Japan Should Join the Global Trend Toward Decarbonization
Teruyuki Ohno Executive Director, Renewable Energy Institute
The international transmission project to deliver renewable energy from Canada to New York will start off
The year 2018 will mark the commencement of construction of an international transmission line to deliver renewable energy from the Province of Quebec in Canada to New York, a major power consuming area. The purpose of this project is to achieve 50% renewable electricity by 2030, a core target of climate change measures in the State of New York. The project also aims to secure a power source that will replace Indian Point Energy Center, a nuclear power plant located 40 km north of New York City and to be shut down in 2021.
This project, called “Champlain Hudson Power Express,” will install a high-voltage direct current transmission line which runs from Quebec via the bottom of Lake Champlain and the Hudson River for a total length of over 500 km. Construction will start in 2018, and power supply via the line is planned for 2021.
Adjacent to the State of New York, the Commonwealth of Massachusetts also has an ongoing project to supply 1 GW of renewable electricity from the Province of New Brunswick in Canada to the Boston area by installing a 600-km submarine power cable under the Atlantic Ocean. This project will also allow renewable electricity to replace Pilgrim Nuclear Power Station, which will shut down in June 2019.
In these projects, expansion of renewable energy plays a central role in addressing climate change and replaces nuclear power. It would be fair to say that these projects symbolize the growing global movement toward energy transition.
Renewables become central to climate change measures
Despite the Trump administration’s announcement of withdrawal from the Paris Agreement, COP23 held in Bonn in November showed that the global movement toward a decarbonized society had been accelerating. What was impressive was that many American companies and local governments established a coalition called “We Are Still In” and participated in COP instead of the Trump administration. The coalition set up their own large pavilion in the conference venue, and held daily events where leaders from California, New York, and other states as well as major American companies such as Walmart, Bank of America, Microsoft, and Coca-Cola promoted their climate change efforts.
As introduced above, renewable energy deployment is expanding as central efforts against climate change at the state government level. The private sector is also active in promoting similar efforts. In the United States, more than 100 companies participating in Renewable Energy Buyers Alliance (REBA) aim to use their purchasing power to develop an additional 60 GW of renewable energy by 2025.
While the COP was being held, the International Energy Agency (IEA) released World Energy Outlook 2017. According to the estimation of global average annual net capacity additions by type of power source from 2017 to 2040 shown in this report, 160 GW of renewable energy will be added per year, while only 17 GW of coal-fired power plants will be added. Moreover, annual addition of nuclear power will be no more than 4 GW, although it was once touted as “clean power source with no CO2 emissions” as if it could serve as a main player in climate change measures.
Dramatic price decline has boosted massive deployment of renewable energy
What lies behind these expanded roles of renewable energy is continuous and dramatic decline of prices. When a solar PV project realized a price of 2.42 cents/kWh in an auction conducted in Abu Dhabi in September 2016, the world was surprised at the low price. A year later, however, an auction in Saudi Arabia in October 2017 received a bid of 1.78 cents. Wind power also achieved a record-low bid of 1.77 cents in Mexico in November 2017. In areas with favorable conditions, solar PV and wind power can now generate electricity at an incredibly low price of less than 2 cents/kWh.
Even in areas whose natural environment is not particularly favorable, a price of several cents is now possible. Renewable energy has become a power source cheaper than fossil fuel and nuclear power in many countries and areas around the world.
Japan should join the global trend toward decarbonization
Since last year, the Japanese government has discussed revision of the Basic Energy Plan and the long-term energy saving strategy toward 2050. In these discussions, claims persisting in legacy technologies such as nuclear and fossil fuel have still been repeated, trying to foster baseless distrust of renewable energy.
On the website of the Agency for Natural Resources and Energy, nuclear power has been publicized as a power source cheaper than fossil fuel and renewable energy since last autumn, citing data in 2015 which estimated the nuclear power generation costs to be 10.1 yen/kWh. However, this estimation assumed the construction costs of a nuclear power plant to be not more than half of those in new construction projects in progress in the United States and Europe. If the estimation were based on the construction costs equivalent to those projects, the nuclear power generation costs would be around 14-15 yen, higher than that of fossil fuel. Japan is susceptible to special risks such as massive earthquakes and volcanic eruptions. In such a country, how could a nuclear power plant be constructed at costs not more than half of those in the United States and Europe? This point has remained unexplained.
In contrast to these old-fashioned discussions by some national government officials, the year 2017 witnessed the start of new efforts to develop renewable energy in the private sector in Japan. As of January 2017, no Japanese company had joined RE100, an initiative by companies committed to 100% renewable electricity. However, three companies, Ricoh, Sekisui House, and ASKUL, have joined it in the past year. Many other companies, universities, and local governments are strengthening various efforts to use more renewable energy.
If Japanese companies are not allowed to freely use renewable energy at lower costs in the domestic market, they will lose their competitiveness in the global market where decarbonization is advancing. In 2018, the Renewable Energy Institute will promote efforts to accelerate transition from nuclear and coal-fired power to renewable energy in collaboration with various companies, local governments, and other organizations. We will also demonstrate the feasibility of international grid connection in Asia and present a vision for energy transition as in Europe and North America for the purpose of expansion of renewable energy deployment and reduction of power costs.