plaza accord on currency realignment, which triggered the yen’s rapid appreciation and exposed exporters to stiffer global competition. At the time, the government adopted the new policy goal of striving to reduce the costs related to domestic energy supplies. Then, in the latter half of the 1990s, the energy picture changed once again, this time because of the need to deal with global warming. In Japan as in the rest of the world, the issue of how to reduce carbon emissions became a major factor in energy policies. The international community’s shift in this direction was made official with the adoption in 1997 of the Kyoto Protocol on cutting greenhouse gas emissions.

It was in the midst of this series of energy policy modifications, each one reflecting the changing times, that the unprecedented earthquake and tsunami struck East Japan on March 11, 2011, causing the disaster at the Fukushima nuclear plant. As a result, Japan’s energy policy must now aim not only for stable supplies, reduced supply costs, and low carbon emissions but also for enhanced safety, which has emerged as a crucial issue. In particular, the need for the energy supply system to be able to withstand natural disasters is now widely recognized. Those four key elements have become the essential preconditions for Japan’s continued viability within the international community. The dilemma for the country’s energy policy, however, is that energy sources that adequately fulfill all four requirements cannot be found. 

Abandoning Nuclear Power Is Impractical

In the wake of the nuclear disaster in Fukushima, Germany and Italy decided to steer their energy policies away from nuclear power; and in Japan as well, the debate over whether to take a similar step has intensified. But it is not possible for Japan to discuss the nuclear issue in the same way as those two countries. In Europe and the Americas, countries can be linked by power lines and natural gas pipelines. In the European Union and North America, accordingly, the question policymakers must ask is whether energy can be stably supplied from within the broader region rather than on a country-by-country basis.

Japan, of course, is an island country, and it cannot be connected to the power grids of other countries. Moreover, its level of energy self-sufficiency—from geothermal, hydropower, solar, wind, and other domestic power sources—is a meager 4%. And 100% of the uranium for Japan’s nuclear power plants is imported. If spent nuclear fuel was recycled for reuse and classified as a “semi-domestic” energy source, self-sufficiency would rise to 18%. This, though, would still be the lowest level among OECD countries.

Raising Japan’s level of self-sufficiency over the long term will require both energy conservation and aggressive initiatives to introduce and expand renewable energy sources. It does not follow, however, that nuclear power is an unnecessary energy option. It would be quite difficult to replace all of the nuclear-generated electricity, which now accounts for around 30% of Japan’s overall energy supply, with renewable energy sources, given their unstable supply. Nuclear energy offers outstanding reliability of supply for reasons that include the fact that once reactor fuel has been procured, it can be used to generate electricity for a period of several years. Taking the nuclear power option off the table would thus be a mistake.

Under current Japanese regulations, each nuclear power station must be shut down temporarily every 13 months to conduct an inspection. At present, local governments are refusing to allow operations to resume after the inspections because of the public’s wariness toward nuclear power. If this situation continues, the inspected nuclear plants will remain out of operation indefinitely, and all of Japan’s nuclear plants will be out of operation by May 2012.

The Institute of Energy Economics, Japan, has calculated the potential consequences that would occur if that situation were to arise. Needless to say, one outcome is that electricity would be in extremely short supply. The shortages, moreover, would not just be in the eastern half of the country, where the Fukushima power plant and Tokyo are located, but would spread over western Japan, as well.

What about the economic impact? Were none of the nuclear reactors to resume operations, the immediate stopgap options would be to make up for the shortfall in electricity supply by stepping up power generation from existing thermal plants—by burning oil, natural gas, and coal—and by building new natural gas turbines. In such a scenario, the fuel costs for fiscal 2012 (April 2012 to March 2013) would exceed those of fiscal 2010 by approximately ¥3.5 trillion. If this cost increase is passed on to consumers, electricity bills would rise by around ¥3.7 per kilowatt-hour. The manufacturing sector would be the hardest hit, with the institute calculating that electricity fees for industrial purposes would jump by around 36%.

Hollowing Out of Industry Could Accelerate

Because of uncertainty about electricity supplies, the trend toward the hollowing out of Japanese industry has now picked up speed. If higher costs are passed on to electricity users, accordingly, manufacturers will come under additional pressure to shift operations overseas.

