2010 Annual Report on Energy (Japan’ s “Energy White Paper 2010” )
June, 2010 Ministry of Economy, Trade and Industry Government of Japan 2010 Energy White Paper
Energy White Paper Contents
The Energy White Paper is a legal white paper reported annually to the Diet Part 1 Challenges for energy and future policy following a cabinet decision based on Article 11 of the Basic Act on Energy Section 1 Country-by-country comparison through quantitative evaluation Policy. of energy security The white paper is usually made of Part 1 which sets themes and topics in Chapter 1: Responses by major consuming countries to energy security on accordance with the recent situation, analyses the policies and introduces major events trends; Part 2 which shows domestic and overseas energy trends with the use of Chapter 2: Transition of the global energy demand structure graphsand data; and Part 3 whic h lklooks bkback on the resource and energy Chap ter 3: Transition o f the energy security polic ies o f majtijor countries policies in the previous fiscal year. Chapter 4: Quantitative evaluation of comprehensive energy security Important issues in the subject fiscal year have been selected as the themes of Chapter 5: Direction of the measures for strengthening energy security in Part 1. For example, in the 2008 white paper, factors for the sharp rise in the Japan crude oil price up to 2008 were analyzed. Section 2 Trend of introduction and efforts toward the future expanded Objecti ve of the 2010 white paper (chllhallenges and dft future poli liicies on introduction of renewable energy energy) Chapter 1: Situation of renewable energy Chapter 2: Trend of introduction of renewable energy in Japan This white paper aims to transmit information particularly on the following 2 points. Chapter 3: Trend of introduction of renewable energy in major advanced countries (1) Country-by-country comparison through quantitative evaluation of energy Chapter 4: New policy deployment for expanding the introduction of security renewable energy With the growing need to respond to energy security and global warming issues when planning energy policy, the white paper aims to show the necessity and Part 2 Trend on energy direction of the energy policies from the viewpoint of energy security by Section 1 Energy trend in Japan diachronically analysing and comparing the energy security of major consuming Chapter 1: Outline of energy supply and demand countries. Chapter 2: Trend of energy consumption by sector Chapter 3: Trend of primary energy (2)Trend of introduction and efforts toward future expanded introduction of Chapter 4: Trend of secondary energy renewable energy The white paper explains the growing international interest in renewable energy Section 2 International energy trend while touching on trends on investment and business deployment. It introduces Chapter 1: Outline of energy supply and demand renewable energy introduction trends and the actual situation on renewable energy Chapter 2: Trend of primary energy in Japan and other major countries, as well as explaining the details of Japan’s Chapter 3: Trend of secondary energy policy measures including the two energy-related laws established in July 2009 and Chap ter 4: ItInternati onal compari son of energy cost s the viewpoints toward future dramatically expanded introduction.
Part 3 Status of measures taken on energy supply and demand in FY 2009 Date of the Cabinet decision
June 15 CbiCabinet dec iiision an d report to the Diet
1 I. Country-by-Country Comparison through Quantitative Evaluation of Energy Security
1. The fundamentals of energy security 2. Risk threatening energy security Energy security refers to being able to secure Geopolitical risk (Countermeasures: increase in self-sufficiency, diversification of import counterparts, energy in the “tit”“quantity” necessary for peopl‘le‘s divers ifica tion of energy sources, response t o suppl y di srup tion b y st ock pili ng, e tc.) lives , economic and social activities, and Political and military situations (wars, civil wars, embargos, etc.) of individual countries (resource national defense, etc. at affordable “prices.” producing countries and neighboring countries + countries near the transportation route) With changes through the years in the political International relations situation, economic/industrial structures, and Risk used as diplomatic tool (crude oil embargos, stopping of gas delivery via pipelines, etc.) risks threatening them, the environment around Resource nationalism (seizure/nationalization, levyypg increase, export regulations, etc.) the fdfundament tlals have also chdhanged. Scramble for resources among resource consuming countries [1] In the 18th century, the Industrial Revolution Other geopolitical risks dramatically expanded the use value of * In recent years, risk of terrorism, piracy, etc. has become apparent. energy resources for production & Geological risk (Countermeasures: increase in self-sufficiency, diversification of energy sources, etc.) transportation and germinated the strategic Reduction of reserves importance of energy resources Uneven dis trib uti on of resources [2] In the 20th century, energy was secured to Risk in domestic supply system (Countermeasures: enhancement of supply reliability, etc.) enhance national power and prosecute Reduction in equipment investment (aging of equipment) wars. Stagnant technological development [3] After the oil shocks, supply disruptions Supply and demand tightness risk (Countermeasures: increase in self-sufficiency, diversification of became a major risk and the key ppyolicy import counterparts, diversification of energy sources , etc. ) target was to minimize their effects. Market price risk (Countermeasures: international cooperation toward market stabilization, etc.) [4] In the 2000s, on top of supply disruption risks, avoidance of supply and demand Risk of natural disasters, accidents, strike, pandemic, etc. (Countermeasures: increase in self- tightness risk and minimization of their sufficiency, enhancement of supply reliability, response to supply disruption by stockpiling, etc.) effects have also challenged us. 3. Concept of quantitative evaluation
