10 Questions for Understanding the Current Energy Situation
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JAPAN'S ENERGY 10 questions for understanding the current energy situation Energy How much energy can Japan supply independently? Security How are electric power rates changing? Economic Efficiency What is carbon neutrality? Environment What steps are being taken to ensure a stable energy supply and safety? Safety What is the government’s basic energy policy? What innovations is Japan working on to achieve decarbonization? Innovation Is Japan advancing the introduction of renewable energy? Renewable Energy Is Japan advancing the reconstruction of Fukushima? Reconstruction of Fukushima Is nuclear power generation necessary? Nuclear Power Energy How much energy efficiency has Japan achieved? Efficiency Ministry of Economy, Trade and Industry Agency for Natural Resources and Energy Use this QR code to view the article. 1. Energy Security Changes in Energy Self-Sufficiency Ratio Q How much energy can Japan supply independently from domestic resources? A In 2018, Japan’s self-sufficiency ratio was 11.8%--lower than other OECD countries. Comparisons of primary energy self-sufficiency ratios among major nations (2018) 700.3% Renewable geothermal, wind, solar.etc. energy 320.0% Hydro 175.8% electric Nuclear power Natural gas Crude 97.7% oil 70.4% 55.1% Coal 37.4% 27.4% 16.0% 11.8% 5.3% No. 1 No. 2 No. 3 No. 5 No. 11 No. 16 No. 22 No. 29 No. 33 No. 34 No. 35 Norway Australia Canada USA UK France Germany Spain South Korea Japan Luxembourg Source: Estimates for 2018 from IEA “World Energy Balances 2019”, except for data for Japan, which are confirmed values of FY 2018, derived from “Comprehensive energy statistics of Japan”, Agency for Natural Resources and Energy. * The ranks in the table are those of the 35 OECD member countries. Energy self-sufficiency ratio in Japan 2010 Self-sufficiency ratio 20.3% 2018 2 011 Self-sufficiency Self-sufficiency ratio ratio 2017 Self-sufficiency % 2016 % 2015 Self-sufficiency ratio 11. 6 2012 2013 2014 11. 8 Self-sufficiency ratio % Self-sufficiency Self-sufficiency Self-sufficiency ratio 9.5 ratio ratio ratio % % 8.2 6.7% 6.6% 6.4% 7.4 Primary energy sources: Primary forms of energy, including oil, natural gas, coal, nuclear power, solar power, and wind power. Energy self-sufficiency rate: The percentage of the primary energy resources required for people’s daily life and economic activities which can be produced or acquired in their own country. Q What sources of energy does Japan depend on? Japan is largely dependent on oil, coal, natural gas (LNG), and other fossil fuels imported from outside Japan. Following the Great East Japan Earthquake, the degree of dependence on fossil fuels increased A to 85.5% in FY 2018 in Japan. Trends in the mix of the primary energy supply in Japan Renewable energy(*) Hydro electric 8.2% Renewable energy(*) Renewable energy(*) Hydro electric Nuclear power 4.4% 4.4% 3.5% 1.0% Hydro electric 0.6% Nuclear power 3.3% LNG 1.6% 2.8% Coal Nuclear Coal Coal power 16.9% 22.7% 25.1% 11.2% LNG FY 1973 FY 2010 22.9% FY 2018 (year of 1st oil LNG (before (most recent year) crisis) 18.2% Great East Japan Earthquake) Oil 75.5% Oil 40.3% Oil 37.6% Dependency on Dependency on Dependency on % % % fossil fuels 94.0 fossil fuels 81.2 fossil fuels 85.5 Source: “Comprehensive energy statistics of Japan”, Agency for Natural Resources and Energy. * The sum of the values shown may not be 100% in some cases due to rounding of values. 1 * Renewable energy here, including geothermal power, wind power, and solar power, but not hydroelectric power, includes unused energy. Resource Procurement Status Q What countries does Japan import fossil fuels from? Japan depends on the Middle East for around 88% of its crude oil imports. For LNG and coal, although A dependence on the Middle East is low, Japan still relies on imports from Asia and other overseas sources. Sources of Japanese fossil fuel imports (2019) ■ From Middle East ■ From Asia-Oceania ■ From Russia ■ From North and Central America ■ Others Others Others Others Ecuador 1.3% 2.7% 2.3% 0.6% USA 2.2% 約88% USA4.8% Canada 2.8% Russia 5.4% USA 3.8% Bahrain 1.0% Iraq 1.4% UAE Australia Iran 1.6% Russia 2.8% % 38.9% Russia Oman 1.8% 8.3 China 12% Saudi Arabia 2019 0.8% 2019 35.8% 2019 Kuwait Oman 3.7% total Japanese total Japanese total Japanese 8.5% LNG (natural gas) crude oil imports : coal imports : Qatar imports : Indonesia Approximately 1.09 % Approximately 110.92 Qatar 11. 