The March 11 earthquake and ensuing nuclear crisis in Japan has given rise to a strong anti-nuclear sentiment in the country, which is understandable given the scale of the tragedy and its lingering effects. But the tricky part is finding a better way to meet the country’s energy needs.
“The next best or worst choice is coal, oil and LNG [liquefied natural gas] to fill in the gap of all the nuclear stoppages in Japan,” said Lalita Gupta, an energy analyst at Morgan Stanley MUFG Securities in Tokyo, in a telephone interview.
The difficulty is that coal and oil also come with their own emissions problems, Gupta pointed out, and that alternative energy sources such as solar and wind provide only intermittent power, take up lots of space and are expensive.
Prior to the earthquake, Japan was planning to increase nuclear power’s share of the total electric power supply to 53% by 2030. In the 2008 fiscal year, nuclear power supplied 26% of the country’s electricity, while coal accounted for 25% and natural gas supplied 28%, according to a report by the Agency for Natural Resources and Energy, a division of Japan’s Ministry of Economy, Trade and Industry.
Until March, the transition from oil-fired electricity to a mix of nuclear power, coal and natural gas had been advancing as a result of the Kyoto Protocol adopted in 1997, which requires Japan to reduce overall greenhouse gas emissions by 6% (from 1990 levels) by 2012.
But nuclear is no longer in favour, and not only in Japan. “The belief that nuclear power is safe has been swept away since the accident at the Tepco facilities,” said one Tokyo-based analyst at a Japanese brokerage. “The world has been divided into anti-nuclear and pro-nuclear camps.”
In August, in his address at the 66th Hiroshima Peace Memorial Ceremony, then-prime minister Naoto Kan reiterated that Japan, the only country to have suffered an atomic bombing, would reduce its level of reliance on nuclear power generation. Kan also said that he deeply regretted believing in the “security myth” of nuclear power.
Robert Feldman, head of Japan economic research at Morgan Stanley MUFG, said that gas will likely be the answer in the short term, but further technological development will be necessary in the long term — and that will likely create new opportunities.
“Who’s going to develop the technology and commercialise it, such as gas turbines, wind turbines and solar cells?” he asked “Japan has always been good at saving energy, and will be at the forefront of the energy-saving industry. In the new energy world, we have to see a lot of changes in infrastructure. Technological innovations will trigger a reorganisation of industries.”
The Japanese government is also aware that its reputation as a leader in the field of energy conservation means that it also needs to maximise its efforts in reducing greenhouse gas emissions, adding to the pressure on it to come up with a new energy policy.
On the afternoon of October 15, participants of the Occupy Tokyo protest, which echoed its US peers’ demand for more equality in society, made a point of marching past the Tepco headquarters in Tokyo, emphasising the strong emotions that now accompany Japan’s energy debate. Finding a solution that makes everyone happy will be harder than ever.
A longer article on Japan's nuclear industry and the public backlash against it will be available in the forthcoming issue of FinanceAsia magazine.
