Japan's energy policies at a critical juncture
2019/08/15

Sumiko Takeuchi
Senior fellow and member of the board of directors at the IEEI※Reprinted by courtesy of The Japan Times（JUL 1, 2019）Japan’s energy policies are at a big turning point. Due to the unforeseeable future of
the energy business, utility companies have yet to embark on drastic reform. Despite
the fact that irreversible, inevitable and diverse social change is underway
simultaneously, the government has been pressed with spur-of-the-moment
corrections.
At this juncture, it is very difficult to accurately report on Japan’s energy and climatechange policies. But I’m sure that my unique background will help me report as fairly
and comprehensively as possible. I worked at Tokyo Electric Power Co. for a long
period and have direct experience interacting with energy consumers. I’m currently anindependent researcher of environmental issues, mainly global warming and energy
policies, and am well informed about the government’s position through mycommitments as a member of a few government committees concerning those issues.
As a so-called insider on energy issues, I’d like to report on this chaotic situation as
fairly and accurately as possible, taking advantage of my strength in pursuing Japan’s
ideal energy policies as an independent researcher. Some portions in this series may
include my personal opinion, but I’d like you to view them as coming from theunbiased stance of a researcher who maintains the same distance from consumers,
businesses and the government.
What triggered this energy transformation in Japan was the Fukushima nuclear plant
accident in 2011. Prior to that, to tackle escalating global warming, the government
had been aiming to increase dependence on nuclear power to 53 percent of all powergeneration by 2030. After Fukushima nuclear power plant accident, the government
has switched to a policy of lowering its reliance on nuclear as much as possible. In
addition, reform was carried out by revising the energy system under which big
regional power companies controlled the entire chain, from power generation to retail.
Copyright © 2019 International Environment and Economy Institute. All rights reserved.

The entry into and exit from power generation and retail businesses has been basicallyliberalized, and power transmission and distribution are set to be separated fromformer regional monopolies. The regulated integrated system that had maintained
stable power supply has now undergone a paradigm shift that puts the industry in thehands of a market economy. That could spark the beginning of a future revolution, but
at the same time, it is causing a chaotic situation where no one takes responsibility asa whole.
The Basic Act on Energy Policy requires the government to set the basic energy plan
once every three years, which are important documents that qualitatively lay out thecountry’s mid- and long-term policies. The latest fifth installment of the basic energyplan, which was adopted by the Cabinet in July 2018, however, gives little indication onwhich direction our country’s energy policies are headed.
That is because the 106-page document merely organizes the structural challenges
that our country’s energy supply faces and lays out the issues and policies for 2030
and 2050. It expresses a strong desire to realize energy conversion and a low-carbon
society by around 2050, and mentions quite a few technical options for that, but there
are many difficulties in carrying it out.
When the fourth edition of the basic policy was crafted three years ago, the 2030
energy mix was also announced.
The mix unveiled the government’s qualitative targets for the ratio of renewable andother power sources in 2030, but it was issued only as an answer to satisfy the threesimultaneous equations of 1) increasing energy self-sufficiency to around 25 percent,after the rate touched a low of 6 percent in 2013 following the nuclear plant
shutdowns; 2) ruling out further power price hikes after a price for industrial users
shot up by 40 percent in 2014 from 2010 levels due to the feed-in tariff system forrenewables and a rise in fossil fuel costs to compensate for nuclear shutdowns; and 3)
targeting global warming mitigation measures on par with those of the U.S. andEurope.
It was assumed from the outset that achieving the goals would be difficult. Even
though there’s still time until the target deadline of 2030, we still have a long way to go
in terms of achieving the government’s energy mix goals.
The government’s 2030 vision relies heavily on renewables and nuclear power, andCopyright © 2019 International Environment and Economy Institute. All rights reserved.

plans call for deriving about 44 percent of power from homegrown energy that does
not emit carbon dioxide during power generation. (Despite Japan’s reliance on
overseas uranium resources, nuclear power is generally counted as part of the energy
self-sufficiency ratio under international standards due to its high stockpile capability.)
But the surcharge imposed on the public under the feed-in tariff (FIT) system that wasintroduced to spur an expansion of renewable energy will top ¥2.4 trillion in 2019
alone and has become a significant burden on consumers and industries. Power output
from solar and wind power has been growing rapidly, but it’s still below 10 percent of
total generation, with many criticizing the government policy’s cost-effectiveness.
In addition, the vetting of nuclear plants’ safety under new safety standards has been
protracted, with only nine reactors having resumed commercial operations. Out of the54 commercial reactors that Japan had before the massive earthquake in 2011, thenumber of operable reactors has been reduced to 34 after subtracting the reactorsthat the operators have decided to decommission. The firms have been saddled withsteadily rising safety improvement costs and an uncertain business environment. The
ratio of fossil fuel-fired power generation continues to be over 80 percent in total, withcarbon dioxide emissions from power generation staying higher than they were before
the 2011 quake.
For a manufacturing industry-dominated economy like ours, a stable and affordable
energy supply is a lifeline. Because of a lack of fossil fuels domestically, nothing is more
important than securing a homegrown energy supply. The government has topromote energy saving, while at the same time raise the ratio of renewable andnuclear power. This energy transition will not happen unless we reduce the cost ofrenewable energy, solve its technical challenge of instability and dispel concerns about
the safety of nuclear power.
It is a big challenge to curb the cost burden as much as possible, and yet make a suretransition to low-carbon and self-sufficient energy. Because energy conversion is asocial change, it requires a national debate. The indifference of the public may present
the biggest challenge facing Japan’s energy policies.

Copyright © 2019 International Environment and Economy Institute. All rights reserved.