IEEJ: November 2011 All Rights Reserved
Special Bulletin

A Japanese Perspective on the International Energy Landscape (66)

November 17, 2011

IEA WEO-2011 and JapanKen Koyama, PhD
Chief Economist, Managing Director
The Institute of Energy Economics, JapanOn November 16, our institute (IEEJ) hosted a symposium in Tokyo on IEA’s “WorldEnergy Outlook 2011”, which was released just last week. Madame Maria van der Hoeven, whobegan her term as IEA Executive Director in September, participated as keynote speaker in thesymposium, making a presentation on the outline and features of the WEO-2011. Here, I would liketo summarize the significance of the symposium, rather than the WEO-2011 itself.

The Tokyo symposium on the IEA’s WEO has become a key annual event.

However, thisyear’s IEA WEO symposium might have been particularly important for Japan. This is because theMarch 11 Great East Japan Earthquake has led the IEA to (1) analyze how the impact of the disastershould be incorporated into the IEA’s energy supply/demand outlook and (2) present an analysis on
the disaster’s impact on Japan’s energy supply/demand conditions and policies, which will havedirect implications for Japan. The first point indicates that Japan’s problem is significant in theworld’s energy problem. The second point hints that the world has great interests in Japan’s future
and that the energy problem is of grave significance to Japan.

Regarding the first point, the annual IEA WEO has, in a timely and effectual manner, takenup key themes or topics of late. In this respect, the last year’s WEO-2010 focused on the future
course of natural gas, providing the world with the key phrase “A Golden Age of Gas.” WEO-2011
particularly features an analysis of the Low Nuclear Case in consideration of the Fukushima Daiichi
nuclear plant accident triggered by the disaster.

As a matter of course, WEO-2011 also analyzes other important topics including Russianenergy supply and demand, coal markets, energy subsidies, etc. In addition to these special topics, it
includes regular important analyses such as the supply/demand outlook through 2035 and its
implications for energy security and climate change in each of three scenarios – the Current Policies
Scenario, the New Policies Scenario and the 450 Scenario. But it may be needless to say that one ofthe WEO-2011 features is the Lower Nuclear Case analysis.
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IEEJ: November 2011 All Rights Reserved
The fact that the WEO, which is recognized by energy experts in the world as one of themost important reference material for long-term world energy supply/demand forecasts, takes up thefuture course of nuclear energy and its implications indicates the significant impact of the March 11
disaster. This means that the world is paying attention to the Japanese problem and may continue
watching Japan’s future course and actions.

Regarding the second point, it is very significant that Executive Director van der Hoeven
used many slides in her presentation to present precious implications of the Low Nuclear Case forJapan’s energy policies. The IEA analysis indicates a decline in Japan’s energy self-sufficiency, asubstantial increase in payments for energy imports, an expansion in carbon dioxide emissions andother changes in the Low Nuclear Case. These effects could be of grave importance in Japan’senergy security, global warming and the three Es of energy policy -- Energy security, Economic
efficiency/growth and Environmental sustainability. Interestingly, the IEA analysis shares many
points with problem consciousness and analyses with those of our institute’s.

As a matter of course, quantitative analysis results or forecasts in the IEA analysis
naturally differ from IEEJ analysis results due to differences in various preconditions and simulation
models. But it is significant to analyze what it is that leads to differences. The symposium might
have indicated that if it is difficult for Japan to boost nuclear energy’s share of power generation toabout 50% as projected under the current “Basic Energy Plan”, Japan will have to independently
decide what alternative energy sources or what electricity consumption saving measures should beadopted. Then, Japan will have to understand that any option would exert various economic andsocial burdens on the nation.

As a matter of course, Japan itself will have to be responsible for deciding how to address
its own energy problem. To that end, Japanese people will be required to have objective andreasonable discussions. Then, they should adopt international viewpoints without becoming
inward-looking. In this sense, the latest IEA analysis is very important in that “outside experts” in aninternational organization coolly point to challenges and matters of concern regarding Japan’s futureenergy situation through detailed quantitative analyses.

In the world of energy, the IEA is put in an important position as an internationalorganization. In the world, however, there are many other organizations and experts that can give
opinions that are worth listening to. In proceeding with discussions on Japan’s energy policies, weshould listen to and learn from good-quality, significant overseas opinions as much as possible andmake decisions on our own. The IEEJ would like to make efforts to provide opportunities to do so.
Contact: report@tky.ieej.or.jp
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