IEEJ： July ©IEEJ 2024
Special Bulletin
A Japanese Perspective on the International Energy Landscape (699)

July 25, 2024

Interest Growing in Roles of Nuclear Energy under New Situation
Ken Koyama, PhD
Chief Economist, Senior Managing Director
The Institute of Energy Economics, JapanAs the global energy transition progresses with the aim of balancing enhanced energy
security and decarbonization, interest is increasing significantly in innovations and various energy andtechnology options, such as the widespread use of CO2-free hydrogen. In this context, nuclear energy
is also coming into the spotlight anew, with interest growing greatly in the roles of nuclear energy.
While the abovementioned energy transition is being promoted, the new information revolution
symbolized by the rapid expansion of the use of generative AI, the spread of data centers, and thegrowth of semiconductor production has led to a significant increase in demand for electricity such as
stable zero-emission power, contributing to growing interest in nuclear energy. In the following, I
summarize my views on the new situations in Japan and other countries, as well as the growing interest
in and hope for nuclear energy under such situations.
I think that an important tidal change in global trends surrounding nuclear power wasindicated by a statement made in October 2021 by European Commission President Ursula von derLeyen to the effect that nuclear as a stable source of energy is necessary for the European Union. Since
nuclear energy is a politically and socially sensitive issue, it is basically up to each EU member state
to decide what position to take on it. Accordingly, France makes great use of nuclear energy, while
Germany aims to phase it out. At a time when countries in Europe began to consider introducing
energy subsidies in the face of general energy price hikes, the statement by the European Commission
president attracted global attention. Following the statement, France in November 2021 announcedplans to build new nuclear reactors. Then, the United Kingdom followed suit. After the Ukraine war
broke out, France and the United Kingdom released specific nuclear plant construction plans.
On the other hand, energy price hikes and supply instability caused by the Ukraine crisis
reminded the world of the importance of energy security. As energy security came to be reaffirmed asa top priority in energy policy, the use of coal-fired power generation was strengthened even in Europe
as the countermeasure for the crisis, at the cost of increasing CO2 emissions. Indications then werethat Europe was giving greater priority to energy security than to decarbonization at a time of crisis.
However, the EU adopted the REPowerEU plan to enhance energy security by phasing out its
dependence on Russian fossil energy sources and to promote decarbonization over the medium to shortterm. Attempts to promote both energy security and decarbonization have become widespreadworldwide.
In this regard, the importance of nuclear energy as a stable power source with zero emissions
and as a quasi-domestic energy source contributing to improving energy self-sufficiency has become
even more strongly recognized. In a sense, this trend has spread worldwide. In Japan, Prime Minister
Fumio Kishida has taken the initiative to promote the restart of idled nuclear reactors, extend theoperation of lifetime of existing nuclear reactors, build new nuclear power plants, and develop newreactors. This is because Japan, which has many idled nuclear reactors even after restarting 12 reactors,
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can be expected to contribute very efficiently to cutting CO2 emissions, limiting electricity costs, andimproving energy self-sufficiency to meet its energy security, environmental conservation, andeconomic efficiency goals, by making effective use of existing nuclear reactors while securing theirsafety and national understanding.
In addition to the effective use of existing reactors as mentioned above, many plans to build
new nuclear reactors have emerged in Europe and other countries. It is also important that the UnitedStates, Canada, Europe, and others have begun to enhance various concrete initiatives for new nuclear
energy options, as indicated by growing interest in the development of small modular reactors.
Amid these developments, the progress in the new information revolution and its impact
have recently attracted global interest with respect to stable electricity supply and nuclear energy. The
rapid spread and expanding use of generative artificial intelligence are rapidly attracting attention asa factor that will be combined with the accompanying significant expansion of data centers, growing
demand for semiconductors, and the subsequent expansion of semiconductor manufacturing bases tocause an electricity demand surge in addition to a structural electricity demand increase attributable toprogress in decarbonization.
Given greater energy efficiency through the expanding use of generative AI and energysaving efforts for data centers, there are various views about how the new information revolution
would boost electricity demand on a net basis. No definite view exists now. Clearly, however, there isgrowing awareness of the need to reconsider conventional assumptions and envision a future increasein electricity demand in countries around the world.
Moreover, the increase in demand for electricity due to the information revolution ischaracterized by extremely high expectations for stable and high-quality zero-emission power sources.
As mentioned above, there are measures to strengthen energy conservation, but in terms of expanding
the supply of zero-emission electricity, renewable energy is of course also expected, and this is whereexpectations and interest in nuclear power will increase. In particular, if nuclear power, which has thecharacteristics of a stable power source, is to provide a competitive power supply from the perspectiveof the entire power system, it will emerge as an even more effective countermeasure. In addition, there
is also interest in the idea of locating SMRs in close proximity to the demand side such as data centersand supplying electricity in comparison with options such as expanding renewable energy sources inareas with suitable natural conditions and supplying them through the strengthening of the power grid.
Responding to the increase in electricity demand due to the new information revolution is still a future
problem with various uncertainties, and various countermeasures and options are on the table, andnuclear power is clearly one of them.
In Japan, discussions are underway at the advisory council for the formulation of the Seventh
Strategic Energy Plan. Since the discussions at the time of the formulation of the current Sixth Plan
were implemented in the midst of the acceleration of the trend toward carbon neutrality, the discussion
has tended to focus too much on the issue of decarbonization. However, in the formulation of thisbasic plan, in addition to the issue of further deepening the reduction of GHG emissions, it is necessary
to respond to a completely new international situation, such as the emphasis on energy security since
the outbreak of the Ukraine crisis, the increasingly complex geopolitical situation, and the division of
the world as represented by the US-China confrontation. In addition, it is necessary to respond to thenew situation in Japan, such as the possibility of an increase in electricity demand due to the progressof the new information revolution mentioned above, and the importance of securing a stable supply ofelectricity
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In light of these points, it is necessary for Japan to scrutinize the current domestic and foreignenergy situation and to discuss and compile a comprehensive and overarching policy response. In thiscontext, from the perspective of contributing to the 3Es, it is certain that the effective use of nuclear
power after ensuring safety and gaining the understanding of the public will be the most important
issue. While there is no doubt that the effective use of existing reactors is an extremely importantpriority, it is important to remember that from a long-term and strategic perspective, it is imperative
to provide a concrete path for new construction and expansion and support for new technologies inorder to maintain the nuclear supply chain and maintain and secure human resources. It is essential for
Japan to discuss strategic formulation to enable the response to important new developments that areprogressing at home and abroad.

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