Japan Needs Nuclear Power to Offset High Gas Costs, Tanaka Says

Japan, which pledged this year to scrap nuclear power by 2040, needs to keep atomic fuel in its electricity mix to offset rising energy costs and a possible military conflict in Iran, according to the former executive director of the International Energy Agency.

“Without nuclear, we have a very serious problem,” Nobuo Tanaka, now a global associate for energy security at the Institute of Energy Economics in Japan, said in an interview today in Singapore. He predicts that atomic power may contribute as much as 30 percent to the nation’s future mix and said phasing it out will prove to be “impossible.”

Japan’s government said in September it will eliminate atomic power following radiation leaks resulting from Fukushima Dai-Ichi disaster. This decision may be reviewed in light of continued business support for reactors, the Institute of Energy Economics of Japan said yesterday. Keidanren, Japan’s biggest business lobby that includes industry giants like Toyota Motor Corp. as well as power utilities, has called the zero nuclear plan “unrealistic” and a threat to Japanese manufacturing.

While Japan is paying about five times as much for gas as buyers in the U.S., Yukio Edano, Japan’s Trade and Industry Minister, disagrees with those advocating getting as much as 25 percent of Japan’s future power from reactors.

“I don’t think the zero-nuclear scenario is any more negative than the 20 to 25 percent scenario for Japan’s economy,” Edano said Aug. 7. “Rather, it will positively impact the economy if we do it right,” and developing renewable-energy and power-saving technologies would boost domestic demand and improve Japan’s competitiveness, he said.

Military Strike

Conflict in Iran and the closure of the Strait of Hormuz, a transit route for 85 percent of Japan’s oil and 25 percent of its liquefied natural gas imports, adds energy risks, Tanaka said. A military strike by Israel on Iran’s nuclear facilities is the “most likely scenario,” he said.

All but two of Japan’s 50 reactors remain shut more than 18 months after an earthquake and tsunami caused a meltdown at Tokyo Electric Power Co.’s Fukushima Dai-Ichi plant and shattered public confidence in the safety of atomic power. The country’s utilities imported 5.31 million tons of LNG in August, a record for that month, the Federation of Electric Power Cos. said Sept. 14. Japan accounted for 18 percent of Asia-Pacific gas demand last year, according to BP.

To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net

To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net

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