Japan must diversify energy sources

November 24, 2012

ENERGY SEMINAR

For energy security, Japan urged to diversify sources

http://www.japantimes.co.jp/text/nb20121124d2.html 

By TAKASHI KITAZUME 

Staff writer

Japan needs not only to maintain a diverse energy mix — including nuclear power — but also diversify the ways of securing imported fuel in the face of the changing global supply-demand structure, a former executive director of the International Energy Agency said at a recent seminar in Tokyo.

The Democratic Party of Japan-led government's plan to seek a phaseout in nuclear power lacks the perspectives of energy security for the country and fails to address international concerns such as the possible impact of a Mideast turmoil on oil supply, or the effects of rapidly growing energy consumption in countries like China and India, said Nobuo Tanaka, currently an associate at the government-affiliated Institute of Energy Economics.

Tanaka was speaking at a seminar on energy security organized by the Keizai Koho Center on Oct. 30.

In the wake of the triple meltdowns at Tokyo Electric Power Co.'s Fukushima No. 1 nuclear power plant, which followed the massive earthquake and tsunami on March 11, 2011, all but two of Japan's nuclear reactors remain shut down. Prime Minister Yoshihiko Noda's Cabinet announced a plan in September to seek to phase out nuclear power generation by the end of the 2030s.

Without nuclear power, Japan will inevitably have to import more oil, natural gas and coal in addition to increasing power generation through renewable sources such as solar and wind, Tanaka said. This will cause a triple problem of rising costs, reduced security and greater emission of greenhouse gases, he noted.

Japan's nuclear disaster has prompted Germany to reverse its position and announce a phaseout of its nuclear power generation by 2022. One way for Germany to achieve that would be importing more natural gas, but it is also connected to neighboring countries through regional power grids, which would enable the country to buy electricity, for example, produced at nuclear power plants in France, Tanaka pointed out.

Germany turned from a net energy exporter to a net importer in March last year, but European countries maintain a collective security system in energy supply through a regionwide power grid network as well as gas pipelines, he said. Japan, for its part, does not even have a nationwide network of power lines and its still divided by the 50 hertz/60 hertz differences in eastern and western Japan, he noted.

Crude oil prices are not expected to come down in the future with the rising demand from emerging powers, Tanaka said. Meanwhile, if a crisis emerges over Iran's nuclear program and Tehran blocks crude supplies through the Straits of Hormuz, the current oil stockpiles by IEA members will be able to supply global demand for only two or three months, he said.

In case the crude oil prices should spike to double the current level, Japan is estimated to quickly lose its current account surplus and the deficit could run as high as ¥12 trillion if its nuclear plants remain shut down, Tanaka said.

Expectations are high for increases in natural gas supplies worldwide with the shale gas revolution in the United States and development of unconventional types of gas in other countries, but Tanaka said that the market will not ease substantially because there will also be huge demand particularly in countries like China.

Meanwhile, export capacity of Southeast Asian countries, including Indonesia, Malaysia and Brunei, which have long been major suppliers of liquefied natural gas (LNG) to Japan, is forecast to decline as these rapidly growing countries need to supply rising consumption at home, he said.

Japan will need to diversify its sources of natural gas imports, including the purchase of shale gas from the U.S. as well buying more from Russia by building gas pipelines, he said. Russia today accounts for 9 percent of natural gas and 4-5 percent of oil that Japan imports, and increasing imports from Russia will also help Japan reduce its dependence on supplies from the Middle East, he noted.

Meanwhile, another speaker at the seminar, Robert Dujarric, director of the Institute of Contemporary Asian Studies at Temple University's Japan Campus in Tokyo, urged Japan to set a goal of minimizing demand for fossil fuels as sources of its energy supply from security viewpoints, given the geopolitical risks involving many of the world's oil producers.

A logical course for Japan would be to invest more in research and development on efficiency in renewable and non-traditional energy sources, Dujarric said. "Energy is a challenge for Japan but it is also an enormous opportunity for Japan" to develop a path for "thriving in a lower fossil fuel environment" with its energy-efficiency technologies, he said.

On the other hand, a zero-nuclear policy will lead to higher fossil fuel prices by pushing up demand for oil and gas as alternative energy sources, along with exacerbating the global warming problems, he said.

The need for a diverse mix in energy supply as the foundation of energy security was also echoed by Akihiro Sawa, an executive senior fellow with the 21st Century Public Policy Institute, who spoke at another seminar on energy issues organized by the Keizai Koho Center on Nov. 5.

Japan was heavily dependent on oil imports as a fuel for its electricity generation when it was hit by the First Oil Crisis in 1973. After its economy was severely affected by the supply disruptions and sharp increase in oil prices, the nation responded by diversifying its sources of power generation more to nuclear and natural gas, Sawa pointed out.

Even with the huge investments, it took decades for the share of nuclear energy in Japan to reach the roughly 30 percent it had before the Fukushima crisis, gradually reducing the reliance on oil, he said.

While the zero-nuclear scenario assumes a sharp increase in the share of renewable energy, it would similarly take decades for renewable sources — whose research has indeed been continued since the days of the 1970s oil crises without much success in terms of securing a substantial volume of power generation — to make up for the gap left by ending nuclear power, Sawa noted.

Japan's current basic energy plan, which was set in 2010 by the same DPJ-led government then under Prime Minister Yukio Hatoyama, called for increasing the share of nuclear power to 53 percent and that of renewables to 19 percent by 2030.

This plan, created for the purpose of achieving Hatoyama's call for reducing Japan's greenhouse gas emissions by 25 percent from the 1990 levels by 2020, in itself was problematic in that relying more than half of Japan's power supply on a single source — nuclear — would result in severe nationwide supply disruptions in case problems emerge in nuclear reactors, just as the oil supply was disrupted during the 1970s oil crises, he said.