The Japanese Government indicated that fuel cost for electricity generation increased by 3.6 trillion yen per year in FY2013, compared to FY2010, due to an increase in generation from fossil fuel power plants to offset the shutdown of nuclear reactors.

This estimate exaggerates the actual impact of the increase in fossil fuel generation with regard to the following two points.

1. The Government’s estimate is based on the assumption that the loss of nuclear power generation is entirely and exactly replaced by fossil fuel, however, after the earthquake disaster and the nuclear accidents, the actual increase in fossil fuel generation was about 30% less than the Government’s estimate due to the progresses made in energy savings and energy efficiency. The Government’s estimate has not taken into account those reductions.
2. The 3.6 trillion yen claimed increase, is based on the Government’s exaggerated fuel quantity factor, but also irrelevant price factors. It is not appropriate to include the rise in LNG price and yen weakening resulting from other causes, and to consider them as consequences of shutting down nuclear reactors.

While the Government has acknowledged that the price factor is included in its estimate, as can be seen in the parliamentary statement by Mr. Motegi, Minister of Economy, Trade and Industry on 3rd March 2014, yet the reduction made by energy savings and energy efficiency is still not incorporated into the Government’s estimate.

According to the estimate by Japan Renewable Energy Foundation (JREF), the additional fuel cost is 2.4 trillion yen per year, taking into consideration the reduction made by energy savings and efficiency. And the figure is 1.6 trillion yen per year when the price factor is taken out from 2.4 trillion yen.

Figure 1 Additional fuel costs in FY2013 compared with FY2010

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