A Demand for the Restructuring of Energy Policy
December 18, 2012
Keidanren
1. Introduction(1) Energy provides the foundation of national livelihood andcorporate activity. It is required of the government to fully draw on
the lessons learned in the Fukushima Daiichi Nuclear Power Plant
accident which occurred last year and to develop a responsible
policy which assures safety as an indispensable prerequisite andappropriately balances energy security (a stable supply), economic
efficiency and environmental suitability (S + 3E). Energy policy mustnot be an impeding factor to economic growth.
However, industry has deep misgivings about the government’s
recent policy.
(2) In the short-term, there is still no prospect for resolving theelectricity shortage which has continued since the Great East Japan
Earthquake; and therefore we are always forced to save substantial
amounts of electricity during periods of tight supply and demand.
Also, the increased use of thermal power as a consequence of thestoppage of nuclear power plants has caused higher electricity rates,
and has induced an outflow of national wealth worth trillions of yenannually and a significant worsening of the current accountbalance.
(3) In terms of middle- and long-term energy policy, the Innovative
Strategy for Energy and the Environment, formulated by the Energyand Environment Council in September this year, contains manyflaws.
For example, its projections of both the volume and costs ofintroducing renewable energy and energy efficiency andconservation are excessively optimistic. Against this backdrop, if
measures aimed to “enable zero operation of nuclear power plants inthe 2030s” are forced through, it is obvious that electricity rates willsoar and anxieties over the power supply will be stimulated. Givensuch circumstances, deep negative impacts on economy and society
will be inevitable – for example, companies will be deprived of theircompetitiveness and job losses will be caused.
Furthermore, abandoning the nuclear option will lead toincreased dependency on fossil fuels, which is problematic in termsof energy security for our resource-poor country and climate change
1prevention. It is also feared that such policies will seriously affectJapan’s relationship with the US, which has supported Japan as apartner in the peaceful use of nuclear energy.
(4) Industry has continued its untiring efforts to maintain domestic
industry and employment in the midst of intensifying global
competition. However, electric power supply uncertainty and theupward pricing pressure on electricity rates are already hindering
domestic corporate activities. If such circumstances continue, anaccelerated hollowing-out of industry and employment cannot beavoided.
The government of Japan should fundamentally restructure its
energy policy as provided below:
2. Short-term energy policy(1) First, the electricity supply-demand forecast and measures fornext summer should be identified within the current fiscal year.
Then, in order for companies to confidently formulate theirdomestic production and investment plans, detailed measures and aroadmap for securing electric power in the next three to five years
should be promptly identified.
(2) In order to resolve the uncertainty in electricity supply and tocontrol the upward pressure on electricity rates, nuclear power
plants whose safety has been assured must be restarted aftergaining the understanding of the local government. However,despite its announcement of the necessity to resume nuclear power
plant operations 1 , the government of Japan has not exhibited aconcrete roadmap. This has provoked mistrust towards thegovernment’s attitude among Japanese citizens and local
governments where nuclear-related facilities are located.
The government of Japan should immediately identify aroadmap for restarting nuclear power plants. Then, with theassurance of safety as an indispensable prerequisite, the restarting
process must be pushed forward as quickly as possible throughappropriate role-sharing and cooperation among the government,
the Nuclear Regulation Authority, and electric power companies.
Furthermore, not only electric power companies but also thegovernment and the Nuclear Regulation Authority are required to
The Innovative Strategy for Energy and the Environment provides that “theoperation of nuclear power plants whose safety is assured will be restarted as animportant power source.”

