IEEJ：December©IEEJ 2021
Special Bulletin
A Japanese Perspective on the International Energy Landscape (562)

December 10, 2021

Reconsidering Energy Mix Issue in New International Energy Situation
Ken Koyama, PhD
Chief Economist, Managing Director
The Institute of Energy Economics, Japan
In the world pursuing carbon neutrality, the key point is what energy mix each country
would seek to achieve carbon neutrality in accordance with its national conditions, energy resources
endowment, technological capabilities and economic power. As the Glasgow Climate Pact wasadopted at the 26th Conference of Parties to the United Nations Framework Convention on Climate
Change, or COP26, to reaffirm the significance of limiting global warming to 1.5℃, each country isrequired to work out its energy mix goal and promote specific initiatives for realizing the goal toenhance decarbonization.
Meanwhile, some developments this year indicate that the stable energy supply issignificant. As energy prices shot up simultaneously, major countries reaffirmed the significance ofstabilizing energy markets and suppressing price hikes and implemented and enhanced relevant
domestic and foreign policies. In a symbolic development, an unusual coordinated release of oil
reserves led by the United States was announced on November 23. The development shows that how
to secure energy as a strategic good for national life at stable, reasonable and affordable prices is a
key policy challenge for emerging market and developing economies, as well as advancedeconomies.
Japan and other countries in the world will pursue energy policies and mixes to address theabovementioned challenge. Japan’s sixth Strategic Energy Plan depicts an energy mix goal for 2030
while falling short of specifying a goal for 2050. Initiatives to realize the 2030 energy mix goal anddevelop and achieve a 2050 energy mix goal are central future energy policy challenges.
In considering the energy mix issue, we must pay attention to present changes in theinternational energy situation and subsequent energy mix policy revisions. The biggest recent
matters of interest to me include a potential change in Europe. As noted in A Japanese Perspective on
the International Energy Landscape (556), European Commission President Ursula von der Leyen on
October 22 said that the European Union would need nuclear as a stable energy source and naturalgas as a transitional source while giving top priority to the promotion of renewables. She wasdiscussing the energy price hikes and the future EU energy mix. In a manner to respond to theremark, French President Emmanuel Macron offered France’s resumption of new nuclear power
plant construction in his country on November 9 amid COP26. East European countries are giving
priority to nuclear in considering enhancing climate change and energy security measures. Specificinitiatives to develop small modular reactors and other innovative nuclear power generation
technologies as future options are seen in some countries including Canada and the United States.
In Japan, nuclear energy issues have become politically and socially difficult and sensitive
due to the 2011 Fukushima Daiichi nuclear power station accident. In such situation, Japan has been
plagued with various challenges regarding the restart of existing nuclear power plants, the extension
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IEEJ：December©IEEJ 2021of their service lives, their replacement, new plant construction and the nuclear fuel cycle. Toward
the realization of the 2030 energy mix goal and the development of the 2050 goal, Japan will berequired to closely watch the global situation regarding nuclear energy and promote domestic
nuclear energy policy discussions to restore the social acceptability of nuclear plants under nuclear
regulations that simultaneously pursue safety and efficiency.
Natural gas as a transitional energy source, as given in the von der Leyen remark, is thekey to considering the energy mix issue in Japan and Asia, as well as in Europe. The energy
transition to decarbonization will take a long time. Advanced economies’ goal of decarbonization in
2050 indicates that the energy transition will take at least 30 years or a longer time depending on
future conditions. Given realities in developing economies, the transitional period would be farlonger. How to secure stable supply of not only natural gas and liquefied natural gas but also oil andcoal during the transitional period while seeking to achieve energy mix goals may remain an
extremely important issue for Japan and the world. Investment to secure their stable supply will berequired. Europe, the Americas, Asia and Japan should pay attention to the reality and share therecognition that adequate investment is required.
The decarbonization of fossil fuels is another important viewpoint for positioning fossil
fuels including natural gas and LNG as well as oil and coal in a future energy mix. As noted in theIEEJ Outlook 2022, the flagship product of the Institute of Energy Economics, Japan, the world
could substantially reduce CO2 emissions and continue to use fossil fuels by promoting thedecarbonization of fossil fuels and the use of blue hydrogen and ammonia. There are numerous
technological, economic and social challenges to overcome for the promotion. A long-term strategicenergy challenge is to develop international supply chains for CO2-free hydrogen and include suchhydrogen into each country’s energy mix. Technological advancement and cost cuts areindispensable for resolving the challenge and should be considered along with how to securenecessary infrastructure investment and how to price CO2.
Regarding the decarbonization of fossil fuels, the position of coal in the energy mix isimportant. The COP26 pact called for phasing down unabated coal power, but European and U.S.
pressure on Asia and Japan to shift from the coal phasedown to a phaseout may grow in the future.
Then, it may be important for Asia and Japan to depict and demonstrate to the world a future energy
mix picture to substantially reduce CO2 emissions while mixing CO2-free ammonia with coal forpower generation.
While blue hydrogen from fossil fuels and green hydrogen from renewable energy are
attracting global attention regarding the use of CO2-free hydrogen or ammonia, yellow hydrogenusing nuclear power generation may also be conceivable. These hydrogen options’ economic
efficiency and environmental effects should be analyzed to allow CO2-free hydrogen to be included
into an energy mix that meets the characteristics of each country or actor.
As a matter of course, it will be important for Japan and the world to promote renewableenergy such as solar and wind power as much as possible and position renewables as a major
component of a power generation mix. Global hopes are placed on renewables that feature falling
power generation costs, domestic availability and the absence of CO2 emissions. At the same time,electricity storage systems and backup power sources will grow important for preparing for cold
waves, long windless periods and other natural phenomena that would destabilize solar and wind
power generation. How to hold down costs for these measures to integrate renewables into the2

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electricity system is the key to promoting renewables and depicting a future energy mix picture.
Initiatives to develop and realize energy mixes based on the latest energy situation and policy
challenges will remain important.

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