Indices (key indices) related to core elements among comprehensive Stage in the supply chain Key indices Supplementary indices energy security components are quantitatively evaluated. In addition, 1. Development and utilization of A. Primary energy self-sufficiency Utilization rate of power supply indices that can supplement key indices (supplementary indices) are domestic/semi-domestic energy (including nuclear power) facility also quantitatively evaluated. resource For evaluation , at each stage of the supply chain, specific key indices 2. Procurement of overseas B. Diversification of countries from Amount of direct investment and supplementary indices have been selected, from the viewpoint of energy resources, and risk which energy is imported into resource-producing understanding changes with age and country-by-country comparison. management of resource C. Diversification of energy source countries transportation D. Reduction of dependency on
Domestic choke points Resource procurement Domestic supply demand 3. Risk management in the E. Reliability in electric power supply Energy-related governmental Development and utilization of domestic/ semi-domestic energy resources Risk management domestic energy market R&D expenses DdtitDemand restraint in the domestic energy market Securement of overseas Risk management of energy resources resource transportation 4. Demand restraint F. GDP specific energy consumption GDP specific energy consumption at each sector 5. Response to supply disruption G. Response capability to supply Usable years of domestic Response to supply disruption disruption by stockpiling resources 2 I. Country-by-Country Comparison through Quantitative Evaluation of Energy Security
4. Evaluation of key indexes
A. Primary energy self-sufficiency B. Diversification of import counterparts Evaluation on import ◆ Evaluation on diversification (including nuclear power) counttterpart diversifi ca tion for of itimport counttterparts by Transition of self-sufficiency of primary energy crude oil and natural gas based on multiplying import quantity by (including nuclear power) of individual countries the import quantity (in the 2000s) country risk Herfindahl-Hirschman Index (HHI)
Crude oil China is rated high Crude oil Evaluation for China China since it has France which aggressively advanced promotes USU.S. diversification to the U.S. diversification to France Middle East, Asia, S. Korea Africa, etc. has been France Germany Britain U.S. China Japan S. Korea and Africa, etc. slightly lowered. France Germany Britain U.S. China Japan S. Korea Former S. Korea China Middle North Latin Soviet Europe Asia Oceania Africa Others Britain is rated low Evaluation for Britain East America America Union Japan since Europe Japan which highly 1970s 1980s 1990s 2000s Source: accounts for a high depends on Europe China had no record of importation in the 1970s. Germany Britain Source: percentage of the with low country risk It is important to promote diversification of import Britain imported crude oil. Germany improves. counterparts in order to strengthen energy security. China has diversified import counterparts to countries in France increased its self-sufficiency from 26% in Germany is rated Latin America and Africa while accepting certain country Natural gas Natural gas Evaluation for the 1970s to the current 50% or more by adopting medium since it Japan S. Korea Germany worsens measures for promoting nuclear power plants. risks. depends approx. Western nations have decreased dependency on the France 40% on former France reflecting Britain secured a high level of self-sufficiency by Soviet Union and dependency on the Middle East, while shifting import counterparts to S. Korea Japan former Soviet Union. promoting maintenance and increase of the neighboring resource-producing countries. However approx. 50% on Germany Europe. China Evaluation becomes production amount of domestic resource energy. some of such countries have certain country risks. better since country Britain China is rated low Britain China sharply increased domestic demand through In Japan, despite the decreased dependency on the since it substantially risk of Oceania is USU.S. industrialization and economic progress. It has Middle EtEast in the 1980s, dddependency on the Middle China solely depends on low. been a net importer of petroleum since 1993 and East subsequently increased. Expanded use of coal has U.S. Oceania. Germany of natural gas since 2006. increased its share in Oceania. C. Diversification of energy source D. Dependency on choke points Flow of petroleum and major choke points (Sauce: IEA World Energy Outlook 2004) Primary energy supply composition Primary energy supply composition (in the 1970s) (in the 2000s) Transition of choke point ratios for individual countries (Data in the 1970s to 1980s for China and S. Korea are not available) U.S. U.S. China China Japan Japan Britain Britain France France S. Korea S. Korea Germany Germany