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provide credible explanations of the safety of nuclear power and thenecessity of resuming operations in order to gain the understandingof Japanese citizens and local governments where nuclear power
plants are located.
(3) Although the development and dissemination of renewableenergy is important, its impact on national livelihood and corporate
activity must be minimized to the extent possible.
From this perspective, the current feed-in-tariff program
entails many institutional problems. It not only boosts electricity
rates in an already upward trend but also impedes technologicalinnovation. In Europe, where feed-in-tariff programs have a longer
history of introduction, they are undergoing significant revisions
due to sharp increases in public burden. Public burden will
obviously rapidly increase in Japan as well if the current program
remains unchanged; and therefore, its revision is urgently called for.
Likewise, the tax for measures against global warming, which will
push energy prices upwards, should also be reconsidered, including
options to abolish it.
3. Middle- and long-term energy policy(1) As mentioned at the beginning, the Innovative Strategy for
Energy and the Environment entails a significantly large number offlaws. The realistic introduction potential of energy efficiency andconservation and renewable energy must be carefully reviewed
based on thorough consideration of the appropriateness of theburden to be placed on the public2. Then, from the standpoint ofmaintaining a diversity of energy sources, including nuclear power,
time should be taken for renewed discussions on an energy mix thatwill secure an appropriate balance of “S + 3E” in order to formulate a
new Basic Energy Plan.
Climate change policy should also be fundamentally reviewed
to ensure their consistency with energy policy.
(2) The following measures are required in terms of each energy
source:i. Nuclear power should be continuously utilized as base load power,with safety as an indispensable prerequisite. Therefore, it isimportant that under the newly established Nuclear Regulation
Authority, public and international trust is recovered throughIn terms of renewable energy, in particular, the entire picture of related costs,
including those regarding backup power sources, power transmission anddistribution networks and storage battery installation, must be made clear.

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public-private collaboration.
The government is also required to responsibly consider ways
for radioactive waste disposal.
Furthermore, from the perspective of securing a stableelectricity supply by through maintaining diverse energy sources,
amendments to the Act on Compensation for Nuclear Damage
regarding the liabilities of the national government and plant
operators should be steadily considered, as provided in theSupplementary Provision of the Law on Nuclear Damage Liability
Facilitation Fund3.
ii. Thermal power generation such as coal-fired thermal power
generation should be continuously utilized as an inexpensive andstable power source. Therefore, environmental assessment
procedures should be rationalized 4 to the extent possible, andresearch and development and other efforts made for its verificationand practical use should be enhanced in pursuit of even further
efficiency and decarbonization5.
Also, in order to secure a stable fossil fuel supply, public andprivate sectors are required to join hands to acquire interests innatural resources and strengthen price negotiation power.
iii. In respect of renewable energy, the dissemination of expensive
equipment should not be rushed; and instead, public and private
resources should be concentrated on overcoming its weak points,
such as its inefficiency and instability. Deregulation should besteadily promoted and focused research and development should betaken forward through the sharing of power generation efficiency
targets, etc. among public and private parties, for example.
Furthermore, the research and development of storage
batteries, which are indispensable for power stability, and theverification and standardization of the smart grid should also beprioritized.
In Article 6 paragraph 1 of the Supplementary Provisions to the Law on NuclearDamage Liability Facilitation Fund, which was enforced in August last year,provides that the government “shall take necessary measures including
fundamental review of amending the Compensation Act, etc. …. as early as possible
after enforcement of the law.” According to an additional resolution of the law, “asearly as possible” is defined as “approximately one year.”
4Recent developments in environmental assessment include the streamlining ofprocedures for thermal power plant replacement (Interim Report of the Liaison
Conference on the Expedition of Environmental Assessment Procedures for Power
Plant Installation). Proper screening procedures of CO2 emissions are alsorequired.
5 For example, the verification of ultra-supercritical technology and the practicaluse of CCS (carbon dioxide capture and storage) are important.
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iv. In terms of energy efficiency and conservation, the establishmentof appropriate and technologically proven energy efficiency
standards, measures to disseminate and promote energy-saving
equipment and facilities, and supportive measures such as theenhancement of tax credits on research and development, should bedeliberated upon. It is also important to promote public movementin order to encourage electric power conservation and to increase
replacement demand for energy-efficient appliances.
4. For future deliberations on energy policy
In the “national debate” which was organized before formulating
the Innovative Strategy for Energy and the Environment6, the generalpublic was not provided adequate and clear information regarding theenergy policy options presented.
Ample time should be reserved for future deliberations based on
the provision of all important information, including any negative
impacts which may be inflicted upon national livelihood and corporate
activity. Furthermore, the government’s decision-making process
should be made more transparent by disclosing the proceedings of all
meetings.
Energy strategy is the equivalent national strategy. We strongly
demand that in the end the government make a responsible decisionfrom a broad and long-term perspective.

The challenges of a zero nuclear power were identified only after the “nationaldebate.”65