Table of Contents
- Historical Background of the Japan’s Economy
- The Oil Crisis of the 70s and Its Impact on Japan
- Alternative Sources of Energy in Japan (Diversification)
- The Case of Fukushima
- International Reaction to the Fukushima Incident
- Japan Going Back to Coal and Developing Coal Technology
- Related Economics essays
Dynamics of the energy market plays a crucial role in the development of any country’s economy, especially if this country is highly industrialized. Japan is one of the world’s biggest economic powers, and its economy requires stable energy supply for normal functioning. However, the country has recently faced a series of serious problems with the energy market, most of which have been caused by the Fukushima disaster. The current paper is aimed at reporting on how Japan shapes its energy policy to sustain economic growth.
Historical Background of the Japan’s Economy
Japan is widely considered an economic wonder because of its spectacular growth in all respects in the late 20th century. This economic and social growth has a precedent in the 1800s, when the Meiji Restoration made the country recognized as an influential world power among other mostly European countries that dominated the geopolitical arena at that time. The WWII was a major loss for Japan that had sided with the Hitler Germany and lost the war. However, the consequences of the loss were not as dreadful as expected since the country was treated rather cautiously by the Allies. The only significant restriction it faced concerned its military potential. Japan has quickly recovered from the devastation caused by the war and has shown the highest rates of social and economic development in the world for many years in a row. In 2006, the country had the 2nd largest GDP in the world (Lim, 2007). In all respects, Japan is now considered to be the third largest world’s economy right after the USA and China, which is remarkable given its relatively small area and lack of natural resources. Currently, Japan is among the most technologically advanced and innovative economies, having taken a leading position in many sciences and industries.
The Oil Crisis of the 70s and Its Impact on Japan
In the 1970s, Japan’s economic development significantly depended on the imported oil that took 74% of the total energy supply (Lim, 2007). For this reason, the two subsequent oil crises of 1973 and 1979 had such a huge impact on the country, resulting in a decline in industrial production for the first time after the termination of the war. Coupled with price inflation, the government had to devise ways to decrease its oil dependency in order not to suffer an economic decline again in the future because of the “volatile Middle East” (Lim, 2007). Initial costs of energy shifts to nuclear power and other alternative energy sources were rather high, but most industries managed to recover their revenues and decrease oil dependency during the 1980s and afterwards. It was done thanks to the government’s efforts, in particular “the Law Related to the Promotion of the Development and Induction of Oil Substitute Energy” adopted in May, 1980 (Lim, 2007). Besides, the 1970s saw a rapid development of the “nuclear village” in Japan that has accounted for 30% of total energy supply till recently (The Economist, 2013). Due to the oil crises and following energy shift policies, some industries had faced serious troubles in the 1980s, but they were revived during the 1990s economic boom. Thanks to the oil crises, Japan recognized its energy insecurity and managed to improve it significantly by switching to alternative sources of energy described below. It has also decreased its oil dependency since, for example, in 2001 it accounted for 49.4% of the entire energy sector (Lim, 2007). This decrease is a remarkable feat for the highly industrialized country.
Alternative Sources of Energy in Japan (Diversification)
Japan has turned to alternative sources of energy in order to diversify its energy market and decrease oil dependency. These sources include nuclear power, fossil fuels (mainly coal), hydroelectricity, and to a lesser extent renewable sources of energy, including solar and wind stations. Oil still plays a rather important role in the energy market, but less than before.
Nuclear power had been a promising and highly productive energy source in the country till 2011. Prior to the Fukushima disaster and switching off of all nuclear plants, 48 nuclear reactors generated 30% “of Japan’s electrical demand.” (PBS Newshour, 2014) There were also plans “for the nuclear village…to supply at least half of Japan’s power” (The Economist, 2013). Fossil fuels have always played a major role in Japan’s energy market. In 2007, the country was the biggest importer of coal in the whole world, being ahead even of developing economies (Lim, 2007). Coal is used for generating electricity with about 80 million tons annually (before 2011) and for making steel (Lim, 2007). The demand for coal has been steadily increasing since 1973 by about 2.5% annually with 78 million tons imported in 1973 and already 184 million tons imported in 2004 (Lim, 2007). After joining the Kyoto Protocol, Japan has tried to reduce carbon emissions through a slight decrease in the use of coal for electricity generation, which has even led to partial decommissioning of some power stations working on fossil fuels. This decrease in the use of coal had to be balanced with the increase in the use of nuclear power, which was among the highest in the world.
