Gas 2023 Issue

Gas declines slowly In 2002, the Japanese government passed the Basic Act on Energy Policy. In 2003, the Ministry of Energy, Trade and Industry (METI) published the first Strategic Energy Plan (SEP). The 2018 5th SEP called for a policy of more nuclear to reduce greenhouse gas emissions while meeting energy security requirements. In 2021, the Japanese government announced a policy to achieve net zero by 2050. The 6th SEP called for a signifi - cant increase in renewables in the power mix, 60% more renewables than in the 5th SEP, which came out three years earlier (see Figure 2 ). In addition, the new plan included a nuclear renaissance that would more than triple the share of nuclear power in the power mix. Ultimately, the goal was to reduce greenhouse gas emis- sions by 46% compared with 2019 levels. This was to be achieved by reducing oil, gas, and coal power from 76% of the power mix in 2019 to 41% by 2030. Notably, gas remains an important part of the long-term power mix. The volume of gas consumed in the power sector will decline slowly and is not expected to disappear completely. However, the plan has significant challenges, not least the long-term reliance on nuclear power to achieve the goal of net zero emissions by 2050. The ability of Japan to increase its nuclear power will have a large impact on gas and LNG demand. Nuclear renaissance The Fukushima Daiichi Nuclear Power Plant lies on the northeast coast of Japan in Okuma in the province of Fukushima. After the Fukushima disaster of 2011, all nuclear power plants in Japan were shut down. Although restarts have happened since then, only 6% of electricity in Japan was generated via nuclear power in 2019, com - pared to 25% prior to 2011. Japan’s nuclear ambitions, therefore, must overcome the strong anti-nuclear lobby and the tarnished reputation of nuclear power post-Fukushima. Despite strong pushes to reopen the nuclear power stations, the approval process has been very slow.

system has not been attractive, especially when regional rivalries are considered. Unfortunately, in recent times, the two-grid approach has caused some difficulties. The Great Tohoku earthquake and tsunami of March 2011 affected the northeast coast, or the Tohoku region. Most of Japan’s power generation facilities are located on the coast for cooling water sup- plies, as well as the reliance on imported sources of energy. As a result, they were greatly affected by the devastating tsunami in 2011. The Fukushima Daiichi nuclear reactor was the most high-profile casualty of the tsunami. However, a total of 11 power stations were offline because of the earthquake, accounting for about 10 GW of capacity – all in the 50 Hz zone. The western region, which runs on 60 Hz, was unaffected. However, surplus capacity could not be routed to the 50 Hz zone because there was only 1 GW of interconnection capacity between the two grids at the time. This lack of interconnections between the different elec - tricity grids and the isolated demand centres has impli- cations for the infrastructure requirements of the future power grid. As higher levels of renewables are added to the power mix, vastly greater amounts of interconnection will be required to accommodate the intermittent nature of renewables. This challenge is made more complex by the two separate electricity frequency systems. greater amounts of interconnection will be required to accommodate the intermittent nature of renewables As higher levels of renewables are added to the power mix, vastly

90% 100%

6.7% 7.7% 6.0%

7.0%

12.1%

15.0%

8.8%

More renewables

80%

9.0%

More renewables AND nuclear

11.0%

More nuclear

70%

6.2%

21.8%

60%

6.0%

37.0%

21.0%

31.1%

50%

27.0%

28.0%

40%

20.0%

30%

32.0%

0 10% 20%

32.5%

26.0%

19.0%

6th plan (2021)

6th plan (low nuclear scenario)

Actual utility company plans 2022

Actual 2019

5th plan (2018)

Oil

Coal

Gas

Nuclear

Biomass

Hydrogen/ammonia

Hydro

Geothermal

Wind

Solar

Figure 2 Forecast power mix – challenges ahead

Gas 2023