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Recommendation on the revision of the Basic Energy Plan
Lead the Transition to a De-Carbonized Economy

8 September 2017

Recommendation on the revision of the Basic Energy Plan
Lead the Transition to a De-Carbonized Economy

Renewable Energy Institute issued a recommendation on the revision of the Basic Energy Plan which is now being discussed at the sub-committee under the Advisory Committee for Natural Resources and Energy of the Ministry of Economy, Trade and Industry (original Japanese version released on 5 September 2017).

Recommendation on the revision of the Basic Energy Plan
Lead the Transition to a De-Carbonized Economy

Renewable Energy Institute
8 September 2017

In the beginning of August, Ministry of Economy, Trade and Industry has started discussions on the revision of the Basic Energy Plan, at the sub-committee under the Advisory Committee for Natural Resources and Energy. In parallel, the newly established Study Group on Energy Situations has started discussions on longer-term strategies on energy policies.

The current plan formulated in 2014 stated in the beginning that it would “review the energy strategies mapped out before the Great East Japan Earthquake from scratch and minimize reliance on nuclear power as much as possible,” while it defined nuclear power and coal-fired power as “important base-load power sources.” As this shows, the plan maintained the framework of old energy policies, which are out of touch with the world trend of rapidly growing renewable energy.

Three years have passed since then, and energy transition is accelerated even faster globally. In many countries and areas, solar PV and wind power have become more inexpensive power sources than nuclear power and coal-fired power. More than 100 world-leading companies announced that they would switch their power source to 100% renewable energy. Many developed countries, mainly in Europe, aim to shut down their coal-fired power plants. The grand plan to connect the grids across the world and meet all power demands by renewable energy has now come into play.

The government’s documents submitted to the two recent meetings under the METI, reflect the reality of the global energy transition to some extent. As for the present status of renewable energy, the current plan which was adopted three years ago only focuses on the increase of electricity charges caused by expansion of its deployment. On the other hand, the new documents also provide data showing that renewable energy prices are declining worldwide and solar PV costs in Europe have been reduced to a quarter over the past six years. As for nuclear power, while the current plan only mentioned “the global expansion of introduction mainly in emerging countries,” the new documents also note that countries such as Germany, Switzerland and South Korea chose to implement nuclear phase out. Moreover, with regard to energy efficiency, they recognize the delay in improvement of the energy intensity in the industrial operation sector.

However, these changes are still seen only partially. In contradiction to the above examples, the key message for energy transition mentioned in the current plan, “reliance on nuclear power will be lowered as much as possible by energy saving and renewable energy deployment as well as improvement of the efficiency of thermal power plants, etc.” is missing in the new documents. In the discussions, some members of committees vociferously insisted on adherence to nuclear power and point out distrust of renewable energy without any ground.

With the Basic Energy Plan of the government not indicating a direction toward a de-carbonized economy, the construction of 42 new coal-fired power plants has been planned for Japan. As companies in Japan cannot purchase abundant renewable energy electricity at a low price like companies in other countries, they are now receiving harsh evaluations from investing institutions, which became more sensitive to the carbon risk. One of the reasons for the Japanese auto industry’s delay in transition to electric vehicles is that they have misjudged the speed of decarbonization of electricity enabled by the expansion of renewable energy.

In order for Japanese companies to survive and achieve further development in a global market that is shifting to de-carbonization, the government needs to change its energy policies fundamentally. Renewable Energy Institute will continue to offer policy recommendations to promote the transition to a sustainable society through renewable energy and energy efficiency.

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