Do you have doubts?

October 23, 2012

Source: Financial Times

http://www.ft.com/intl/cms/s/0/1fc5fe9a-1916-11e2-af4e-00144feabdc0.html#axzz2ADgEsWBa

Doubts cast over Japan nuclear phase-out 

By Jonathan Soble in Tokyo

October 23, 2012 2:26 pm

©Bloomberg

It has only been a month since Japan declared that it would close down its nuclear industry by the end of the 2030s, but already a contentious plan to complete several partially built reactors is sowing doubts about the government’s commitment to the radical policy shift.

The facilities – stretching from the northern tip to the southwestern part of the country – were approved years before the triple meltdown in Fukushima in March last year, but construction had been frozen following the disaster. The decision over their fate is seen as a test of just how serious Japan is about abolishing an industry that had been the source of 30 per cent of its electricity.

In the weeks since the nuclear phase-out was announced, Yukio Edano, industry minister, has said three approved but unfinished reactors are exempt from a central provision of the phase-out policy, under which no new plants will be built. Electric Power Development, the utility that owns one of the facilities, responded by saying it plans to resume work this year, with an eye to beginning electricity production some time after 2014.

Iida Tetsunari, a leading anti-nuclear activist, called the decision “insincere politics” that was “clearly against the principle” of ending nuclear power. The Mainichi newspaper, a national daily, said: “Many people must surely feel as though they’ve been tricked by a fox.”

Some sceptics had already dismissed the phase-out announcement as empty pre-election rhetoric. The target date was vague, and within days the cabinet of Yoshihiko Noda, prime minister, backtracked over implementation. Under pressure from pro-nuclear business groups, it resolved to act “flexibly” and with “constant verification and revision” – hedges that might keep the nuclear industry in business indefinitely.

It remains unclear exactly how many new reactors might be completed in practice. One of the three approved units, at Higashidori nuclear station, located on the remote northern tip of Japan’s main island, is owned by Tokyo Electric Power, the disgraced and financially crippled operator of the Fukushima plant.

Construction is only about 10 per cent completed, and Tepco’s problems make prospects for a resumption dim, according to government officials and analysts.

Electric Power Development’s facility, in the village of Oma not far from Higashidori, is about 40 per cent finished, while the most advanced, Chugoku Electric’s Shimane plant in southwestern Japan, is more than 90 per cent built and was supposed to have started operating this year.

Chugoku has not revealed its plans for the facility, but has been consulting local politicians over restarting work.

In theory, it is possible to reconcile finishing the plants with the gradual phase-out envisioned by the new energy policy. Japan has 50 reactors already in service, and they are to be used while the country develops alternative energy sources such as solar and wind power. Supporters of the partially built plants argue that they will contain the latest, safest technology, and scrapping them now would mean writing off the tens of billions of yen already sunk into construction.

However, Kenichi Oshima, a nuclear policy expert at Ritsumeikan University, says uncertainties about the future cost of operating nuclear plants in Japan weaken the economic case for more atomic power. “There will be more costs for safety upgrades, and no one knows what kind of insurance system is going to be put in place. These things will make a big difference to generating costs.”

Since it takes about 40 years for a reactor to recoup its initial building costs, switching off the new plants in the 2030s, around two decades before the end of their normal operating lifespans, would mean accepting major investment losses – something a future government might be unwilling or unable to impose on utilities. “Basically, building these reactors would mean reversing the nuclear phase-out,” Mr Oshima says.

Allowing Oma and Shimane to go ahead could also open the door to more plants being built. Nine other reactors were in various stages of planning before Fukushima, and while the government has said they will not be constructed, some pro-nuclear local leaders have continued to push.

The governor of Fukui prefecture, a western area with a big nuclear industry, has recently stepped up lobbying for two planned reactors in his jurisdiction that had been close to receiving final approval before the accident. Higashidori’s village council has appealed for construction on its reactor to resume over fears for the local economy.

The phase-out plan could recede even further if Mr Noda’s Democratic party of Japan is ousted in an election early next year, which polls suggest is likely. The opposition Liberal Democrats nurtured the nuclear industry for decades when they were in power, and are more sceptical towards renewable energy.

The main roadblock to building could come from other local governments. Towns and villages that host nuclear plants receive generous state subsidies and tend to support the industry, even after Fukushima, but their unsubsidised neighbours are often less keen.

In northern Japan, the mayor of Hakodate city, located across a narrow strait from Oma on the island of Hokkaido, has threatened to sue to prevent construction from resuming. On a visit to Tokyo to complain to the government this week, he told reporters: “The decision to permit construction is based on a pre-Fukushima safety myth.”