Energy: exploit all options

August 14, 2012

Editorial: Explore all options for stable and affordable energy sources

http://mainichi.jp/english/english/perspectives/news/20120814p2a00m0na008000c.html

In the debate over Japanese energy policy heading toward the year 2030, how much of our energy supply will be comprised by nuclear power and how much by renewable energy have attracted the most attention. Meanwhile, however, thermal power generation still makes up the majority, at 50 to 65 percent, and natural gas has constituted a higher percentage of that than it ever has in the past.

It is crucial that we find a reliable way to procure natural gas at low prices. This is a make-or-break issue for stability of the Japanese economy and the lives of the people.

Power companies and gas companies that are ordinarily pitted against each other in attracting customers should consider jointly purchasing natural gas. Moreover, we urge them to consider participating in natural gas development overseas.

It is time for the East Asian countries of Japan, China and South Korea to deal with gas-rich countries cooperatively, instead of trying to outflank each other. Japan would be ideal to take the lead in organizing collaboration. It is important also to think about laying gas pipelines with the Eurasian continent with an eye to accessing natural gas in Sakhalin and Siberia. South Korea has already embarked on pipeline construction with Russia. By expanding our options, we can increase leverage in price negotiations.

None of this is easy, and if we were to compile a list of the difficulties that lie ahead, it would be a long one. We have yet to find a clear future vision for electricity, and the circumstances surrounding Japan and its environs are trying, making international cooperation difficult. However, challenges are ours to confront and overcome. Let us carefully calculate the risks, and pursue various possibilities toward cost reduction.

According to the Institute of Energy Economics, Japan (IEE Japan), in 2012, in the wake of the Fukushima nuclear plant disaster, nuclear power generation has dropped to below 2 percent of all power generation. Meanwhile, thermal power generation comprises close to 90 percent, of which natural gas makes up the largest proportion, at 35 percent. Among fossil fuels, demand for natural gas continues to rise rapidly as it performs well across the board in cost, carbon dioxide emissions, and the political stability of its producer nations.

That procurement of natural gas has gone smoothly is what has allowed Japan to avoid large-scale power outages during periods of no nuclear power generation and small-scale nuclear power generation. With the rapid development of shale gas in the U.S., natural gas from Qatar that was headed for the U.S. was freed up for purchase by Japan. It was a close call, and we cannot continue to rely on such games of chance.

With the sudden rise in natural gas imports and other factors, Japan is set to spend 4.6 trillion yen more on fossil fuel imports in fiscal 2012 than in fiscal 2010, before the Fukushima nuclear crisis broke out. Our trade balance has been tipping toward the unfavorable. With the decline in the number of children and a rapidly aging population, it's unavoidable that we succumb to a current-account deficit several years down the line. There is concern that the government bond market will turn turbulent. As such, it would be wise to bring down the import price of natural gas and other energy sources to as low as possible.