Nearly all of the fossil fuels needed to power Japan’s thermal plants will have to come from imports. Natural gas imports in particular will have to be increased significantly. Now that rapidly developing nations like China and India are also scrambling to secure energy resources around the globe, Japan will be facing increased competition to secure its own resources. On top of this, there is the impact from the democracy movements that have spread throughout North Africa and the Middle East, where large quantities of oil and natural gas are extracted. The structural causes of political instability in these regions will remain for a long time, and it is impossible to predict when a crisis might erupt or what form it might take.

Saudi Arabia has been able to escape this wave of political change for the moment thanks to its abundant revenue from oil, which is now hovering at the high level of $100 a barrel. It is funneling surplus financial resources into efforts to diffuse the frustrations among its citizenry, as by providing inexpensive housing and generating employment opportunities for young people. But if the price of oil were to fall, making it impossible to prevent social unrest, even Saudi Arabia could be swept up into the revolutionary ferment.

Stabilizing the political situation in oil-producing Middle Eastern countries will be costly, making it likely that high oil prices will continue. In this context, if the global movement away from nuclear energy sparked by the Fukushima nuclear disaster spreads widely, the shift toward the use of natural gas, including liquefied natural gas (LNG), will accelerate. Up to the moment of the March 11 earthquake, there had been an excess global supply in the LNG market. But this buyer’s market was instantly transformed into a seller’s market under the impact of the natural disaster and nuclear accident, which has forced Japan to consume great quantities of LNG to generate electricity for immediate needs.

One of the world’s biggest suppliers of natural gas is Russia, and after March 11, it promptly announced that it was prepared to give Japan help in securing LNG. While all nations supplying natural gas gained an advantageous political position because of the disaster, which strengthened their global pull, Russia in particular has benefited. Its strong position could have a spill-over effect on other issues, including its territorial dispute with Japan over the Northern Territories, the small group of islands off Hokkaido.

China, meanwhile, has been leveraging its abundant financial resources for a concerted effort to secure natural resources in countries around the world. This presents Japan with the new task of figuring out how, amidst the worldwide shift toward natural gas, to reliably secure, at a reasonable price, the LNG for which it is almost wholly dependent on imports.

Renewable Energy Can’t Save Japan

Renewable energy has been in the spotlight ever since the Fukushima nuclear accident, but it is not some sort of “savior” that can immediately replace nuclear power. Japan has considerable latent resources in the areas of solar, wind, geothermal, biomass, and other types of natural energy. But to use these resources in a commercially viable way presents major challenges. Operations must be expanded to realize economies of scale and lower costs, and time is required to diffuse the technologies.

Fossil energy resources like oil, natural gas, and coal are, in a sense, the “stock” of solar energy accumulated over the centuries. Renewable energy, meanwhile, with the exception of geothermal power, is the “flow” of solar energy. As such, its energy density is low. This means that renewable energy is inferior in economic terms, raising the technical question of how to overcome this weakness.

Another issue facing renewable energy is that its supply is unstable owing to a dependence on natural conditions. Moreover, because such energy is low in density, it requires a wider expanse of space for facilities. Let us consider what this need for space means. To take an often-cited example, in order to create the same amount of electricity that a 1,000-megawatt nuclear reactor can generate in one year, a space equivalent to the land enclosed by the roughly 35-kilometer Yamanote train line that encircles downtown Tokyo would be required in the case of solar power—and several times that space for wind power. In other words, a huge gap will have to be bridged in order to turn low-density natural energy into electricity, a highly refined form of energy. Huge tracts of land and much technical innovation will be needed.

Wind power is also subject to its own unique problems, such as low-frequency noise pollution and visual impairment of the landscape, as well as damage that can be caused when flocks of birds collide into wind turbines. On a small scale these problems are not so noticeable, but introducing large-scale wind farms with thousands of turbines would make them impossible to ignore.

Geothermal power, meanwhile, is an area where Japan has considerable potential. Naturally many geothermal resources are located near hot springs. There is considerable opposition to the large-scale development of such resources among those who depend on hot springs because it can threaten their livelihoods by depleting the flow of hot water. It may be possible to overcome local resistance, however, by getting local people involved in projects, enabling them to receive benefits from the operations. Unless methods are found to work out a means of coexistence with people in local areas and resolve other problems, the use of geothermal energy will not easily spread.

