Japanese energy

Review of Energy Policies: Japan 2003
OECD Observer

The archipelago that makes up Japan is two-thirds mountains, with few indigenous energy resources. As the fourth largest energy consumer in the world, with relatively high energy prices, the most important energy challenge for Japan is security of supply.

The obvious solution to powering Japan may be to choose the relative independence of nuclear power. Yet this option is becoming politically more challenging, according to the Review of Energy Policies: Japan 2003 by the International Energy Agency (IEA), a sister organisation of the OECD. It points out that in recent years, nuclear power operations in Japan have been marred by safety-related incidents, either at generating plant sites or at fuel manufacturing plants. Due to the important role of nuclear in terms of energy security and climate change mitigation, the report urges the government to restore public confidence.

More also needs to be done to improve economic efficiency, notably in the energy markets and the cost-effectiveness of government policies, and Review of Energy Policies: Japan 2003 urges the government to continue market reforms initiated in the last decade. Up to now, there has been little competition in electricity and gas markets. While the recent measures introduced by the government are useful, stronger measures may be needed if competition does not take hold.

Meanwhile, decoupling the rise in energy use from economic growth may prove difficult to achieve. As the Japanese economy recovers, its recent drop in energy-related CO2 emissions and a decline in industrial emissions could very well bounce back. Review of Energy Policies: Japan 2003 points out that energy utilities project a 14% increase in emissions from 1990 to 2010.

Was Japan too optimistic when it committed to a 6% reduction of greenhouse gas emissions under the Kyoto Protocol? Together with a 30% increase of nuclear power generation by 2010, the government is counting on a number of other tactics to reach that goal, including improving energy conservation, moving away from coal and promoting natural gas for fuel, and tripling its supply of new and renewable energy sources.

©OECD Observer No 240/241, December 2003




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