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Japan pays lip service to nuclear phase-out

By: The Economist

Posted: 09/21/2012 2:24 PM | Comments: 0

Units five and six of the Fukushima Dai-ichi nuclear power station are seen through a bus window in Futaba, Japan. (AP Photo/David Guttenfelder, Pool)

With doubts running high about how long the Japanese government can survive, its decision last week to phase out nuclear power by the end of the 2030s looked half-baked. Sure enough, on Sept. 19 it dropped any pretense of a deadline, leaving open the possibility that at least two reactors under construction could operate until the 2050s.

The ambiguity has much to do with the general election which Prime Minister Yoshihiko Noda has promised to call soon. Polling indicates that, since the Fukushima nuclear disaster in March 2011, public opinion has turned firmly against nuclear energy. Big business argues, however, that Japan’s economy will suffer if the phase-out occurs too quickly. Local governors whose prefectures host nuclear-power plants also complain about the strategy.

For the time being, the government’s policy appears to be to pay lip service to a phase-out that it is too timid to implement, while also scrambling for alternative sources of energy. Even before the nuclear disaster, Japan was the world’s biggest importer of liquefied natural gas, and now it consumes nearly a third of global output. But ensuring reliable supplies, as well as securing a good price, is becoming a foreign-policy headache.

America is awash with cheap shale gas, but is divided on whether Japan should have access to it. Big Japanese trading firms have positioned themselves to turn American gas into LNG for export to Japan. First, though, they need approval from the Energy Department, since — remarkably — Japan still has no free-trade agreement with its close ally. Noda has pressed President Barack Obama for approval, but faces American opposition due to the environmental risks and from those who say that it will push up the domestic price of gas.

Recently Richard Armitage and Joseph Nye of the Washington-based Center for Strategic and International Studies argued that America should waive the restriction for Japan, saying that the two countries should be "natural-resource allies as well as military allies." In this election year, however, American politics are complicated. Taisuke Abiru of the Tokyo Foundation, a think tank, says that he expects that, if Japan wins approval, it will be for a "symbolic" amount of gas, at least at first.

There are other options. Australia is due to become Japan’s biggest supplier of LNG by 2020, overtaking Qatar. Canada is also promoting its export potential to Japan with the development of five proposed LNG terminals on its Pacific coast.

At a regional trade summit in Vladivostok this month, Japan attempted to improve relations with Russia, a neighbor with whom it has yet to sign a peace treaty ending the Second World War. Both countries have reportedly made soothing noises to each other about the possibility of compromise over four islands which the Soviet Union invaded in the last days of the war. Russia’s Gazprom and the Japanese government also agreed to promote the construction of a $13 billion LNG plant in Vladivostok.

As it is, Russia provides about a tenth of Japan’s LNG. President Vladimir Putin is eager to open up new LNG export markets in Japan and elsewhere in Asia, partly to offset weakening sales to Europe.

Still, Abiru says that considerable doubt hangs over an LNG accord with Russia, not least because it is not clear how expensive gas from the Russian Far East will be. Price is becoming an increasing consideration for Japan, because its energy imports have pushed the nation’s trade balance into the red.

That also helps explain the government’s indecision regarding nuclear power. Woolliness may be sensible economics, but it is bad politics nonetheless.

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