ClCoal PtPetrol eum NtNatural gas NlNuclear HdHydroe lec titric GthGeothermal , RblRenewable energy France Germany Britain USU.S. China Japan S. Korea power new energy Source: IEA Energy balance of OECD Countries, Non-OECD Countries, 2009 edition 1970s 1980s 1990s 2000s Source China: Import statistics, Other countries: IEA Oil Information France strongly promotes nuclear power, while suppressing the ratios of coal-fired and petroleum-fired power generation. A choke point refers to a strategic point on a sea route or on water such as a straight or a canal that is strategically Germany promotes introduction of natural gas and nuclear important from the viewpoint of geopolitics, and economy and defense, etc. A choke point is, in many cases, used for power, replacing coal and petroleum. Currently, it is moving transporting a large quantity of energy and extremely vital for energy security. toward the phase-out of nuclear power and the expansion of The choke point ratio is a ratio of the total quantity of crude oil which passes a choke point with respect to the total the introduction of renewable energy. import quantity. The ratio can sometimes exceeds 100% because when a choke point is passed multiple times all the Britain promotes the expanded use of domestic natural gas. multiple times are calculated. Japan and S. Korea take measures to expand the utilization Decrease in Britain and Germany is remarkable. Among China, Japan and S. Korea, all of which have high of alternatives to oil, and particularly encourage diversification dependency, the dependency of China which has diversified import counterparts ranging from Africa and South of energy sources for power generation. America, etc. is relatively low. 3 I. Country-by-Country Comparison through Quantitative Evaluation of Energy Security
4. Evaluation of key indexes (continued)
E. Reliability in electric power supply F. GDP specific energy consumption G. Response capability to supply disruption IEA member countitries are promoting the Transition of days of stockpiling Annual power failure time per customer Transition of GDP specific energy consumption (Japan = 1.0) Equivalent establishment of stockpiling based on the day on the ground in individual countries agreement related to stockpiling. China clarified the establishment of state oil stockpiling in the 10th 5-year plan (2001 to 2005), and promotes its establishment. France, which has an energy dependency rate of 29% even in Europe, has a strong response capability to supply disruption.
France Germany Britain U.S. China Japan S. Korea Germany has a sufficient stockpile despite high dependency on Russia (39%). 1980s 1990s 2000s Both in Japan and S. Korea, with 80-90% France Germany Britain U.S. Japan S. Korea dependencies on the largest import Source: Japan Electric Power Information Center, Inc., “Overseas electric power industry statistics 2009”, Source: Federation of Electric Power Companies Japan France Germany Britain U.S. China S. Korea counterpart, the Middle East, their response capability to supply disruption by oil In Britain and the U.S., electricity deregulation caused Response capability at supply disruption of crude stockpiles are only 129 and 71 days, the selection of inefficient power sources and sluggish Specific energy consumption in advanced countries oil from the largest import counterpart respectively. investment in building new power supply facilities, etc. has improved due to low economic growth and Former Britain’s response capability to supply Accordingly, their power failure time is longer than that in population increase rates, changes in industrial Europe: Soviet Union: Latin other countries in the 2000s. America: disruption by oil stockpiling is approx. 80 structure, progress of introduction of energy saving days Middle days because it has as high as a 66% Power transmission and distribution facilities were days equipment, etc. East: established by large scale electric power supply days Middle Middle dependency on Europe and no mandatory Though the evaluation for China has improved Europe: East: East: businesses including EDF in France and E. On in days stockpile amount. China is on the way to Germany. As a result, the power failure time has been because of the expanding GDP due to recent days days days establishing state stockpiling, with a current fluctuating between approx. 30 to 50 minutes. economic progress, there is still a great difference response capability to supply disruption In Japan, general electricity utilities undertake obligations compared to other countries. France Germany Britain U.S. China Japan S. Korea being 93 days.
for supplying sectors for which retail sales are to be In S. Korea, specific energy consumption deteriorated 1980s 1990s 2000s Britain, the U.S. and China are capable of
regulated and for ultimately assuring the supply to due to negative growth caused by the Asian currency Source: , covering domestic consumption for a consumers subject to deregulation. Accordingly, the crisis. Estimation based on the days of stockpiling on the ground considerable period of time by domestic power failure time is generally low. crude oil in addition to their stockpiles.
5. State of energy security in individual countries Radar chart: Country-by-country comparison in the 2000s (assuming the OECD average is 100, any difference from the OECD average is converted into an index for each key evaluation. Ten points are given to the highest rated country, and scores for other countries are given on the relative evaluation .) Line graph: Increase and decrease in each key evaluation when a value in the 1970s or the oldest identifiable value is assumed as 1.0 Despite an decrease in dependency on the Middle East for petroleum after the oil shock, Japan dependency increased again in the 2000s, so did dependency on choke points. Primary energy self-sufficiency Diversification of import counterparts are ongoing for natural gas. Though dependency on (including nuclear power) Self-sufficiency Diversification HI of import Australia for coal is high, its country risk is low. counterparts of fossil fuel As a result of the expansion of the utilization of coal, natural gas and nuclear power as Diversification HI of energy Response Import sources alterna tives topetltroleum, Japan is hig hlhly ratdted in the country-bby-country comparison on to supply counterparts disruption Choke point risk reduction supply source diversification. The average power failure time is the second shortest after S. Korea. Because deregulation- Specific Power failure time consumption Choke induced competitive pressures that were weaker than those of western nations and because per GDP point Specific consumption per GDP of other reasons, liberalization in power distribution has been advanced since the 1980s. Response capability to oil supply disruption from the An expansion of the Law Regarding the Rationalization of Energy Use ( the Energy Diversification of largest import counterpart Conservation Law) established and enforced in 1979 has led to the application of the Power energy 1970s 1980s 1990s 2000s filfailure time sources regulator y scope from energenergy consuming manufact uring indu stries to the transportation, business, home electric appliance and housing sectors and the promotion of energy In the 1980s and thereafter, primary energy self-sufficiency increased through continuous conservation in individual sectors. promotion of nuclear power utilization. Since however Japan is poor in domestic energy Dependency on Middle East for petroleum is structurally high, and thus the response resources, it is rated low in the country-by-country comparison. capability to supply disruption by stockpiling is rated low in the country-by-country comparison. 4 I. Country-by-Country Comparison through Quantitative Evaluation of Energy Security
5. State of energy security (continued) in individual countries
France
Primary energy self-sufficiency (including nuclear power) Though France is poor in domestic fossil energy resources except coal, it increased its Diversification HI of import primary energy self-sufficiency by aggressively promoting nuclear power development at Self-sufficiency counterparts of fossil fuel an early stage. Diversification HI of energy Response Import sources to supply counterparts France has promoted diversification of import counterparts by nurturing powerful energy disruption Power failure time supply businesses such as GDF, EDF and TOTAL, and by strengthening its presence in the competition for acquiring resources. France imports from Europe, the former Soviet SpecSpecificific Specific consumption per GDP consumption Choke Response capability to oil Union, Africa, and Middle East in a balanced manner. per GDP point supply disruption from the largest import counterpart The power failure time is rated as medium. Monopolistic business conducted by Choke point risk reduction Diversification of (vertical axis on the right) vertically-integrated national and public companies is presumed to have been Power energy 1970s 1980s 1990s 2000s failure time sources advantageous in the aspect of capital investment.
Germany 2.5 20.0 15.9 The German government maintains a nuclear phase-out policy and promotes the Primary energy self-sufficiency 2.0 (including nuclear power) introduction of renewable energy. 3.9 15.0 1.8 Diversification HI of import Self-sufficiency counterparts of fossil fuel In Germany, the dependency on the Middle East for oil substantially decreased. The 9.1 10.0 1.9 1.5 1.4 Diversification HI of energy basic energy security strategy is to enhance a stable relationship with Russia, and as a Response 8.0 Import sources to supply 6.0 counterparts 10.0 result, dependency on former Soviet Union countries in fossil fuel imports has increased. disruption Power failure time 404.0 1.0 2.0 As for the natural gas supply, construction of a direct pipe line from Russia has been 1.0 0.8 Specific consumption per GDP Specific 0.0 5.0 committed to. consumption Choke 0.5 0.7 Response capability to oil per GDP point 0.6 supply disruption from the largest import counterpart Due to excess transmission capacity , the power failure time is relatively short. 6.1 6.4 1.0 Choke point risk reduction 0.0 0.0 (vertical axis on the right) Energy efficiency has been increased through the improvement of the energy demand Diversification of Power 5.8 energy 1970s 1980s 1990s 2000s failure time structure in the former East Germany. sources 8.2
UK 2.5 70.0 In accordance with the exploration and development of North Sea oil and gas fields, 60.1 Britain’s energy self-sufficiency ratio dramatically increased. Because production of oil 10.0 60.0 Primary energy self-sufficiency 2.0 (including nuclear power) and gas in North Sea is diminishing these days, however, the UK’s energy self- Self-sufficiency 1.9 50.0 Diversification HI of import 2.8 10.0 2.6 counterparts of fossil fuel sufficiency is expected to decline gradually. 1.7 Response 808.0 151.5 Diversification HI of energy to supply Import 40.0 Dependency on gas has increased because of the promotion of the utilization of 6.0 counterparts 1.3 sources disruption 4.0 domestic natural gas. In response to lesser diversified energy sources, the UK has 1.2 30.0 Power failure time 2.0 1.0 1.0 reevaluated the importance of nuclear energy and promoted renewable energy. Specific 0.0 consumption Choke 20.0 Specific consumption per GDP per GDP point Due to deregulation in the electricity market, suspensions and closures of power 0.5 0.5 Response capability to oil 10.0 10.0 supply disruption from the generation facilities have been accelerated. Thereafter, reliability in electric power supply 7.7 largest import counterpart 1.0 is a challenge. Diversification of 0.0 0.0 Choke point risk reduction Power energy (vertical axis on the right) 212.1 failure time sources 7.6 1970s 1980s 1990s 2000s In response to “the Energy PfPerformance of BildiBuildings Directi ve ” of the EU in 2002, energy efficiency in the residential sector has dramatically increased. It is more efficient than that in Japan.
