Update: Recent Developments in Nuclear Energy Policy Issues in Japan

JFS Newsletter No.134 (October 2013)

This update on nuclear energy policy issues in Japan follows our most recent update, provided in JFS Newsletter No. 130 (June 2013). As of February 2011, just before the Great East Japan Earthquake on March 11 and the subsequent Fukushima Daiichi nuclear accident occurred, there were 54 nuclear reactors operating in Japan, with its national energy mix comprised of 31.3% nuclear power, 63.1% thermal power, 5.1% hydropower, and 0.5% renewable energy.

The Fukushima Daiichi nuclear power plant is comprised of six reactors. Due to the Great East Japan Earthquake and tsunami, the cores and containment buildings of reactors 1 to 3 were damaged and the reactors lost their cooling function. Furthermore, although reactors 4 to 6 were already in cold shutdown for planned maintenance, a hydrogen explosion occurred in reactor 4, significantly damaging its containment building. Also forced to stop operation were four reactors in the Fukushima Daini power plant, owned by Tokyo Electric Power Co. (TEPCO), all four reactors owned by Tohoku Electric Power Co., and one of the reactors owned by the Japan Atomic Power Co.

Regarding reactors 5 and 6 of the Fukushima Daiichi nuclear power plant, immediately after the accident, TEPCO indicated it planned to decommission them, and after an inspection of the plant in September 2013, Prime Minister Shinzo Abe directed it to do so. Therefore, the decommissioning of all six reactors became a certainty.

Insufficient cost allowances seem to be the reason TEPCO decided not to decommission reactors 5 and 6 earlier, despite the fact there was no possibility of resuming their operation. A trial calculation shows that the power generation industry will suffer a loss of some 4.4 trillion yen (about U.S.$44.9 billion) if all 50 domestic nuclear reactors capable of generating electricity are decommissioned. In that case, six power utilities, including TEPCO, will be crushed by debt, because power utilities up to now planned to spend 40 years making an allowance for the decommissioning costs on the premise that a nuclear reactor will operate for more than 40 years to pay those costs. Therefore, early decommissioning results in an extraordinarily large loss all at once, easily causing insufficient allowances to cover decommissioning costs.

Against this backdrop, the Ministry of Economy, Trade and Industry (METI) plans to introduce a new accounting system, where power utilities can depreciate the costs necessary for nuclear plant decommissioning for 10 years after each nuclear reactor finishes operation and can also include such costs in electricity charges. This is scheduled to be introduced by the end of this year. The new accounting system will make it easier for power utilities to secure the financial resources necessary for decommissioning, and thereby each power utility can more easily decommission aging reactors as well as reactors not meeting safety standards. The decommissioning of reactors 5 and 6 at the Fukushima Daiichi nuclear power plant seems even more certain partly because of this planned change in the accounting system.

After the earthquake, how has the operating status of nuclear reactors changed in Japan, where nuclear reactors are required to undergo an inspection every 13 months? For this reason, the nuclear reactors that did not stop operation because of the earthquake halted operations for their periodic inspections, one-by-one, and all nuclear reactors in Japan stopped operation in May 2012, for the first time in 42 years.

Power utilities could not restart the operation of their nuclear reactors, even after their inspections were finished, due to public perception and the anxiety of local people. Thus almost all but two of the nuclear reactors (reactors 3 and 4 at the Ohi nuclear power station, owned by Kansai Electric Power Co.) remained shut down. These reactors resumed operation in July 2012, but they stopped operation again on September 15, 2013, for their 13-month periodical inspections. As a result, all nuclear reactors in Japan are currently stopped again for the second time in 14 months.

To restart a nuclear reactor, it must undergo and pass reviews to determine whether it satisfies the New Regulatory Requirements for Commercial Nuclear Power Reactors, formulated by the Nuclear Regulation Authority. The new requirements were announced in July 2013. Six power utilities have applied for reviews of their 14 reactors and are waiting for them to be completed. Even if they pass the reviews, power utilities also need to obtain the consent of the relevant local governments to restart their reactors. After the accident at the Fukushima Daiichi nuclear power plant, the Emergency Planning Zone designated by the national government was expanded to a 30-kilometer radius from each nuclear power plant, so the number of concerned local governments has increased. For this reason, some said that it will take a long time to obtain the consent of all local governments, and it is still uncertain which reactors will resume operation, and when they will do so.