The issue of low-frequency noise pollution from land-based wind power has led Japan to focus its technological development on offshore wind power. In Europe, were Denmark, Germany, and other countries have already installed turbines on much of the land best suited to wind power, the lack of additional sites and concerns about damage to landscapes have motivated a shift to large-scale offshore wind farms. The North Sea, where many of the offshore farms are located, is relatively shallow, with water depth of 50 meters or less across a wide coastal area. This makes it possible to have turbines that are fixed to the seabed. However, such sea-based turbines are still apparently over 30% more expensive than those installed on land. Japan would have to rely mainly on floating wind turbines because of deeper water depths. These turbines increase the technological issues to be addressed, and there is also the problem of providing compensation to the owners of fishing rights.

In this way, generating electricity using renewable energy is not a simple matter of having the needed resources and then developing them. In addition, there is the problem of high costs. As explained earlier, the density of such energy is low, which makes it less economically viable than fossil energy sources. In one form or another, government subsidies become inevitable. Arguably the most effective way to promote investment in renewable energy is to use a feed-in tariff system in which electricity is purchased from producers at cost. In the case of Europe, it was the introduction of such systems that sparked the first full-scale development of renewable energy. In Japan’s case, first a system for buying back surplus electricity generated from household solar panels was introduced in 2009, and then, in August 2011, a law for a feed-in tariff for renewable energy development was enacted. While the new system can be expected to boost the introduction and expansion of such energy, it will be necessary to gain a consensus among the public with regard to bearing the costs that arise.

The lack of supply stability is the foremost problem confronting renewable energy. To overcome this weakness, electricity storage technologies must be developed. In the absence of a storage capacity, renewable energy will not progress into a high-quality energy form. Intense competition is now underway for the development of storage technologies, but at present it is not clear when they will become available or what their costs will be. In this way, people need to recognize that problem-solving efforts must go forward and produce results in a wide variety of areas before renewable energy can become a viable alternative to thermal and nuclear power.

The Line Separating Pro- and Anti-Nuclear Camps

The nuclear disaster in Fukushima has of course had an impact on not just Japan but the entire world. It is likely to slow down considerably the boom in recent years for nuclear power, referred to as the “nuclear renaissance.” This is a trend in Europe and North America in particular, where people in recent years have been taking a fresh look at nuclear power as an important energy option in the battle against global warming. Germany decided in October 2010 to extend the operational life of its nuclear plants, and Italy was moving toward the construction of a new nuclear power plants. But the accident in Fukushima changed all that, slamming the brakes on such developments and leading Germany, Italy, and Switzerland to shift back toward the policy of moving away from nuclear power.

In contrast, Britain, France, Russia, the United States, and some other countries have stuck to a course of promoting nuclear power, while beefing up safety policies. In developing countries, which require more electricity to power their economic growth, the trend toward seeking to develop nuclear power remains fundamentally unchanged. Emerging economies that are seeking to develop nuclear power include not only China and India but, more recently, Vietnam and the United Arab Emirates, as well as the Czech Republic, Poland, and other East European nations. There is greater awareness now in these countries of the need to strengthen safety measures, but their policy of advancing nuclear power has not been altered.

The country that has experienced the greatest degree of shock regarding nuclear power is of course Japan, where the “safety myth” surrounding nuclear power plants has been shattered. This is a real problem that must be recognized. A review of the history of the United States and Europe shows that after the accidents at Three Mile Island and Chernobyl, it took 20 to 25 years before people began to look on nuclear energy in a favorable light once again. It seems reasonable to assume that Japan will require a similar period of time before decisions on nuclear power can be reached in a dispassionate atmosphere.

The impact of the recent nuclear disaster has reached far and wide in Japan. There are increased concerns about the safety of nuclear energy technology, a loss of trust in Japan’s nuclear safety regulators and power-company officials, and complaints about inadequate provision of information. Faults in the design of the administrative setup further eroded public confidence. That is, the Nuclear and Industrial Safety Agency (NISA), which was in charge of regulating nuclear safety, was under the authority of the Ministry of Economy, Trade, and Industry, which also oversaw the Agency for Natural Resources and Energy, an organ promoting nuclear energy. Following the accident, a decision was made to merge NISA with the Cabinet Office’s Nuclear Safety Commission and to place the merged organization under the Ministry of the Environment. The loss of public confidence has been so severe, however, that it is likely to take considerable time and effort to regain the people’s trust.