5 I. Country-by-Country Comparison through Quantitative Evaluation of Energy Security
5. State of energy security (continued) in individual countries
USU.S. With abundant energy resources, the U.S. maintains relatively high self-sufficiency.
Primary energy self-sufficiency (including nuclear power) The U.S. is gradually shifting import counterparts from the Middle East and Africa to Diversification HI of import North America and Latin America. It imports resources from these 4 regions in a Self-sufficiency counterparts of fossil fuel balanced manner. Diversification HI of energy Response Import sources to supply counterparts Development and utilization of domestic coal and natural gas has progressed, and disruption Choke point risk reduction diversification of energy supply sources has been advanced. Power failure time Specific Though bu ilding of new nuclear power pltlantswasat astand still in the 1980s thereaft er, consumption Choke per GDP point Specific consumption per GDP the momentum of reviewing this stance has been building recently. Response capability to oil supply disruption from the The U.S. has an inferior capacity to invest in power transmission and distribution Diversification of largest import counterpart Power energy 1970s 1980s 1990s 2000s networks because of the small size of businesses particularly in local areas, on top of sources failure time electricity deregulation.
China
Primary energy self-sufficiency While China has abundant domestic resources and maintains high self-sufficiency, self- (including nuclear power) sufficiency dropped due to a sharp increase in demand in accordance with rapid Self-sufficiency Diversification HI of import counterparts of fossil fuel economic progress. Because of its high dependency on domestic coal, China faces Response Diversification HI of energy challenges in diversification of energy sources. to supply Import sources disruption counterparts Choke point risk reduction China, mainly lead by national oil companies such as CNPC, CNOOC, and SINOPEC has been aggressively promoting the acquisition of overseas interests, and diversified Power failure time import counterparts for oil to Russia, Viet Nam, Venezuela, and African countries. Specific Response capability to oil consumption Choke supply disruption from the Dependency on the Middle East for entire fossil energy supply is approx. 40%. per GDP point largest import counterpart Specific consumption per GDP Since in the 2000s, China has been promoting the building of state oil stockpiling bases. (vertical axis on the right) Diversifi- 1970s 1980s 1990s 2000s Currently, China is presumed to have secured an oil equivalent of 59 days. cation of energy sources
Korea 2.5 Primary energy self-sufficiency Because Korea is poor in domestic energy resources except lignite, dependency on 1.8 (including nuclear power) 2.3 2.0 1.9 imports of fossil fuel increased and energy self-sufficiency declined. Through the Self-sufficiency 1.7 Diversification HI of import Response 10.0 303.0 counterparts of fossil fuel promotion of nuclear power generation, the energy self-sufficiency ratio has been 1.7 to supply 8.0 1.5 Diversification HI of energy successful in that it has been maintained at the same level as that of Japan. disruption 6.0 Import sources counterparts 4.0 1.0 Choke point risk reduction As for natural gas, import counterparts have been diversified among the Middle East, 2.0 1.0 Specific 0.0 0.8 Power failure time Indonesia, and Australia, while dependency on the Middle East is still high. consumption Choke 1.0 point 0.6 per GDP 0.5 Due to the industrial structure in electric power generation, investment on facilities for 3.1 0.2 Specific consumption per GDP power transmission and distribution was sufficient, and power outage times are short. Response capability to oil 0.0 suppl y disru ption from the Power Diversification of Largest import counterpart 10.0 failure time 1970s 1980s 1990s 2000s energy 7.1 sources
6 I. Country-by-Country Comparison through Quantitative Evaluation of Energy Security
6. Viewpoints for future measures
Energy securit y refers to bein g able to secure ener gy in the necessaryypp amount at an acceptable price. Japp,an, with its poor 目指すべきエネルギー安全保障のかたち State of energy security to aim for domestic resources, needs to pursue securing a necessary amount and strengthening its resistance against situations such as increased resource prices, rising resource nationalism and others. Self-sufficiency自給率 1.8 10.0 (1) Enhancement of independent energy ratio including promoting independent development Response供給途絶 8.0 Import to supply 輸入先counterparts An appropriate business portfolio in the energy/resource supply chain should be constructed. The development of domestic disruption対応 6.0 resources and independently explored & developed energy & natural resources should be promoted,aswellas 434.3 4.0 2.7 2.0 construction of optimum production systems & the maintenance and strengthening of the domestic supply network. 