- Polls show that 70% of respondents back turning off the #nuclear switch @michaelauslin
- Nuclear power accounts for 11% of Japan's total energy consumption & provides nearly 30% of electricity generation
- Likely scenario: Japan turns to the global energy markets for more oil and natural gas @michaelauslin
Japanese Prime Minister Naoto Kan, who faces the end of his political career due to his handling of the aftermath of the March 11 earthquake, tsunami and nuclear disaster, has decided to go out in a blaze of glory. Mr. Kan dramatically announced last month that Japan should end the country's reliance on nuclear power for electricity generation.
Further, his government has reaffirmed a 2009 plan proposed by his predecessor Yukio Hatoyama to cut Japan's greenhouse gases by 25% from 1990 levels, in part by using less coal. The prime minister's plans will either usher in the next global era of energy production, or it will destroy Japan's economy.
Mr. Kan has a lot of public support for his radical plan. Recent opinion polls show that 70% of respondents back turning off the nuclear switch. Social discontent with nuclear power has only grown in recent weeks with the revelation that beef from 3,000 cows registered unsafe levels of cesium radiation after eating contaminated straw near the site of the Fukushima nuclear power plant ravaged by the March 11 quake.
Meanwhile, thousands of displaced families continue to live in temporary shelters while workers try to stop completely the radiation leakage from Fukushima. Aging plants such as Fukushima are in vital need of safety upgrades. In a country where nuclear power has always been distrusted by a large proportion of the populace, the nuclear industry may not recover from this episode.
"No country in the world is considering an energy step as radical as Japan's."
Yet economic reality could derail Mr. Kan's audacious plan. Nuclear power accounts for 11% of Japan's total energy consumption and provides nearly 30% of electricity generation. Until the Fukushima disaster, Japan had planned to increase its nuclear power generation to 50% of all electricity demand. If all of Japan's 54 nuclear plants are taken offline, the country will have to find a substitute for the 265 billion kilowatt hours of electricity produced each year by nuclear plants.
No country in the world is considering an energy step as radical as Japan's. Germany comes closest with Prime Minister Angela Merkel's pledge to close the country's 17 nuclear reactors by 2022. But they produce "only" 133 billion kilowatt hours of electricity, or 20% of the country's total.
So Mr. Kan has no historical precedent anywhere else in the world to offer guidance on how best to implement such a shutdown, let alone the likely outcome. Consider just a few of the basic questions that would need to be answered at the beginning: How to balance consumer electricity demand with industrial needs; what kind of phase-in process for alternative sources of electricity is possible; and how to build new energy transmission infrastructure.
Mr. Kan's plan, to the extent there is a real plan, is to move to alternative energy sources linked together by a "smart grid" system. Many of these could be produced in comparatively small amounts, yet efficiently allocated according to as yet unknown metrics of demand. Renewable energy, solar power, hydro power and geothermal power all are offered as options for replacing nuclear energy.
Proponents of this plan note that Japan is already the world's most energy-efficient country. It cut its dependence on oil nearly in half starting in the 1970s, from 80% of total energy consumption to less than 50% today.
Yet for a country that is the world's third-largest generator of electricity, a rapid and wholesale abandonment of a significant energy source could devastate the economy if it is planned and carried out improperly. While their development should be aggressively pursued, there is no indication that alternative sources of energy can make up the difference. Hydroelectricity accounted for only 8% of total capacity in 2008, while wind and solar registered barely 2% and produced a meager four gigawatts of electricity.
Prime Minister Kan may be reacting to current public anger at the Fukushima disaster, but how will he or any successor respond if no appreciable alternate supply is found when nuclear plants are taken offline? Consumer demands for electricity in Japan's humid summers won't be satisfied by yet more planning.
A likely scenario instead is that Japan would turn to the global energy markets for more oil and natural gas. That would not only drive up global energy prices but would also reverse Japan's decades-long trend of reducing its dependence on foreign oil. Businesses and energy utilities would quickly move to secure supply wherever they can, regardless of the goal of being more energy efficient.
All this will make energy more expensive for Japan's consumers. Already the government is talking about adding subsidies, funded by consumers, to defray the cost of making utilities buy electricity from more expensive alternative sources. That would make consumer goods more expensive and, combined with likely higher oil prices, would depress consumer demand just when Japan needs more robust domestic consumption. It would also result in higher prices for Japanese goods abroad at a time when an ever-strengthening yen already threatens the export sector.
To combine a nuclear shutdown with a 25% greenhouse gas cut would tax even the best prepared planners. But apparently both announcements were made off the cuff by two different prime ministers, with no advance preparation or notice.
That alone is enough to shake national and international confidence in Japan's government. Indeed, press reports this week indicate that the United States has asked Japan to be more specific about how its energy policy plans would affect economic activity and global energy markets.
Energy may become Japan's defining economic debate of the next decade. The country needs a serious national discussion, not political pandering or flights of fancy. It is not too much to say that the country's future depends on how that discussion plays out.
Michael Auslin is a resident scholar at AEI.