The provisional FY 2040-41 power generation mix comprises renewables at about 40-50%, thermal power at around 30-40% and nuclear power at about 20%, compared with renewables at 22.9%, thermal power at 68.6% and nuclear power at 8.5% in FY 2023-24.
The provisional FY 2040-41 share of thermal power, however, does not include a breakdown of each power generation source, such as coal, LNG and oil, nor does it present an explicit share of hydrogen and ammonia in the proposed power generation mix.
The proposed FY 2040-41 thermal power share is inclusive of such decarbonization measures as hydrogen, ammonia, or carbon capture and storage, Atsushi Kodaka, METI's director of Energy Strategy Office, told reporters separately.
Mixed views
Commenting on the draft FY 2040-41 mix, Takeo Kikkawa, president of the International University of Japan, told S&P Global Commodity Insights that it is "meaningless", adding that it will not be able to serve as a basis for companies deciding on investments.
Kikkawa -- who was for many years previously involved in the formulation of the Strategic Energy Plan as a member of METI's advisory committee -- questioned whether companies would be able to buy LNG on long-term contracts based on this draft mix, given the difficulty of estimating natural gas demand as well as LNG demand for power generation.
"The Strategic Energy Plan, which had long acted as a judgment material for investment, failed to fulfill its role this time -- this is the biggest feature in a nutshell," Kikkawa said.
The draft Strategic Energy Plan, meanwhile, recognized the importance of thermal power to balance intermittency in renewables, as well as keeping Japan's focus on securing sufficient power generation capacity while phasing out insufficient coal-fired power generation volumes.
"With LNG in particular being placed as a practical step for transition as well as the importance of government working together with the private sector to secure necessary long-term LNG contracts to be prepared for such risk as soaring prices and supply disruptions, we see this positively as a company," a JERA spokesperson said.
The draft energy policy has also placed natural gas as "an important source of energy even after realizing carbon neutrality" amid expected advancement of decarbonizing gas, as well as its expected use as feedstocks for hydrogen.
A spokesperson for Tokyo Gas said that the draft strategy sees natural gas as being necessary in the mid-to-long term, alongside Japan's intention to ensure LNG supply with the private sector, adding that the company intends to follow the policy direction.
The draft Strategic Energy Plan also notes that Japan intends to bolster its LNG supply chain for ordinary and emergency situations by considering ways to boost LNG storage and reloading capacities.
With the country's policy direction pursuing economically rational transition with a prime focus on stable energy supply, "we see this will support our ensuing investment decisions as well as for our business continuity," an INPEX spokesperson said.
The current 6th Strategic Energy Plan calls for non-fossil fuel power supply sources to account for roughly 60% of the country's total electricity mix by FY 2030-31, compared with a 24% share in FY 2019-20.
Under the plan, Japan expects renewable energy to account for 36-38% of the country's electricity generation mix in FY 2030-31, with the introduction of 1% hydrogen/ammonia and 20-22% nuclear power, totaling 57-61% of the non-fossil fuel power supply.
It envisages LNG comprising 20% of the FY 2030-31 power supply sources, with coal accounting for 19% and oil for 2%.
