Nuclear Poised to Be Winner as Abe Eyes Broader Japan Majority

Nuclear energy is likely be one of the big winners as Japanese Prime Minister Shinzo Abe looks set to return to power after elections on Dec. 14.

A broader mandate for Abe, who’s framed the snap election as a referendum on his economic policies, would embolden the ruling Liberal Democratic Party to push ahead with restarting some of the nation’s 48 idled nuclear reactors. Abe’s LDP may expand its majority in Japan’s lower house, according to opinion polls released by five newspapers on Dec. 4.

“Abe can take up drastic policies once this election is over,” said Shigeaki Koga, a former trade ministry official who writes about energy and policy issues. “He will push through policies to promote nuclear power including restarting many of the reactors next year.”

Nuclear power, which accounted for almost a third of Japan’s electricity generation before the Fukushima disaster in March 2011, has been identified by Abe and the LDP as an important source of “baseload power.” Even after the public outcry following Fukushima, Abe has insisted nuclear will continue to play a role in Japan’s energy mix.

Abe’s LDP returned to power two years ago in a landslide victory by ousting the Democratic Party of Japan, which had pushed for the introduction of an incentive program for clean energy and phasing out nuclear.

Since then, Abe’s government has moved to restart some of the nuclear reactors once their safety is confirmed. As yet, none of the reactors are back online though utilities have applied with Japan’s new regulator for safety checks on 20 reactors, a precursor to restarts.

Energy Policy

While the government released a set of energy policies in April, it has yet to decide how much electricity should come from what energy sources.

The incentive program for clean energy that was ultimately brought in by the previous government may come under a more thorough review after the election, said Takashi Hongo, a senior fellow at the Mitsui Global Strategic Studies Institute in Tokyo.

The feed-in tariffs provided under the current design are too generous, Hongo said.

Meanwhile, parties are split over the role of nuclear. The Democrats are sticking to their campaign promise two years ago of phasing out nuclear. The New Komeito, the LDP’s much smaller coalition partner, says its eventual aim is a nuclear-free society.

“It’s the current government’s energy policy to keep things vague,” said Hiroshi Takahashi, a research fellow at the Fujitsu Research Institute. “The party wants to keep nuclear power in the mid- and long-term but they know saying that aloud will upset voters.”

Public Opposition

In reality, Abe’s government may be planning to add new nuclear reactors to replace ones too old to restart, Koga, the former trade ministry official, said.

A poll conducted last month by public broadcaster NHK shows 40 percent of respondents oppose nuclear restarts, surpassing 24 percent of those who say they support them.

Regardless, backers of nuclear energy point to its economic imperative as justification for reintroducing it in Japan.

Since Japan flicked off the switch to its nuclear energy program, expensive energy imports, particularly of liquefied natural gas, have worsened trade deficits. Japan has run a trade deficit for 28 straight months.

The Japanese government estimates Japan’s regional power companies paid 3.6 trillion yen ($29.6 billion) more in fuel costs in fiscal 2013 compared with fiscal 2010 before the Fukushima disaster.

Imported Fuel

As a result of the high cost of imported fuel, Japan’s current account registered a 367.9 billion yen monthly deficit in June, placing an extra burden on an economy that has contracted for two straight quarters after a sales tax increase in April.

In view of those numbers, some of Japan’s largest companies say nuclear energy is critical to their operations.

“How much longer do we need to endure?” a group of energy-intensive industries asked in a petition submitted to government ministers earlier this year. “We need to know the path for survival.”

Nippon Steel & Sumitomo Metal Corp. and Kobe Steel Ltd. are among the member companies belonging to the 11 industry groups that were signatories to the petition.

Climate Targets

The absence of nuclear has also set back the nation’s climate goals. Japan’s greenhouse gas emissions have been on the rise since 2010 as thermal power generation increased to make up for lost nuclear capacity and the economy recovered after the 2008 financial crisis. Greenhouse gas emissions rose 1.6 percent in fiscal 2013 compared with the previous year and are 8.5 percent higher than the year before Fukushima, according to preliminary data by the Ministry of the Environment released on Dec. 4.

That’s bad news as climate envoys from more than 190 countries gather in Lima, Peru to debate a framework to keep the earth’s temperature from rising. Countries are to submit plans on their contributions to climate change in the first quarter of 2015, if possible, toward a universal agreement.

“We say we need to keep nuclear for economic and energy security reasons, and also to fight climate change,” said Masami Hasegawa, a senior manager for the environmental policy bureau at Keidanren, Japan’s largest business lobby.

Japan will restart 25 of the 48 reactors by 2018, according to projections by Bloomberg New Energy Finance. The gap left by nuclear’s absence will be filled mainly by firing liquefied natural gas, said Yoko Nobuoka, an analyst for BNEF in Tokyo.

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