Japan’s Coal Hunger Poses Costly Challenge to Emissions

Updated on
Japan Coal Revival
Japan’s reliance on coal has been rising to make up for lost nuclear capacity after Fukushima. Photographer: Tomohiro Ohsumi/Bloomberg

Japan will depend on new coal technology that’s more than twice the cost of traditional plants to meet its targets on reducing global warming pollution.

In a plan formally adopted earlier this month, Japan said it expects coal to generate about a quarter of the nation’s electricity by 2030.

For Japan to meet this target and still meet its goal of reducing climate-warming gases “every single one of the new coal-fired power plants has to have technology that reduces emissions,” Joseph Jacobelli, an analyst at Bloomberg Intelligence, said by phone. “But that’s easier said than done because that raises the costs.”

One approach backed by the government is integrated gasification combined cycle, IGCC, technology which turns coal into gas. Impurities are removed from the synthesized gas before it’s burned, lowering emissions compared with plants where coal is used directly.

Mitsubishi Hitachi Power Systems Ltd., a venture between Mitsubishi Heavy Industries Ltd. and Hitachi Ltd., is developing a plant capable of operating at net efficiency of as much as 50 percent, compared with 40 percent for standard coal-fired power plants, according to data compiled by the Japanese government.

Besides improved efficiency, plants using IGCC also emit 20 percent less carbon dioxide, the data shows.

Efficiency Costs

But efficiency comes with a price. IGCC coal-fired plants can cost more then 545.2 billion yen ($4.4 billion) a gigawatt to build, according to the U.S. Energy Information Administration. That’s more than two times the price of a regular coal-fired plant in Japan.

Emission-cutting technologies like IGCC and another technology called carbon capture and storage also threaten costs, according to Michael Rutkowski, managing director of the energy practice at Navigant Consulting Inc., a Chicago-based consulting firm.

Japan has a single medium-scale IGCC facility -- started as a demonstration project -- and less than 10 IGCC facilities are operational throughout the world.

“A big part of their long-term costs are uncertain and could result in these types of plants not being competitive compared to other technologies at some point in the future,” Navigant’s Rutkowski said by e-mail.

Tokyo Electric Power Co. is planning to build two IGCC plants in Fukushima, which they see as an opportunity to boost the region’s economy and create jobs while reducing emissions, Tatsu Yamagishi, a Tokyo Electric spokesman, said by e-mail, declining to discuss costs.

Power Generation

Coal power generation is expected to be one of the cheapest fuels in 2030 at 12.9 yen per kilowatt hour, compared with 13.4 yen for natural gas and oil at 41.6 yen, according to draft estimates of generation costs from Japan’s trade ministry. And coal plants under 112.5 megawatts are not subject to environmental impact assessment by the Ministry of Environment.

On average, coal accounted for 24 percent of Japan’s energy mix in the 10 years before the 2011 Fukushima disaster, according to the government. With Japan’s nuclear fleet idled and undergoing safety checks, coal increased to 28 percent by 2013. More than 14 gigawatts of coal power projects are at various stages of planning, according to the government. The country’s LNG and crude oil imports fell in June, as coal rose 0.8 percent.

Japan’s utilities “want to build as much coal as possible because they see it as the cheapest fuel,” Polina Diyachkina, a Macquarie Group Ltd. analyst in Tokyo, said by phone.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE