A Brief Recent History of Japanese Nuclear Power
…[T]he Kyoto move should be seen in the domestic context of Japanese policymaking under the [ruling Democratic Party of Japan]. (5) We argue that Japan’s problem is the political economy of vested interests in this policy area rather than the fine print of the Kyoto Protocol. Indeed, Japan's domestic opponents of Kyoto are not aiming their obstructionist efforts at the Protocol alone, but more generally at the use of compulsory targets and rules. And they are not doing this on the basis of an objective determination of the overall costs and benefits, for Japan, of taking a leading role in reducing CO2 and other greenhouse gas emissions, ramping up the use of renewable energy, and otherwise achieving low-carbon growth.
Rather, these vested interests are protecting their turf and their own bottom lines. They include monopoly electrical utilities. These actors have the domestic market cut into ten fiefs and want to protect that dominance against competitors and energy alternatives that might threaten their plans to expand nuclear power. The vested interests also include carbon-intensive industries such as cement, steel, and other industries. They are averse to any rules that might impose costs on them, even if such might be in their own long-term benefit through enhanced competitiveness. Together with an accommodative economic bureaucracy, these interests have long been accustomed to crafting their own voluntary commitments, or, at the very least, deflecting pressure for compulsory targets by making them so low as to be meaningless. They want to go back to the comfortable status quo that prevailed before regime change, and are making significant headway towards that end.
The Prize
The political economy of Japan’s energy and environmental policy needs to be seen against the backdrop of rapidly expanding threats and opportunities. The former include accelerating climate change as well as the rising risks and costs of such conventional energy sources as coal, oil, natural gas and nuclear. These often overlapping threats (e.g., fossil fuel use exacerbates the climate problem) have spurred many governments to action. Smart action can reduce vulnerability to price shocks and other negative externalities associated with reliance on conventional energy, especially imported fuels. Smart energy and environmental policy also holds forth the opportunity to gain an expanding share in the rapidly growing green energy economy. Over the past year, as Japan’s new national government has backtracked on most of its energy and environmental commitments, its Chinese, German and other competitors have bolstered their own policies for leading the ongoing energy-environmental revolution…. (6)
Let us look more closely at Japan’s structure of incentives to act. The first and most obvious incentive is that Japan relies on oil for 44 percent of its primary energy. It also gets over 90 percent of that oil from the unstable Middle East. Japan also uses a lot of coal, since in 2008 just over 60 gigawatts of its slightly more than 280-gigawatt power generating capacity was coal-fired, and the country used just under 33 percent of the OECD total consumption of 174.3 million tons of coking coal. (7) Virtually all of this coal is imported as well, from suppliers who of late are struggling to meet demand in the face of infrastructure bottlenecks, more frequent natural disasters, water constraints and other issues. Japan’s significant consumption of natural gas and uranium are also fraught with uncertainty and price problems, especially as rapidly growing countries such as China and India compete for these finite and geographically concentrated resources.
…Japan’s post-oil shock policies included massive support for nuclear power, (8) and it has grown into a powerful vested interest at the core of the country’s ten regional electrical monopolies. As a result, the pre-DPJ energy and environmental policy elite were betting heavily on expanding nuclear power as the answer to the problem of power supply as well as GHG emissions cuts. (9) As concerns about climate and conventional energy costs mounted in the early 2000s, nuclear power emerged as the favorite alternative. Thus the 2010 Basic Energy Plan aims at making nuclear power the key driver in Japan’s electricity supply by raising its role to about 50 percent of electricity supply by 2030. The authorities plan to realize this objective by constructing nine new nuclear plants by 2020 and at least fourteen by 2030. (10) The nuclear lobby has much of the energy R&D budget locked up (11) and has the support of broad swaths among the political and bureaucratic elite in the central government. They see nuclear power as the only realistic option for reducing dependence on fossil fuels and cutting emissions, and are also keen on making it a major export business.
Hence, one more reason for Japan’s post-2000 slacking off in promoting renewables was that there was a favored alternative power source. Another was that the big carbon-intensive (steel, cement and the like) business community gained influence in the policymaking process. (12) No matter the image of Japan as a high-tech, green nirvana, the peak industry association, Nippon Keidanren, has long promoted carbon-intensive industries. They have a powerful influence on energy and environmental policymaking, especially in an era of weak governments. Moreover, Keidanren’s chair or vice-chair is by convention drawn from the nuclear-focused utilities. This fuses the interests of the utilities and their major corporate customers, who share the conviction that alternative energy is unreliable and costly, and that there is no realistic alternative to the status quo. This combination of tightly fused organization and significant clout of incumbent interests has enabled the business community to reject targets that it does not like.