0.0 GDPSpecific原単 チョーク consumption Choke per位 GDP ポイントpoint Significance of independently explored and developed energy and natural resources 10.0 0.2 Independent development of resources by Japanese エネル companies is likely to enable the stable acquisition of a certain 停電時間Power Diversification of failure time ギー源energy 9.3 amount of resources for an extended period, since the 7.2 sources Petroleum imppqort quantit y in times of emer genc y(y (unit: 10 thousand BD ) companies are directly engaged in production/operation. Examined by Agency for Natural Resources and Energy Independent development also contributes to strengthening a First oil crisis Gulf crisis Increase/ Increase/ wide range of mutually-dependent relationships with resource- Fiscal 1973 Fiscal 1974 Fiscal 1990 Fiscal 1991 producing countries, early detection of changes in supply and decrease decrease demand based on the policies of resource producing countries, Total import quantity and understanding the strategies of resource producing Crude oil under independent development countries/majors and technical trends, etc. Crude oil not under Independent development can help for reduce risks of independent development physical supply disruption and enhance the upstream development and the competitiveness of Japanese companies. Even at the time of oil shock or similar events, despite decrease in the entire supply amount, the import quantity of crude oil under independent development mainly in the Middle East increased, which has contributed to the securing of a stable supply in emergencies. (2) Promotion of support by supplying risk money in order to secure interest of Japanese companies Dependency on overseas procurement is unavoidable in order for Japan to secure a necessary amount of energy resources. It is important to pursue diversification of risks by diversifying the energy sources themselves and by diversifying import counterparts for each energy resource. When diversifying the import counterparts, it is necessary to take into consideration the country risk of each resource producing country. When promoting diversification of import counterparts through securing independent development, there are many cases where the energy resource interests which will be accessible in the future exist in countries/regions with relatively higher country risks. Such risks cannot be taken merely by the resource developing company, and it is necessary, asanation,to promote support by supplying risk money, risk taking with use of trade insurance, etc. or the establishment of appropriate risk management system, etc.
(3) Reduction of choke point risk and establishment of stockpiling It is impossible to completely avoid the choke point risk itself under the situation where overseas dependency for energy resources is high. Accordingly, it is necessary to promote international cooperation to ensure safe sea lanes, as well as to steadily establish state stockpiling of petroleum/petroleum gas in preparation for supply disruption caused by straight blockades in emergencies or the delayed supply of energy resources.
7 II. Trend of Introduction and Efforts toward Future Expansion of Renewable Energy
1. Growing international interest in renewable energy Renewable energy has been aggressively deployed targeting advanced countries in the Demand for renewable energy is expected to expand from now because of the hike fields such as photovoltaic, solar heat, and wind power, etc. Japanese companies are also ifin foss ilflil fuel pr ices due tito increase d energy deman did in emerg ing coun titries and the advancing efforts in joint-venture businesses with overseas companies and in business operations taking advantage of their technological advantages. Cases in which electric accelerated scramble for energy resources. utilities, trading companies, and manufacturers, etc. participate in overseas power [Prospects of increases/decreases in global energy demand] generation businesses also increased. [Examples of business being deployed by Japanese companies]
Prospects of increases/decreases in primary energy by energy source in individual regions Mitsubishi Heavy Industries, Ltd. (MHI): Sumitomo Corporation: Photovoltaic power generation (Spain) * Comparison between 2007 and 2030 in the case where the current demand growth rate continues Wind power generation (Britain) Sumitomo Corporation started operation of mega solar MHI and its motor section headquarters in Europe, Mitsubishi (large-scale photovoltaic) power plants in Tenerife Island in the Spanish Canary Islands, which have been aggressively Coal Power Systems Europe (MPSE), signed a introducing wind power and photovoltaic power generation China memorandum with the British government to recent years from the viewpoint of protecting environmental work for a demonstration and development resources. This is the largest power plant in the world with Petroleum project of offshore wind turbines with subsidies the output of 12.6 MW among the power plants operated India from the Department for Business, Innovation mainly by a Japanese company. Sumitomo procured Other Asian Gas and Skills (BIS). This is the first time for a Japanese photovoltaic panels manufactured by Sharp. countries manufacturer to enter the offshore wind turbine market. Nuclear power Middle East Hydroelectric Sharp Corporation: Mitsubishi Corporation: OECD countries Other Solar cells (Italy) Photovoltaic, solar heat and Sharp made a joint venture contract related to wind power (Spain) (renewable energy) business for manufacturing thin-film photovoltaic Latin America cells with Enel greenpower (EGP) and Mitsubishi Corporation is jointly developing STMicroelectronics, and a joint venture contract and operating a new energy power on idindepen dtdent power pro diducing bibusinesses w ith generation business with Acciona, which Africa EGP. owns new energy power generation facilities with an output of approx. 