The shutdown of all Japan’s nuclear power stations bar one has forced the country to turn to thermal power – in particular LNG – to meet domestic electricity demand. But there is now a fierce debate going on throughout Japan about the direction of its future energy policy.
Location of Ohi nuclear plant, Fukui Prefecture, Japan. (Interfax)
The Japanese Nuclear Safety Commission’s approval of safety checks on two reactors in Fukui prefecture has opened a new phase in the nation’s debate over the restart of nuclear plants idled following the Fukushima accident.
With only one of Japan’s 50 viable commercial units online, Prime Minister Yoshihiko Noda is facing a major political choice: either push for a gradual restart despite concerns about the risks involved, or continue relying on costly imports of fossil fuels to shore up Japan’s energy deficit during the summer months of peak demand.
A political minefield
The government imposed a series of computer simulations, known as “stress tests,”, after the Fukushima accident, to check the resistance of nuclear plants against major earthquakes and tsunamis. The tests were undertaken each time a reactor shut down for regular maintenance and refuelling, a process that has led to the suspension of all nuclear plants except for Hokkaido Electric’s Unit 3 at Tomari, in northern Japan, which is scheduled to go offline in early May. The government has said the decision to restart these power plants will be taken on a case-by-case basis with the consent of local authorities.
Units 3 and 4 at Kansai Electric Power’s Ohi nuclear plant in Fukui Prefecture, central Japan, became the first to clear the technical part of the process with the Nuclear Safety Commission announcement on 23 March that stress tests had “demonstrated the effectiveness” of emergency security measures taken after the accident. The commission, however, stopped short of calling the reactors “safe” for restart, arguing such a decision was the responsibility of the government.
The stage is now set for phase two: securing the approval of local communities, a concept initially restricted by Tokyo to municipalities hosting nuclear plants and their respective prefecture. But this has been challenged by a growing number of interested parties whose claims could significantly delay attempts to restart reactors before summer.
The governor of neighbouring Shiga prefecture urged the government on 16 March to include her in consultations because parts of her territory fall within 30 km of the Ohi site – the distance recommended by the International Atomic and Energy Agency (IAEA) for Urgent Protective Planning Zones around nuclear plants, which Japan has pledged to implement. The governor said that she would work with Kyoto prefecture to obtain a seat at the negotiating table.
Osaka Prefecture weighed in on the same day by presenting the results of atmospheric fallout simulations that forecast high levels of thyroid gland exposure in the event of a Fukushima-class accident in Fukui Prefecture. On 18 March, Osaka’s municipal authorities announced that, as Kansai Electric’s main shareholder, they would ask the utility to decommission all nuclear reactors in conjunction with the cities of Kyoto and Kobe. While dismissed by some observers as a political stunt given the cities’ combined stake of 12.5% – well below the two-thirds required to pass a resolution – the move is representative of a growing awareness of the risks involved on a regional level.
The next step for the government will be to decide whether to push for restarts, and what strategy to adopt in negotiating with local authorities.
’On a respirator’
After the accident, Japanese utilities scrambled towards the only viable alternative: firing up thermal power plants, which required boosting imports of oil, coal and LNG. The other main source of energy, hydroelectric power, stalled at around 8% of the total mix in the 1970s against 60% for thermal in 2010.
“Japan’s energy policy before Fukushima was like a juggler carefully performing on stage,” said Paul J Scalise, an energy analyst and JSPS research fellow at the University of Tokyo. The metaphorical balls were the three ‘E’s: economic growth, environmental friendliness, and energy independence. “Now the juggler has stopped performing. In fact, he’s on a respirator and we don’t know if he’s going to survive.”
To keep the juggler alive, Scalise said, the government and utilities are like frantic doctors desperately pumping in fossil fuels to replace nuclear power’s 30% share of total generated electric power. “But you can’t keep the patient on a respirator forever”, he said, because of three factors.
Firstly, LNG may be the most realistic alternative in the short run, but it’s an expensive one. Import prices continue to rise substantially as Japanese demand affects global markets. Secondly, the country’s exclusive reliance on imports (the Middle East for oil, Australia and Indonesia for coal, Indonesia, Australia and Malaysia for LNG) directly contradicts its policy of greater autonomy defined in the 1970s, leaving it at the mercy of a showdown in the Strait of Hormuz or elsewhere. And finally, these short-term efforts are increasing the marginal costs of electricity generation.
“Something has to give,” said Scalise. “Either the utilities raise their electricity prices substantially, which is politically risky, or you are effectively asking stakeholders to take a haircut. Declining net profits will risk dividend payouts, limiting the ability to pay down interest-bearing debt or investing further in their businesses, threatening wages, and ultimately devaluing these companies’ share prices overall.” Accordingly, the first utilities to complete the stress tests, Kyushu and Kansai Electric, were those with the highest reliance on nuclear power (their estimates of supply shortfalls for this summer stand at 8.9% and 25% respectively based on 2010 figures). “These two regions will be the test cases for the fate of nuclear restarts.”
Scalise said the problems will reach beyond the economy if the situation is not corrected, with adverse consequences for Japan’s carbon emissions and the potential withdrawal of industries due to energy security concerns. Utilities are set to submit their needs to the Ministry of Economy, Trade and Industry in April, before the ministry presents its own proposals to the Noda cabinet.
Many obstacles lay ahead in the ruling Democratic Party of Japan’s (DPJ’s) struggle to redefine energy policy. “If a summer shortage forces businesses and individuals to make the kind of adjustments they made last summer or to endure blackouts, it will reflect badly on the DPJ,” said Eurasia Group’s Jun Okumura. “On the other hand, if the public perceives that the government is rushing decisions without proper precautions, this will raise fears and poison the political atmosphere.”
