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Feature: A decade after Fukushima crisis, Japan at crossroads for energy mix

Highlights

Energy supply resilience increases after 2011 earthquake

2030, 2050 energy mix under review as Japan targets carbon neutrality

Moving to procure hydrogen, ammonia fuel supply

Tokyo — Ten years have passed since the Great East Japan Earthquake struck offshore Fukushima, exposing Japan's vulnerability in energy supply from nuclear power plants to refineries, and pushing it to be more resilient against supply disruptions while mapping a pathway to carbon neutrality in 2050.

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The devastating magnitude 9 earthquake in the northeast on March 11, 2011 and subsequent tsunami shut more than 18 GW of nuclear and thermal power generation capacity, including Tokyo Electric Power Company's Fukushima-1 and Fukushima-2 nuclear power plants, as well as shutting one third of the country's refining capacity of 4.52 million b/d at the time.

The massive power outage forced Tepco to carry out rolling blackouts in its service areas for 10 days from March 14, 2011. The refinery outages caused a severe oil product shortage in the eastern region that prompted Japan to release supplies from its privately-held reserves.

While some earthquake-hit power plants and refineries restarted earlier than others, Tohoku Electric's Haramachi coal-fired power plants and Cosmo Oil's fire-hit Chiba refinery did not restart until 2013.

Taking lessons from the 2011 earthquake, Japan will make every effort to ensure stable energy supply regardless of situations, Minister of Economy, Trade and Industry Hiroshi Kajiyama said March 11.

"Because of frequent natural disasters in our country, it is vital to develop energy supply systems that are strong against disasters as well as having such resilience as making speedy restoration from disasters," Kajiyama told the strategic policy committee at METI's advisory committee for natural resources and energy.

"In the wake of the earthquake disaster, we believe we have significantly enhanced domestic supply chains," Ryo Minami, director-general of oil, gas and mineral resources at the METI, told S&P Global Platts.

"We have implemented measures against tsunami at every refinery, as well as having installed 15,000 emergency generators at service stations, which had often been suspended from earthquakes," Minami said, adding that one out of every two service stations in the country could now maintain supply during a power outage.

Related story: A dozen power plants, refinery shut in Japan after strong earthquake (14/02/21)

Nuclear restarts

Only nine nuclear reactors have been restarted in Japan under new regulatory standards introduced in 2013, with 21 nuclear reactors having been decommissioned after the 2011 earthquake; it had 54 operable reactors at the time.

With the three nuclear reactors that were under construction prior to the earthquake, Japan could still operate up to 36 reactors after necessary approvals.

Japan's nuclear power, which supplied 25% of total power generation in fiscal 2010-11 (March-April), slid to 6% in fiscal 2018-19, according to METI data. Gas-fired power generation rose to 38% of fiscal 2018-19 total power generation from 29% in the fiscal year ended March 31, 2011.

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"Our focus of fuels policy in the aftermath of the earthquake was to secure alternative energy as nuclear power generation halts," Minami said. "We opted for LNG and considerably increased it."

Japan's total LNG imports, which stood at 70 million mt in 2010, jumped 12.3% year on year to 78.5 million mt in 2011 and rose to a record high of 88.51 million mt in 2014, according to Ministry of Finance data.

Following nuclear restarts since 2015 after the period of complete shutdown, Japan's LNG imports have slowed down. LNG imports fell 3.9% year on year to 85 million mt in 2015 and fell further to 74.5 million mt in 2020, MOF data showed.

LNG spotlight

LNG, which has increased its significance in Japan's energy mix since the 2011 earthquake, came under the spotlight in January as being among the factors causing power shortages in the face of robust demand during severe cold spells in the country.

"Security of gas supply is a particular concern, as demonstrated by the shortages in gas supply for the power sector in January 2021, resulting in purchases of spot cargoes at record high prices - even higher than after the Fukushima accident in 2011," the International Energy Agency said in its Japan 2021 Energy Policy Review on March 4.

The gas shortage came as a surprise to many market participants, as there was little transparency on gas stocks in the country, the IEA said, adding that there was no obligation for power utilities to store LNG ahead of winter demand periods.

"More frequent reporting of gas stocks should be helpful," Keisuke Sadamori, the IEA's director of energy markets and security, told Platts. "Currently gas stock levels are reported with a three-month delay [in Japan]."

Related story: Impact on LNG fundamentals limited from recent Fukushima earthquake: sources (16/02/21)

Ahead of the country's peak winter power demand season, Japan's LNG stocks for power generation stood at 2.19 million mt at end November 2020, down 11% month on month, according to the latest METI data released Feb. 26.

Asked about Japan's needs for introducing LNG stockpiles as a result of the power shortages in January, METI's Minami said it was unlikely Japan would introduce LNG reserves because of economic difficulty, unlike oil.

"However, we believe it would be reasonable for LNG users to have a little more stocks as among the private sector's response," Minami added.

The recent gas shortage highlights the importance of ensuring electricity security in Japan, where the grid is isolated and the country relies on LNG imports, the IEA said.

Related blog: How the Fukushima crisis led to a revolution in LNG trading

Energy mix

Consolidating power grids should be among Japan's top priorities to prepare for major earthquakes, as well as for boosting renewable power generation as the country targets 2050 carbon neutrality, Nobuo Tanaka, the IEA executive director at the time of the 2011 earthquake, told Platts.

Citing the Great East Japan Earthquake as well as a magnitude 6.7 earthquake that rocked Hokkaido in September 2018, which led to a blackout in the northern island, consolidating the grids was needed for energy security, said Tanaka, who is currently chairman of the steering committee of the Innovation for Cool Earth Forum, or ICEF.

"For instance, it would be practical that the 50 Hz eastern Japan, which has less power plants than the west, should adjust their power frequency to 60 Hz used in the west," said Tanaka, adding that such a change could be implemented by introducing a dual generator at the time of generator replacements over 10-15 years.

Consolidating the power grids will be essential for Japan to expand its renewable power share in the energy mix to 50%-60% by 2050, said Tanaka, who was referring to a METI proposal for the country's current review of the Strategic Energy Plan.

Under that 2018 plan, Japan aims to boost its share of renewable power generation to 22%-24% by fiscal 2030-31 from 17% in fiscal 2018-19.

Commenting on the 2030 target, Shin Hosaka, commissioner of METI's agency for natural resources and energy, said March 4 that Japan was focusing on solar and wind power for the renewable increase.

"We are in the midst of reviewing the 2030 number in the Strategic Energy Plan, and we are discussing how much higher a number we could target," Hosaka told an IEA press webinar, while noting the challenges of limited available flat land for solar power and surrounding deepwater for wind power.

While METI has not released its new 2030 energy mix plans, its 2050 energy mix plan includes hydrogen and ammonia accounting for about 10% of the power generation mix, up from zero currently.

The idea also notes nuclear as a carbon-free source, together with fossil fuels, carbon capture, utilization and storage or CCUS, and carbon recycling accounting for 30%-40% of the energy mix.

Japan's pursuit of 2050 carbon neutrality will require a balance of meeting immediate energy needs and ensuring supply for the future amid rapidly changing energy landscapes.

While noting fossil energy accounts for roughly 85% of the country's current primary energy supply, Kajiyama said that stable procurement of fossil fuels would continue to be important, even when the country was targeting carbon neutrality.

"After all, we will ensure stable supply for daily lives and industry while we will take the challenge of this transition by lowering transitional costs as much as possible," Minami said. "This is our new fuels policy and resources diplomacy approach, under which we will ensure traditional oil and gas supply as well as securing hydrogen and ammonia from abroad."

Platts Atlas of Energy Transition