Looking at the current situation, we should note the convergence that has begun between the opposition to nuclear weapons, stemming from the experience of Hiroshima and Nagasaki, and the movement calling for the abandonment of nuclear power for peaceful purposes. Although using nuclear power to generate electricity is completely different from using it to build weapons, the two issues have begun to be associated with each other, especially since both elicit concerns about radiation. We must recognize, in other words, that there is a swelling chorus of voices calling for the complete elimination of nuclear energy even for peaceful purposes.

Building a National Consensus Is Crucial

To conclude, I want to return to the issue of how we should envisage the future of nuclear power in Japan. My basic conclusion is that to reject the option of nuclear energy would destabilize electricity supplies, increase electricity bills, and seriously impair the effort to reduce carbon emissions. For these reasons, in the short to medium term, the government should not adopt an antinuclear energy policy.

The factors at play in Japan’s energy policy are extremely diverse and multidimensional, making it impossible to focus exclusively on just one aspect. An energy policy must above all secure a stable power supply, but it also must be economically viable, low in carbon emissions, and robust in terms of safety and ability to withstand natural disasters. From a long-term perspective, the aim of stably supplying energy must always be the top priority. And now that electricity has become an even more vital type of energy in the twenty-first century, it has become more important to think about how to secure stable electricity supplies.

All sorts of arguments will likely emerge with regard to the stance to adopt toward nuclear power, but what must be done first is to elucidate thoroughly all the causes of the Fukushima accident and devise safety policies for the short, medium, and long term, based on scientific fact. These policies will have to win over global opinion as well as domestic opinion, particularly in those areas of Japan where nuclear power plants are located. More than scientifically satisfying solutions must be found; there is also a need to resolve psychological issues related to feelings of reassurance.

The Basic Energy Plan approved by government in June 2010 had been based on the concept of making Japan a leader in nuclear power facilities, calling for a total of 14 new reactors to be built—9 reactors by 2020 and a further 5 reactors by 2030. This plan was at the core of Japan’s effort to address the issue of climate change. Specifically, the plan aimed for a 30% cut in carbon dioxide emissions by 2030 (compared to the 1990 level) by increasing nuclear power generation to 53% of all power generation and boosting renewable energy, including large-scale hydroelectric power, from the current 9% level to 21%. The big picture sketched out in the plan was to combine a stable supply of electricity with a major reduction in carbon emissions. But the Fukushima nuclear disaster has placed the plan in great jeopardy.

Looking a decade or two into the future, we can see that it is unlikely that Japan will increase its level of dependence on nuclear energy. But one target could be to reduce the level to around 20% dependence by 2030—as compared to the roughly 30% level today. I think it would be necessary to arrive at a consensus among the public in support of that sort of level.

The fact that Japan lacked natural resources was actually one factor underlying its remarkable growth in the past. That is to say, to compensate for this situation it was necessary to develop energy-conserving technologies that would allow for the most efficient use of the resources available. Following the oil crises of the 1970s, the country’s industrial structure shifted very rapidly to more efficient technologies. In the future, too, there is no question that energy efficiency will be a major pillar of the efforts to resolve problems related to energy security and climate change.

At the same time, though, Japan is facing a situation where the worldwide barriers to securing resources are higher now. With China and other emerging nations scrambling to secure resources, there is a stronger realization than before that resources are not limitless. And the choices are restricted further as a result of environmental problems. All of this means that Japan is subject to an environment that is harsher than ever. It was at this delicate juncture that the earthquake and tsunami hit the country, complicating the problems facing the economy overall, such as the prolonged period of business stagnation and the declining global competitiveness of domestic production bases. From this perspective, the task of getting the energy policy right is clearly a crucial issue. Japan needs to come up with a policy that carefully weighs the circumstances and does not accelerate the nation’s economic decline.

It will not be easy to debate the issues calmly for a while, amidst the whirlwind of anxiety and anger surrounding the Fukushima nuclear disaster. But for the sake of the future of the state and its citizens, we must doggedly consider what needs to be done. Now is precisely the time to reflect on the energy-related factors that undergirded the development Japan has achieved in the modern era. 

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