Japan’s struggle to set a new energy policy
Location of Ohi nuclear plant, Fukui Prefecture, Japan. (Interfax)
The Japanese Nuclear Safety Commission’s approval of safety checks on two reactors in Fukui prefecture has opened a new phase in the nation’s debate over the restart of nuclear plants idled following the Fukushima accident.
With only one of Japan’s 50 viable commercial units online, Prime Minister Yoshihiko Noda is facing a major political choice: either push for a gradual restart despite concerns about the risks involved, or continue relying on costly imports of fossil fuels to shore up Japan’s energy deficit during the summer months of peak demand.
A political minefield
The government imposed a series of computer simulations, known as “stress tests,”, after the Fukushima accident, to check the resistance of nuclear plants against major earthquakes and tsunamis. The tests were undertaken each time a reactor shut down for regular maintenance and refuelling, a process that has led to the suspension of all nuclear plants except for Hokkaido Electric’s Unit 3 at Tomari, in northern Japan, which is scheduled to go offline in early May. The government has said the decision to restart these power plants will be taken on a case-by-case basis with the consent of local authorities.
Units 3 and 4 at Kansai Electric Power’s Ohi nuclear plant in Fukui Prefecture, central Japan, became the first to clear the technical part of the process with the Nuclear Safety Commission announcement on 23 March that stress tests had “demonstrated the effectiveness” of emergency security measures taken after the accident. The commission, however, stopped short of calling the reactors “safe” for restart, arguing such a decision was the responsibility of the government.
The stage is now set for phase two: securing the approval of local communities, a concept initially restricted by Tokyo to municipalities hosting nuclear plants and their respective prefecture. But this has been challenged by a growing number of interested parties whose claims could significantly delay attempts to restart reactors before summer.
The governor of neighbouring Shiga prefecture urged the government on 16 March to include her in consultations because parts of her territory fall within 30 km of the Ohi site – the distance recommended by the International Atomic and Energy Agency (IAEA) for Urgent Protective Planning Zones around nuclear plants, which Japan has pledged to implement. The governor said that she would work with Kyoto prefecture to obtain a seat at the negotiating table.
Osaka Prefecture weighed in on the same day by presenting the results of atmospheric fallout simulations that forecast high levels of thyroid gland exposure in the event of a Fukushima-class accident in Fukui Prefecture. On 18 March, Osaka’s municipal authorities announced that, as Kansai Electric’s main shareholder, they would ask the utility to decommission all nuclear reactors in conjunction with the cities of Kyoto and Kobe. While dismissed by some observers as a political stunt given the cities’ combined stake of 12.5% – well below the two-thirds required to pass a resolution – the move is representative of a growing awareness of the risks involved on a regional level.
The next step for the government will be to decide whether to push for restarts, and what strategy to adopt in negotiating with local authorities.
’On a respirator’
After the accident, Japanese utilities scrambled towards the only viable alternative: firing up thermal power plants, which required boosting imports of oil, coal and LNG. The other main source of energy, hydroelectric power, stalled at around 8% of the total mix in the 1970s against 60% for thermal in 2010.
“Japan’s energy policy before Fukushima was like a juggler carefully performing on stage,” said Paul J Scalise, an energy analyst and JSPS research fellow at the University of Tokyo. The metaphorical balls were the three ‘E’s: economic growth, environmental friendliness, and energy independence. “Now the juggler has stopped performing. In fact, he’s on a respirator and we don’t know if he’s going to survive.”
To keep the juggler alive, Scalise said, the government and utilities are like frantic doctors desperately pumping in fossil fuels to replace nuclear power’s 30% share of total generated electric power. “But you can’t keep the patient on a respirator forever”, he said, because of three factors.
Firstly, LNG may be the most realistic alternative in the short run, but it’s an expensive one. Import prices continue to rise substantially as Japanese demand affects global markets. Secondly, the country’s exclusive reliance on imports (the Middle East for oil, Australia and Indonesia for coal, Indonesia, Australia and Malaysia for LNG) directly contradicts its policy of greater autonomy defined in the 1970s, leaving it at the mercy of a showdown in the Strait of Hormuz or elsewhere. And finally, these short-term efforts are increasing the marginal costs of electricity generation.
“Something has to give,” said Scalise. “Either the utilities raise their electricity prices substantially, which is politically risky, or you are effectively asking stakeholders to take a haircut. Declining net profits will risk dividend payouts, limiting the ability to pay down interest-bearing debt or investing further in their businesses, threatening wages, and ultimately devaluing these companies’ share prices overall.” Accordingly, the first utilities to complete the stress tests, Kyushu and Kansai Electric, were those with the highest reliance on nuclear power (their estimates of supply shortfalls for this summer stand at 8.9% and 25% respectively based on 2010 figures). “These two regions will be the test cases for the fate of nuclear restarts.”
Scalise said the problems will reach beyond the economy if the situation is not corrected, with adverse consequences for Japan’s carbon emissions and the potential withdrawal of industries due to energy security concerns. Utilities are set to submit their needs to the Ministry of Economy, Trade and Industry in April, before the ministry presents its own proposals to the Noda cabinet.
Many obstacles lay ahead in the ruling Democratic Party of Japan’s (DPJ’s) struggle to redefine energy policy. “If a summer shortage forces businesses and individuals to make the kind of adjustments they made last summer or to endure blackouts, it will reflect badly on the DPJ,” said Eurasia Group’s Jun Okumura. “On the other hand, if the public perceives that the government is rushing decisions without proper precautions, this will raise fears and poison the political atmosphere.”