3 Approximately 77.33 12% 8.8% billion barrels million tons million tons Australia Papua New Guinea 4.8% 68% UAE Malaysia Indonesia Brunei 12.1% 29.7% 5.6% 5.4% Dependence on Dependence on Dependence on % % % imported Crude oil 99.7 imported LNG 97.7 imported Coal 99.5 Source: “Trade statistics of Japan”, Ministry of Finance (The degree of dependence on sources outside Japan is derived from “Comprehensive energy statistics of Japan”.) Efforts to secure the stable supply of resources: Japan is strengthening its relationships with the Middle East countries that are its main sources of crude oil. Aiming to increase the amount of LNG in the market, which is low compared to crude oil, Japan is also diversifying its supply sources, and working for further acquisition of resource rights and interests. Q What kinds of mineral resources are used? As an example, the lithium-ion batteries that are used in electric vehicles require rare metals such as A lithium, cobalt, and nickel. Japan depends almost 100% on imports for its mineral resources. (Japan depends 100% on imports for the following 3 minerals.) Global annual production of important rare metals Others 1.9% Zimbabwe 2.1% The Philippines 3.3% Cuba Argentina 2.5% 8.3% Others 14.8% Others 23.3% Indonesia China 9.7% 29.6% Lithium Cobalt Nickel Austraria (2019) Austraria 3.6% (2019) (2019) 54.5% Democratic Republic of Austraria 77,000 140,000 the Congo 6.7% 2,700,000 tons tons 71.4% tons Chile 23.4% Canada Russia 6.7% The Philippines 4.4% 15.6% New Caledonia Russia 8.1% 10.0% Lithium, Li Cobalt, Co Nickel, Ni It is the lightest metal in the periodic table and it has It is a ferromagnetic white metal, less susceptible to It is most commonly used in stainless steel and high energy density. Due to those features, it is now oxidation than iron, and stable with acids and alkali. It heat-resistant steel as an alloy combined with a crucial raw material for producing lithium-ion is most frequently used in positive electrodes of chrome or other metals, and is useful in a wide range batteries mounted in electric vehicles or as power lithium-ion batteries installed in mobile phones, of the industries from coins to electronics. A nickel sources for mobile devices, such as laptop computers. laptop computers, electric vehicles, and others. compound is used in a positive electrode of nickel-hydrogen batteries and lithium-ion or other batteries. Source: USGS “Mineral Commodity Summaries 2020” Efforts to secure the stable supply of mineral resources: The government has developed the Act for Establishing Energy Supply Resilience, which permits the revision of the JOGMEC Act. It can enhance support for risk capital, i.e. funding and debt guarantee, to the mining development business (upstream) and refining business (midstream) in order to secure a stable supply of mineral resources. JOGMEC Act: This is the Act on the Japan Oil, Gas and Metals National Corporation, which stipulates the scope of business for the JOGMEC. 2 2. Economic Efficiency Changes in Electric Power Rates Q How are electric power rates changing? Electric power rates have been rising since the Great East Japan Earthquake. The rates declined from A FY 2014 to 2016 as a result of falling oil prices, but they are rising again. Changes in average electric power rates Crude oil CIF price (Yen/kWh) (Yen/kl) 26 80,000 25.5 25.0 24.8 24 24.3 24.2 70,000 23.7 22.4 60,000 22 22.3 Around 25% increase Homes Around 22% 21.3 increase 50,000 20 20.4 Crude oil 18.9 CIF price 40,000 18 17.5 17.7 17.3 17.0 30,000 16.6 16 15.7 15.6 20,000 14.6 Around 38% increase Industries 14 Around 25% 13.7 increase 10,000 12 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019(FY) Source: Created based on monthly reports of generated and received electric power, and financial materials, of electric power companies. Crude oil CIF price: Transaction price consisting of the import price plus related costs, such as transport cost and insurance cost. Factor 1: Fuel prices Fuel prices have an effect on electric power rates and energy cost. The past decline in crude oil prices and the current situation Japan imported LNG price Japan imported International crude oil price WTI International crude oil price WTI (left axis) (USD/MMBTU) Coal price (USD/barrel) Japan imported LNG price (right axis) (* Million British Thermal Units) (USD/ton) 140 Japan imported Coal price (right axis) 22 300 130 Arab Spring 20 120 Prices of LNG that Japan imports are generally linked to crude oil prices 18 250 110 (reflected in 3-4 months). 100 16 200 90 The production reduction 14 agreement by OPEC and 80 non-OPEC oil producers 12 70 150 10 60 50 8 100 40 US shale oil boom Decade since 2010: Since the start of the “Arab 6 30 Spring”, crude oil prices have hovered around 100 USD due to geopolitical risks in the Middle East and 4 50 20 North Africa regions.