The website addresses of the Nuclear Regulation Authority are listed below. (The status of water leakage from TEPCO's Fukushima Daiichi Nuclear Power Plant is also provided on this website.)
http://www.nsr.go.jp/ (Japanese)
http://www.nsr.go.jp/english/ (English)

There has been concern over possible power shortages now that nuclear power plants that supplied more than 30% of Japan's electricity before the earthquake have all been shut down. But so far none of the major problems predicted, including power failure or scheduled blackouts, have not occurred. Electricity demand usually rises in winter due to heating and other needs, but the national government expects to be able to prevent power shortages again this winter by requiring businesses and households to save electricity, on the basis of its forecast of demand and supply of electricity assuming zero nuclear power generation.

Some people say that if the power supply can satisfy demand without the operation of nuclear power plants, then they will no longer be necessary. However, the shutdown of nuclear power plants has increased fuel costs for thermal power plants, which have operated at full capacity as an alternative energy source. As a result, Japan is forced to shoulder an increasing cost for fuel and also to face the problem of growing carbon dioxide (CO2) emissions.

According to a report on the country's total energy supply and demand (preliminary figures) released by METI, Japan's dependency rate on fossil fuels, such as oil and natural gas, was 92.1% in fiscal 2012. It had been 34 years since that figure exceeded 90% (in fiscal 1978). The highest dependency on fossil fuels so far was at 94% (recorded in fiscal 1973). Japan learned from the experience of the oil crisis and promoted the use of a variety of energy sources. But today the country's dependence on fossil fuels is again growing rapidly, due to the growth in dependence on natural gas (by 20.4%) and oil (by 4.7%) as alternatives to nuclear power, while Japan's dependence on nuclear power dropped by 94.4% from the pre-quake level.

Regarding the country's energy demand in fiscal 2012, the spread of energy conservation efforts helped reduce electricity demand by 8% and fuel oil demand by 4.1%. By sector, energy demand in the industrial sector decreased by 5.5% while in the residential sector it decreased by 5.3% compared to the fiscal 2010 level (before the Great East Japan Earthquake), indicating that both businesses and households have been working to save energy.

Since Japan's self-sufficiency for fossil fuels is almost nil, the country depends on imports for almost all its fuel. Meanwhile, as prices are rising globally, the costs that Japan needs to pay for them also continue to rise.

According to estimates announced by METI in October, the total fuel cost that Japan's nine electric power companies are supposed to pay in fiscal 2013 will increase by 3.6 trillion yen ($36.7 billion, calculated at 98 yen per U.S. dollar) compared to the fiscal 2010 level (before the Great East Japan Earthquake) solely for the purpose of ensuring alternative energy sources to nuclear power. Here's the cost breakdown: increases of 1.7 trillion yen ($17.3 billion) for liquid natural gas, 2.1 trillion yen ($21.4 billion) for oil, and 0.1 trillion yen ($1 billion) for coal; and a decrease of 0.3 trillion yen ($3 billion) for uranium for nuclear power.

The estimated total fuel cost (including both the cost for alternatives to nuclear power and some other factors) of the nine power companies for fiscal 2013 was 7.5 trillion yen ($76.5 billion), an increase of 3.9 trillion yen ($39.8 billion) from the fiscal 2010 level. Of the increase, more than 90% was due to the nuclear power plant shutdown. In this context, there are loud voices, mainly from the industrial sector, that high electricity prices could weaken Japan's international competitiveness and that nuclear power plants should be brought online again as early as possible.