7 million Eastern Europe (Unit: million tons kW. and Russia converted into oil) NGK Insulators Ltd.: NAS cells (UAE) NGK received an order for a sodium-sulfur (NAS) battery Eurus Energy: * “Other” energy sources include biomass, waste, wind, geothermal, photovoltaic, solar heat, system with the output of 50 MW from the Abu Dhabi Water Wind power generation, etc. and Electricity Authority of the United Arab Emirates. Showa Shell Sekiyu K.K.: (Europe and America) tidal wave power. Operation of gas turbine electric generator has been made Eurus Energy, a joint venture company more efficient by leveling the electric load using energy Photovoltaic (Saudi Arabia) between Tokyo Electric Power Company and (Source) IEA “World Energy Outlook 2009” efficient NAS batteries with a high energy density. NGK is Showa Shell started a feasibility study with the Toyota Tsusho Corporation, will build and stud ying fut ure application to the Abu Dhabi mainland w here national oil company, Saudi Aramco, on asmalla small-scale operate new power generation plants with demand for electric power is expanding remarkably and to distributed power generation business utilizing solar the total output of 1 million kWs in the coming Investment started increasing dramatically around 2005 when a sharp increase large scale photovoltaic power generation. light in Saudi Arabia. 5 years. in fossil fuel prices started. Individual governments are aggressively increasing (Source) Created based on press releases of individual companies public spending in order to create employment and foster industries. Such Renewable energy not only serves as a countermeasure to global warming while enhancing investments triggered expanded inflows of private money to the renewable energy security, but also has features such as broad related industries and strong sector (which started decreasing in the latter half of 2008 due to financial crisis relationships with regional economies. Therefore, large positive effects both on economic and other reasons). growth and employment are also anticipated in Japan in relation to renewable energy. [Global trend of investment in renewable energy (by quarter)] * On the other hand, the fact has also been pointed out that imported products increased in Germany which rapidly expanded introduction of photovoltaic power recent years (share of (Unit: 1 billion dollars) Chinese products is 50%).
[Forecast of amount of global photovoltaic power [Forecast of domestic market size (photovoltaic)] generation to be introduced in FY2020 and FY 2030]
[Photovoltaic power generation industry] (Unit: GW)
(Market size of photovoltaic Related industries Cell and Silicon raw Various Non-ferrous metal power generation in Japan) materials module Electronic raw and raw parts Chemistry substrates materials materials Glass, ceramic engineering FY 2008 actual Steel Manufacturing System peripheral equipment Metallic products Photovoltaic battery manufacturer (heavy electric machinery equipment 500 billion yen manufacturers manufacturers /home appliance Machinery manufacturers manufacturers) Electronics and Cell Power collecting electricity boxes, inverters, Device advanced Building materials Photovoltaic linkage Transportation manufacturers battery modules photovoltaic protection equipment countries Building material-integrated devices, and Precise PV module bench batteries equipment Forecast for FY other Systematization 2020 photovoltaic House Photovoltaic General Engineering Heavy electric countries 1.5 trillion yen machinery builders battery contractors manufacturers makers manufacturers, power source manufacturers
Piping, installation, FY 2020 FY 2030 Piping, construction (Source) FY 2008 installation, Energy environment construction (Source) IEA 「World Energy Outlook 2009」 comprehensive Central Local Individuals Companies government IPP Power utilities strategic survey governments ministries (Source) Created based on UNEP SFEI “Global Trends In Sustainable Energy Investment 2009” 8 II. Trend of Introduction and Efforts toward the Future Expansion of Renewable Energy
2. Trend of introduction of renewable energy 3. New policy deployment for expanding introduction The actual achievement and future prospects related to the introduction of renewable energy in Japan are comparable to of renewable energy those in other major countries. On the other hand, the introduction of renewable energy always involves challenges such Measures for encouraging introduction in the world are roughly as unstable output, high costs, and installation constraints. So far, renewable energy has been introduced through clifidlassified into two systems, on top of subidibsidies. various measures within a certain potential. - RPS system (quantity-based regulations: requires electricity The stages of introduction and potential also differ greatly among major countries, depending on differences in geography and climate, retention and utilization conditions of resources, and social and economic scale, as well as other factors. It is companies to use at least a certain amount of renewable energy) important to promote introduction based on the various relevant conditions and characteristics of different types of - Feed-in-tariff law (price-based regulations: requires electricity renewable energy. [Representative characteristics of renewable energy] [Power generation cost for major energy source] companies to purchase renewable energy at a certain price) Even the IEA has pointed out that effective measures are different Considerable reduction in power generation cost is anticipated. Both residential and non-residential sectors Power Photovoltaic have great potential in the amount to be introduced. There are a wide range of supporting industries. generation cost depending on the cost difference from existing power sources. Power generation cost is higher than other power generation methods. (yen/kWh ) Since power generation cost is relatively low, the business is profitable. New technologies including offshore Cost power generation have also emerged. difference Wind power There are constraints on installation (wind conditions, natural parks, landscapes, bird strikes, noise issues, from etc.). Power generation costs are gradually increasing. 