Energy in Japan after Fukushima -Nuclear vs Coal vs Natural Gas not Renewable- Dec 9th 2015 CEE annual meeting Hisanori Nei Professor National Graduate Institute for Policy Studies Japan rd th Japan is the 3 largest Economy and consuming 5 largest volume of energy After Fukushima(2011) , energy consumption has decline 4 consecutive years. Last 3 years , Japanese economy has recovered by the Abenomics In 2014, House sector shows most rate of reduction in energy demand Primary Energy Supply by country mtoe 3500.0 Final Energy Consumption & GDP 18.00 540 3000.0 16.00 520 2500.0 14.00 500 2000.0 12.00 480 10.00 1500.0 8.00 460 1000.0 6.00 440 4.00 500.0 420 2.00 0.0 0.00 400 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 China US Russia India Japan Canada Germany Brazil Industry Business Home Transpot GDP(Real2005)TY GDP(Nominal) It result in constant increase increase of electricity tariff. constant in result It since time 1965. first the It’s supply. hadnonuclearpower we 2014, In 100% 20% 40% 60% 80% EJ 0% 10.00 12.00 14.00 0.00 2.00 4.00 6.00 8.00 1994 Oil 1995 Oil PRIMARY ENERGY SUPPLY BY 1994 1996 1995 Coal 1997 Sources Primary Supplyby Energy Coal 1996 1998 1997 1999 Natural Gas Natural 1998 Natural Gas Natural 2000 1999 2001 SOURCES 2000 2002 2001 2003 2002 Nuclear 2003 2004 Nuclear 2005 2004 2005 2006 Hydro 2006 2007 2007 2008 Hydro 2008 Renewable 2009 2009 2010 2010 2011 Renewable 2011 2012 2012 2013 2013 2014 2014 Natural Gas (LNG) has been major alternative power sources. Thanks producers especially Qatar for the generous increase of LNG export to Japan. GOJ concluded its energy mix at 2030 (July 2015) Energy demand Primary energy supply 489 million kl Self- Renewable energy 13 to 14% sufficiency Economic growth rate 1.7%/year Nuclear power 24.3% 361 mi kl 10 to 11% 50.3mkl Electric Final energy consumption 15%(13%) Natural gas power 25% 326 m kl 18% Electric power 28% Coal 25% Heat, gasoline, Heat, town gas, LPG 3% gasoline, etc. town gas, 75% etc. 72% Petroleum 30% 2013 2030 2030 (Actual result) (After energy conservation measures) values are approximate 5 Japan is heavily depending on imported crude from ME Crude Oil Import by countries 600 100.0 90.0 500 80.0 70.0 400 60.0 300 50.0 40.0 200 30.0 20.0 100 10.0 0 0.0 1960 65 70 75 80 85 90 95 2000 05 10 13 Saudi Iran UAE other ME China Indonesia Rossua Others ME% Power demand Power source composition 1,278 billion kWh 196.1 billion kWh (Total generated energy) 20%(17%) Energy conservation Geothermal 1.0 to 1.1% Economic growth 17% 1,065 billion kWh 1.7%/year Biomass 40%. 3.7 to 4.6% Renewable energy Renewable energy Wind power 1.7% 19 to 20% 22 to 24% Solar power 7.0% Nuclear power Nuclear power Hydroelectric 17 to 18% Approx. 20 to 22% 8.8 to 9.2% Electric Electric power power 966.6 980.8 LNG LNG 22% 27% billion kWh billion kWh Coal Coal 22% 26% Base load ratio: 56% Petroleum 2% Petroleum 3% 2013 2030 2030 values are approximate 7 Basic Act on Energy Policy (June 2002) <Objectives> Securing of Stable Supply (Article2) Utilization of Market Mechanisms(Article4) Environmental Compliance(Article3) <Responsibility of Stakeholders> National Government(Article 5), Local Government(Article6), Business(Article 7), Citizens (Article8).Mutual Cooperation(Article9) <Mandate/Obligation of National Government > /Legislative arrangement, Fiscal or Financial arrangement if needed(Article10) /Report to the Diet(Article 11: White Paper) /Strategic Energy Plan (Article 12: Strategic Energy Plan) /Promotion of International Cooperation (Article13) /Dissemination of Knowledge Regarding Energy (Article 14) 8 Major Change around the time of the Accident(Strategic Energy Plan) TEPCO’s Fukushima Accident and subsequent to NPS a stop Concerns over serious damage caused by the TEPCO’S Fukushima Nuclear Accident and the Safety of Nuclear Power Generation Outflow of National Wealth and increased supply instability due to higher dependency on fossil fuels Rapid increase in Greenhouse gas emissions in Japan Exposed defects related to supply systems, including power interchange and emergency supply between eastern and western Japan Reduced confidence in the government and business operators involved in energy supply Change in the demand trend-increased introduction of cogeneration and changes in power saving actions Higher electricity bills due to a change in the power source mix. And the impact of the international regional differences in energy price on the macro economy, industry and household economy (by combination with the shale revolution) Shale Revolution Signs of a change in the global energy supply-demand structure caused by the shale revolution in North America Turmoil in MENA region after “Arab-Springs” Change in the geopolitical structure of resource-supplying regions, including instability in the Middle Eastern and North African regions. The Strategic Energy Planth The Strategic Energy Plan (First) Oct. 7 2003 (Background) /TEPCO’s Falsification Scandal---Subsequences to 17 NPS shut down /Kyoto Protocol ratified (June 2002) th The Strategic Energy Plan (Second) Mar. 9 2007 (Background) /Oil Price Increase---Demand Shock /Kyoto Protocol Effective (Feb. 2005), First Commitment Period start 2008 /New National Energy Strategy (May 2006) ---Nuclear Renaissance th The Strategic Energy Plan (Third) June. 18 2010 (Background) /Administration Change from LDP to DP /Oil Price Spike and fluctuate /25% CO2 emission reduction proposal by PM of Japan (Sep 2009. UN) There are several challenges to overcome for achieving the policy target 110 /The target of Energy Conservation is extremely high. 100 ・・・ /The share of Renewable and Nuclear Political Message 90 /Power Market Reform・・・Uncertain /Coal vs Natural Gas ・・・ Fuel Price 80 /Nuclear 70 1970-1990 1990-2010 2012-2030 60 0 5 10 15 20 GOJ need to review its Strategic Energy Plan in every 3 years by Law. /Last Strategic Energy Plan was published on April 2014. /In fact, the amendment of the plan has been done every 3 – 4 years. /Next 3 years, there should be some progresses to create more concrete plan . Historically, between 1960 and 1980, actual energy consumption had been lower than planed energy outlook. From late 80s , it had been difficult to lower energy demand than planned outlook by 2008. Primary Energy Supply 1200 1000 800 600 400 200 0 1965 1968 1973 1975 1977 1980 1982 1985 1986 1989 1990 1992 1995 1996 1999 2000 2005 2010 2013 2020 2030 Feb-67 Jul-70 Aug-75 Jun-77 Jun-77 Aug-79 Apr-82 Nov-83 Oct-87 Oct-90 Jun-94 Jun-94 Jun-97 Jun-97 Jul-01 Jul-01 Mar-05 Mar-05 Mar-05 May-08 May-08 May-08 Aug-09 Aug-09 Aug-09 Jul-15 actual Do we have more rooms to improve energy efficiency? 450 600 Primary energy supply per GDP unit of each 400 Real GDP country（（（2011））） 1973→2013 500 350 2.5 Times 22.5% 9.0 （82 million kL） 8.0 300 400 7.7 16.4% 20.6% 7.0 （ ） 250 76 million kL 6.2 9.2% 300 6.0 5.7 5.7 5.1 5.2 200 14.0% 5.0 8.9% （51 million kL） 150 200 4.0 65.5% 3.0 100 2.5 2.5 2.0 2.0 1.7 100 1.4 50 43.0% 1.0 1.0 1.1 1.1 1.0 0.8 （158 million kL） 0 0 0.0 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Current electricity system ・Partial liberalization : retail competition for over 50kw Negative aspects of regional monopoly were revealed customers by 3.11 ・Retail players : 10 big GEUs(vertically integrated, regional 1.Lack of system to transmit electricity beyond monopoly), PPS, etc regions. ・Situation is… 2.Little competition and strong price control ・Share of non-GEU power producer and supplier : 3.6% 3. Limit in digesting the change in energy mix (cf. ・0.6% of the total retail market sales is transacted at JEPX renewables) Decision on Electricity System Reform in 2013 ・The Cabinet decided to execute the Policy on Electricity System Reform on April 2, 2013 Objectives: /Securing the stable supply /Suppressing electricity rates to the maximum extent possible /Expanding choices for consumers and business opportunities Process: A bold reform will be steadily carried out step by step focusing on the 3 agendas: /Cross-regional Coordination of Transmission Operators was established on April 2015 /Full Retail Competition starts at April 2016 (regulated tariff expired by 2020) /Unbundle the transmission/distribution sector by 2020 Supply Share of Natural Gas is varied by countries. Japan maintain the largest volume of Import. After the Fukushima Nuclear Accident, Japan increase its NG import from 75Mt to 90Mt/year If NPS resume as expected, import volume will decrease to previous level. Supply Share by Sources - Gas Production 100% mtoe 800.0 Natural Gas Import by countries BCM 90% 700.0 140.0 80% 120.0 600.0 70% 100.0 500.0 60% 80.0 50% 400.0 60.0 40% 300.0 40.0 30% 200.0 20% 20.0 100.0 10% - 0% - Pipelin Import LNG import Oil Natural Gas Coal Nuclear Energy Hydro electric Renew- ables Gas Production Import Fuel Price Changes in Japan (CIF) /Fuel Price difference make difficult to increase Natural Yen/tkcal 8 Gas Power Units 7 /Utilities consider to build new NG Power Unit as well 6 as Coal ones.