Meanwhile, METI has revealed that the nation's total CO2 emissions due to energy consumption for generating electricity, fueling vehicles, etc., increased by 2.8% from the previous year to 1.207 billion tons, which marked a third consecutive year of increase. This is because, while total energy consumption has decreased from the pre-quake level, fossil fuel consumption has increased over the same period.

The 19th United Nations Framework Convention on Climate Change (COP19) will be held in Poland in November 2013. Former Japanese Prime Minister Yukio Hatoyama of the Democratic Party adopted the medium-term goal of reducing greenhouse gas (GHG) emissions by 25% in 2020 from the 1990 level. Meanwhile, current Prime Minister Shinzo Abe of the Liberal Democratic Party believes that achieving this goal will be impossible, and in January 2013 ordered a revision before COP19.

Of the total amount of GHGs emitted in Japan, CO2 accounts for about 95%, of which 94% is emitted as a result of energy use. In this sense, the choice of energy sources is directly linked to CO2 emissions, and thus it is not acceptable to consider energy policy and anti-global warming policy separately.

Regarding the government's energy policy, a committee was set up after the earthquake to formulate a new basic energy plan, and I was a member of that committee. But then the Liberal Democratic Party was returned to power, and most of the anti-nuclear members were replaced (I am no longer a committee member). And now, a newly-established committee is discussing the plan.

The basic energy plan is supposed to deal with the country's energy supply system, but METI has adopted a stance of being unable to set a midterm GHG emissions reduction target. Citing that the prime requirement to resuming the operation of nuclear plants is the Nuclear Regulation Authority's review to make sure they meet safety standards, METI says, "We cannot determine the proportion of nuclear power of total energy," or "If we set up a high emissions reduction target to tackle global warming, the proportion of nuclear power will have to go under careful review."

Meanwhile, the Ministry of the Environment (MOE) has worked to set out the target, saying, "Without having a definite target, Japan cannot negotiate with the world." In this situation, a council to deliberate the target has been set up, for which METI and the MOE jointly serve as the secretariat. In the council, however, members from METI, who insist that it is difficult to set out a new target, and those from the MOE, who insist that the new target should be set out, often collide with each other. For this reason, deliberations are adjourned for a while, and after they are resumed, their gaps in opinion remain unchanged, further hampering the progress of their deliberations.

In this context, it is doubtful that Japan will be able to set out the target before COP19 in November, and environmental non-governmental organizations (NGOs) and others are also feeling a heightened sense of crisis. In this situation, some media reported on October 1 that the Abe administration had begun to adjust Japan's GHG emissions target for 2020 to a reduction of around 6% or 7% from the 2005 level (note: no longer the 1990 level). At a press conference on the same day, Chief Cabinet Secretary Yoshihide Suga denied this, but some believe that amid the deadlock and confrontation between the two ministries, the prime minister's office may have exerted its influence on this issue.

Since Japan's total GHG emissions increased between 1990 (the base year of the Kyoto Protocol) and 2005, this reduction target of "6% or 7% from the 2005 level" means that Japan's emissions could actually increase from the 1990 level. Environmental NGOs are raising their voices against this, saying that they cannot accept a weaker reduction target than Japan had under the Kyoto Protocol. It is difficult to predict how this situation will evolve and be resolved.

We have great hopes for energy sources that will make it possible to compensate for the shutdown of nuclear power plants; to prevent an increase in fuel costs for thermal power generation; to avoid dependence on imports of energy sources, which are so vulnerable to situations overseas; and to prevent large CO2 emissions which lead to global warming. The sources we need are renewable energy sources.

In Japan, a feed-in-tariff system (requiring utilities to buy electricity generated from renewable energy sources at a fixed rate from small power producers) was introduced in July 2012, and since then the use of renewable energy has been gradually but steadily growing. Japan needs to start almost from zero to promote renewable energy; thus regretfully, it will take a little more time to have renewable energy grow into a pillar that steadily sustains Japan's energy supply.

Japan's Feed-in-Tariff Scheme Kicks Off!

In the next issue of our Newsletter, JFS will introduce the current situation of renewable energy in Japan. Please stay tuned.

Written by Junko Edahiro