AJISS-Commentary
The Association of Japanese Institutes of Strategic Studies
IIPSRIPSInstitute for International

The Japan Institute ofResearch Institute for

Policy Studies

International Affairs

Peace and Security(Secretariat)

Editor:No. 170

Akio Watanabe

30 January 2013

Editorial Board:

THE CASE FOR JAPAN’S ENERGYSTRATEGY AFTER THE SHALE
REVOLUTION

Hideki Asari
Masashi Nishihara
Taizo Yakushiji

Online Publisher:
Yoshiji Nogami
President, JIIA

Naoatsu Aoyama
The Asahi Shimbun Globe did a feature story lastNovember 4 on the “Shale Revolution” originatingin North America. This coverage gave me a real
sense that the economic power and geopoliticalposition underpinning US foreign policy will gain
considerable strength in the second half of thisdecade. In my view, it is very unlikely that “energyindependence” for North America would cause theUS to revert to isolationism.

The views expressed in this piece are the author’s own and should
not be attributed to The Association of Japanese Institutes ofStrategic Studies.

AJISS-Commentary
The Association of Japanese Institutes of Strategic Studies

There is little probability that the US will reduce its involvement in the Middle
East simply because of diminished energy dependence on that region; indeed, it
may even become possible for the US to shift from its conventional Middle East
policy compelled by pragmatism to emphasize steady energy supplies andinstead actively pursue a policy placing greater focus on “democratic values.”
Japan would in principle benefit from the creation of an international environment
allowing the US to remain engaged on global issues. Taking advantage of thefavorable opportunity presented by the “Shale Revolution,” more in-depth
discussions should be undertaken on strategies for advancing the Japan-US
alliance through stronger ties in the energy sector.
Although President Obama enjoys solid support among Americans
interested in environmental issues and thus cannot afford to ignore theopposition to shale development, the prevailing view among experts is that hewill not adopt policies severely hampering such development. The US is
expected to begin exporting LNG to Japan in the latter half of this decade, but
the extent of the exports to be permitted remains uncertain. A short-term priority
for Japan is ensuring as stable a supply as possible of LNG imports from the US.
The current outlook for the US economy is by no means rosy, but the US’underlying strength must be given its proper due. The “Shale Revolution” did notcome out of nowhere.

It is the product of steady technical innovation by“independents,” companies whose entrepreneurial spirit differentiates them fromthe oil and gas majors that have dominated oil and gas development heretofore,
and it is important that the legal and financial frameworks needed to promote
development be put in place. Shale development does not seem likely toproceed as smoothly in China or Europe as in North America. This means that
the US and Canada will maintain their great influence in the resource sector. Toa certain degree the US may even see an increasingly number of manufacturing
companies return home, especially those in energy-intensive industries such as
steel and petrochemical production.
Like it or not, Japan could find itself in future with less leeway to pursue aforeign policy divergent from US strategy. This does not necessarily mean,
however, that Japan will be subservient to the US. Cooperation in the energy

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The Association of Japanese Institutes of Strategic Studies

sector has a reciprocal nature. Japan is obliged to derive as many lessons innuclear power technology as possible from the Fukushima Dai-ichi nuclear
power plant accident. Sharing these technical lessons with the US would no
doubt be very beneficial for the US as it pursues dependable private-sector
nuclear energy at home and non-proliferation of nuclear weapons internationally.
This would also serve as a token of appreciation for the friendship demonstrated
by the US in Operation Tomodachi.
Only with economic strength grounded in robust energy security andstrong relations of trust with the US will Japan be able to present to the US and
the international community meaningful recommendations from its own
perspective whenever the US adopts a unilateralist foreign policy toward theMiddle East or Asia that might prove detrimental to Japan’s interests. It isessential that Japan bolster ties via the LNG trade and seek closer Japan-US
cooperation in nuclear power, renewable energies, and improved energy
efficiency.
Production sites should have achieved considerable diversification byaround 2020, at which time the international trade in natural gas will undoubtedly
have a larger market than at present. If tighter energy collaboration between
Japan and the US can be ensured, Japan will gain significant leverage innegotiating with other petroleum and gas producing countries and will have afirmer footing from which to take on the distinctive and more difficult strategic
issues it faces, including the large-scale introduction of gas from Russia as wellas partnership with China and South Korea on LNG imports.
The debates on energy in last year’s general elections scarcely rose
above sloganeering, and the nearly total absence of in-depth and realisticdiscussions extending to foreign policy and security was quite unfortunate.
Serious discussions among experts on a “post-revolution” energy strategy arevery much needed.

Naoatsu Aoyama is a reporter at the Asahi Shimbun Globe.

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