49 yen existing power Type of energy Effective policies Stable power generation is possible with matured technologies. There are abundant sources in Japan. supply Geothermal Constraint on installation (natural parks, hot spring regions, etc.) is large, and thus power generation cost will Small Hydroelectric Voluntary introduction likely gradually increase in the future. (matured technology)
Stable power generation is possible with matured technologies. There is a growing interest in middle and Credit system with Hydroelectric small-sized hydroelectric power generations. Wind power technical characteristics, Since constraints on installation are large, power generation costs will likely gradually increase in the future etc. being considered Costs differ greatly depending on types and utilization method. Photovoltaic power Feed-in-tariff system, Depending on the future direction on the support system, increases in import materials may increase and affect 8-22 yen gegenerationneration subssubsidiesidies the biomass industries in Japan. The imported materials may compete with power generation, heat utilization, 10-14 yen Biomass 8-13 yen and material utilization. 7-8yen 2nd generation bio Support for Biofuels need to be introduced in a sustainable manner while ensuring sufficient green house gas emissions 5-6 yen (next-generation investment cost technology) (subsidies, tax-exemption due reduction effects with LCA, energy security and cost reduction. Large to investment) Heat pump technologies used in hot water supply systems and air conditioners have international competitive Air thermal, edges. Photovoltaic Wind power Hydroelectric Thermal Nuclear power Geothermal Source: Created based on IEA earth thermal (large scale) (excluding (in case of LNG) “Deploying Renewables 2008” Initial costs are higher compared to combustion-type heaters and hot-water supply systems. small scale) Countries where an RPS system has been implemented (Source) Created based on materials by project Countries where a feed-in-tariff (FIT) law has been implemented team on renewable energy feed in tariff [Introduction status of renewable energy in major advanced countries (2007)] Countries where FIT has been partially implemented though an RPS system is mainly implemented. * Renewable energy, etc. refers to photovoltaic, solar heat, wind, hydroelectric, geothermal, biomass (woody biomass, general waste, biofuel, biogas), etc. (Source) Project team on an all-quantity buyback system of renewable energy (March 2010) Japan USU.S. BitiBritain France Germany SiSpain Italy l Japan has so far promoted the introduction of renewable energy Coal Petroleum Natural gas Nuclear power Renewable energy, etc. through the expansion of demand by supporting introduction, voluntary efforts by electric utilities to purchase surplus electricity, and the RPS system, and achieved a certain result. Primary energy supply composition As institutional measures to effect a dramatic expansion of (2007) introduction in the future, it is important to have the following viewpoints in addition to support for introduction, and innovative Self-sufficiency 18% Self-sufficiency 71% Self-sufficiency 83% Self-sufficiency 51% Self-sufficiency 41% Self-sufficiency 21% Self-sufficiency 15% technological development and demonstrations. It is necessary to Hydro Wind Solar light and Geo- Woody biomass, etc. Domestic waste (food scraps, etc.) Biofuels Biogas electric power heat thermal take effective measures such as regulations and support suitable for the characteristics of each energy source. Transition in introduction of (1) Establishment of a feed-in-tariff law in accordance with the renewable energy recently circumstances of Japan (unit: The Excess Electricity Purchasing Scheme for photovoltaic power convertditted into petroleum, started in November 2009 to promote the use of photovoltaic thousand tons) power. Currently, an all-quantity buyback program is being studied by the project team on an all-quantity buyback system for
Major • Buyback program • Buyback program renewable energy. • RPS (state)
Supplement: Supply composition of primary energy. The “transition in introduction of renewable energy” is created based on the statistics of the International Energy Agency (IEA). conditions, etc. (For Japan, this is created based on comprehensive energy statistics, etc.) For Japan, renewable energy is set to account for 10% of the primary energy supply (in 2020). < Basic Law for Prevention of Global Warming: Cabinet meeting, March 2010 > Solving institutional and social challenges such as by the On the other hand, the EU decides the ratio of the renewable energy with respect to final energy consumption base as the target index, and sets the ratio as 20% for the entire EU (2020). Future prospect (2020) for Japan, if calculated according to the same method as the EU, is expected to be approx. 20% (New and Renewable Energy Subcommittee, August 2009) expanded introduction of wind power generation (e.g. projects in a natural park). 9