The Japanese economy had to face an unprecedented challenge after the Great East Japan Earthquake. Since Koyama (2013) provides an excellent analysis of the energy situation in Japan, I can add just a few comments.
As Koyama (2013) emphasizes, the previous contribution to the energy mix from nuclear power plants was replaced, after the tsunami, by a huge increase in fossil fuels purchased on international markets. Liquefied natural gas (LNG) imports, in particular, increased to probably around 90 million MT in 2013. Imports of LNG are quite diversified geographically. The cost of these additional LNG imports is very high. A partial return to nuclear power in the present power energy mix seems very likely.
Imports of crude oil and petroleum products for power generation also rose substantially after the shutdown of the nuclear plants, being about 4.4 million Bbl. d−1 in 2012. Crude oil imported for power plants is used for direct burning, of course a waste of raw materials and an additional source of greenhouse gases. If Japan had succeeded in the past to consistently limit the direct burning of oil, they had to revive it, due to the electricity demand growth, even by using old power plants.
The incremental CO2 emissions resulting from the additional and unavoidable use of fossil fuels have increased by 15% in 2012, compared with the 1990 (Kyoto Protocol) levels. These emissions will decrease when some nuclear plants are re-started.
Different scenarios are being envisaged regarding the future contribution of nuclear power in the energy mix, without any final plan yet adopted. Whether the contribution of nuclear power will materialize as a contribution of 15% or 25% (or more?) will be important for electricity prices, particularly for industry. The contribution of fossil fuels, particularly LNG, in the energy mix will remain very substantial until 2030 and later. Alternative sources of energy, for example, photovoltaic and wind power, increase slowly on the market, or even to be industrialized (methane hydrates), not to mention geothermal power, which could be developed more.
Japan will most likely start importing LNG produced from shale gas from British Columbia around 2017/2018, at a cost that is likely to be lower than the current cost of other LNG imports. Later, imports from Russia's conventional gas and liquids and from Australia will also increase.
Imported today mainly from the Middle East (80% or more), liquid hydrocarbons could also become geographically more diversified, as is the case for mainland China.
The development of the gas and power industries have actually been engineered and managed in Japan by the private sector (gas and power companies) within their own territory at a huge cost. There are currently 29 LNG import terminals (with another five to come soon) and an impressive number of thermal power plants and LNG tankers. Electricity rates are comparatively higher in Japan than in other developed countries, and the Ministry of Economics, Trade and Industry (METI) initiated a deregulation policy a few years ago to trigger competition and to lower prices in the electricity market.
What is the future of deregulation in Japan? The development of Independent Power Producers (IPPs) is a real challenge, due to the dominant position of the large power companies, particularly in the distribution (network management) sector.
Surprisingly, if we exclude gas piping in the largest metropolitan areas (Tokyo, Osaka, Nagoya) and those between Sendai, Niigata, and soon Toyama, there is still no independent main gas trunkline distribution network supplying Honshu and Kyushu, not to mention Hokkaido and Shikoku. This is a remarkable difference when compared with Japan's neighbors, Taiwan, South Korea, and China, or other industrialized countries, for example, France, where governments and national companies have spent considerable time, money, and effort to cover their territories with a network of pipelines transporting gas to municipalities and industries.
A structural reform would allow for the creation of an extensive, independent network of gas pipes in Japan (useful in the case of emergencies like the March 11, 2011 earthquake), and an independent electricity network management system.
A new and independent Nuclear Regulatory Authority (NRA) was created by law in June 2012. This new and extremely important institution has been given the authority to approve the re-start of nuclear reactors. The NRA maintains close contacts with similar nuclear safety authorities in other countries like the USA, France, the UK, and Canada.
Japan's Institute of Energy Economics has shown that on the assumption that 26 nuclear reactors are re-started, the maximum case they envisage, imports of fossil fuels would be reduced by 1.8 trillion yen, CO2 emissions would be reduced to 98 million tons, and the final effect on price of electricity would be about 2 yen/kwh. The effect on Japanese economy would, therefore, be considerable.
The option of restarting nuclear plants remains, of course, second to the goal of improving and enforcing safety standards. New safety measures defined by NRA will be enforced as from mid-July 2013. As the procedures to allow the restarting of nuclear plants is now well defined, the authorization process may now start. Already several power companies have registered their applications for re-starting about 10 power plants in total with the NRA.