Japanese Nuclear Power Abroad
…At the end of 2009, Japan lost out to Korea in a nuclear export deal to the UAE, and also to Russia on a deal with Vietnam. These losses became a strong spur to a narrow-minded nationalist impulse that found its expression in the “all Japan” framework for promoting nuclear exports. The culmination of this was seen right after the Obama Administration held its Nuclear Security Summit in Washington on April 12-13 of 2010. In June 2010, Japan was holding bilateral negotiations on nuclear exports to India, not a party to the Nuclear Nonproliferation Treaty. PM Kan Naoto had promised leadership towards a “world without nuclear weapons,” but failed to explain his dealings with India, including how it would not pose a threat of proliferation. Far from being a realistic strategy for a new growth area, greasing nuclear sales with yet more public sector money and foreign-policy effort is extremely risky both in terms of its economics and its implications for international politics.
Even the IEA, a strong supporter of nuclear power, does not expect it to increase much as a supplier of global energy needs. (13) And as the American investor coalition, Ceres, notes in a July 7, 2010 study, utilities that deploy nuclear power facilities are taking on investment risks that make them increasingly unattractive to investors and financial institutions. In this respect, it is important to note that the Ceres group represents USD10 trillion in institutional investor funds. Global investors increasingly believe that the conventional energy sector is a risky bet, and are shifting their investment strategies accordingly. (14) With its flawed focus on nuclear as the only serious alternative energy source and energy-generation export, Japan risks pricing itself and its products out of both the green and the conventional global markets….
Clearly, Japan's environmental and energy policymaking has to move towards a 21st-century paradigm. It has to shift from nuclear power and fossil fuels to renewable energy and energy conservation. It also has to shift from an undue concentration on large firms and afford more scope for innovative small firms. And it has to move away from rigid top-down structures to more fluid networks, from heavy industry to a focus on knowledge and the environment. Good public policy is essential to facilitating that transformation. But it is unclear whether the DPJ can return to its earlier commitment to smart, green goals and help realize Japan’s real promise.
(1) The COP acronym stands for the “Conference of the Parties,” which meets annually to work on the United Nations Framework Convention on Climate Change. On the conference and related matters, see the comprehensive overview at: http://unfccc.int/2860.php
(2) The December 10 BBC reported it as a “diplomatic assault on Japan in the hope of softening its resistance to the Kyoto Protocol”: link.
(3) The Protocol covers the period from 2008 to 2012, and has been ratified by 191 countries, though not the United States. It obliges 37 industrialized countries to reduce their CO2 emissions by an average of 5 percent relative to 1990 levels by 2012. There is as yet no international agreement on carbon emissions reductions to cover subsequent years. A concise description of the Kyoto Protocol and its mechanisms can be found here.
(4) This position was reported on by UPI on December 2, 2010.
(5) One could argue that most countries’ climate policies are dominated by incumbent energy interests, which focus their lobbying in national councils of power. Fossil fuels provide 86% of global energy, and their exploration, development and retail industries are the world’s largest and most profitable industry. Their products are also responsible for 60-70% of greenhouse gas emissions. Securing effective international agreement to ameliorate this destructive political economy is thus inherently difficult but imperative.
(6) Moreover, Japanese urban governments in Tokyo and Yokohama are seeking to implement, in their jurisdictions, some of the very carbon reduction, renewable and other policies that the DPJ is backing away from: link.
(7) See International Energy Agency, “Coal Information, 2010,” especially tables 5.1 and 5.3. Note that coking coal is used in making steel in blast furnaces, and at present has no practical substitute.
(8) On this, see Oshima Kenichi Saiseikanou enerugii no seijikeizaigaku: enerugii seisaku no guriin kaikaku ni mukete [ The Political Economy of Renewable Energy: Towards a Greening of Energy Policy], Tokyo: Toyo Keizai, 2010, pp. 36 and 44.
(9) As Gavan McCormack argues in “Japan as a Plutonium Superpower,” Japan can be considered “nuclear obsessed” due to its plan to put plutonium at the centre of its energy economy: link.
(10) On the plan, see the July 16, 2010 summary by the METI Energy and Resources Division.
(11) The World Nuclear Association’s December 2010 report on “Energy Subsidies and External Costs” shows that Japan’s fission R&D was 61.4% of total energy R&D for 2005: link.
(12) On the organization and scale of Japan’s carbon-intensive sector, see Morotomi Toru and Asaoka Mie, The Road to a Low-Carbon Economy [tei-tansoshakai he no michi]: Tokyo: Iwanami, 2010, pp. 16-24.
(13) The IEA’s 2010 “World Energy Outlook” sees nuclear power as going from 6% of global power production in 2008 to 8% by 2035: link.
(14) On these issues, see the summary of the report here.