In turn, renewable energy sources, including hydroelectricity, account for 10% of total energy production (The Economist, 2013). This figure is rather low, but environmentalists are hopeful that it will increase due to “some sort of scientific advances.” (PBS Newshour, 2014) Wind turbines generate a substantial amount of electricity on the Pacific coast to the east of Tokyo, and it is planned to build 50 more turbines offshore (PBS Newshour, 2014). According to the President of the wind power company, “Japan is 10 years behind nations that have embraced renewable.” (PBS Newshour, 2014) However, everything can change thanks to the scientific advancement. Nanotechnologists of Japan are encouraged to promote solar power by finding “an efficient photocatalytic material that enables sunlight to split water molecules into hydrogen and oxygen.” (Nasu & Faunce, 2013) The Japanese government seems to be supportive of nanotechnological researches as it regulates only safety measures and does not restrict researches contrary to many other countries. Solar power has been included into “a desirable mix of energy sources” declared by Minister Yukio Edano, and nanotechnologies may foster a break-through in this respect (Naso & Faunce, 2013). Some Japanese have already installed solar panels on their homes to make themselves energetically self-sufficient. Such energy market dynamics has changed after the Fukushima accident, and Japan’s energy policies have been amended as described below.
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The Case of Fukushima
On March 11, 2011, Japan was hit by the nine-magnitude earthquake and tsunami thereafter. The Fukushima Daiichi nuclear power plant could not cope with the natural disaster, and three active reactors went into a melt-down (CNN, 2014). The resulting disaster was compared in terms of scale with the 1986 Chernobyl accident in Ukraine (CNN, 2014). Both accidents had Level 7 under the International Nuclear Event Scale, but the affected area and the amount of released radioactive elements were smaller in Japan than in Soviet Ukraine (Grimes et al., 2014). At the time of the Fukushima nuclear disaster, the plant had three operating reactors and three reactors were in a “cold shutdown” (Grimes et al., 2014). After the earthquake, reactors were to be shut down and required cooling. Because of the tsunami, backup diesel generators were destroyed, water pumps stopped working, and the cooling process was disrupted. It resulted in the rise of pressure and temperature inside reactors, as well as explosions at Fukushima Daiichi and release of radioactive substances. The Japanese government announced the nuclear accident to the citizens and started immediate relief actions by evacuating citizens from the nearby region and securing the site of the incident. Since then, the government together with the Tokyo Electric Power Company (knows as Tepco) that owned Fukushima Daiichi have tried to cleanse the area of radioactive substances and prevent their escape into the sea. Specialists have been “scraping off two inches of soil contaminated with cesium and other radionuclides” (PBS Newshour, 2014). The Geiger counter shows that it may be relatively safe to return to the neighborhood, but citizens are wary. The WHO has concluded in its report on the Fukushima Daiichi incident that “it would probably cause ‘somewhat elevated’ lifetime cancer rates among the local population” while some scholars think that cancer rates will be higher in the entire Japan (Kiger, 2013). The most recent problem with the incident is that damaged reactors have been leaking water, contaminated with radioactive elements for several months if not years as the Tepco has admitted (Kiger, 2013). According to estimates, 300 tons of this water is leaking into the sea every day (Kiger, 2013). This emergency requires immediate response, but the problem is that nobody knows what to do as there is limited storage capacity for pumped-out contaminated water, and fractures have been found in reactors that now release radioactive elements into underground waters. Scholars say that cesium quickly dissipates in water and is not a serious threat to humans and most marine species, but nearby waters show high levels of both cesium and other nuclides (Kiger, 2013). Strontium-90 poses a more serious threat as it enters into the bones and stays there. The Japanese government has banned fishing in the region. The Tepco has to solve this problem as quickly as possible as no one can predict exact consequences of seawater contamination in the long run. The company has announced that it works on the scientific breakthrough that will allow decontaminating the water and releasing it into the ocean. However, some scholars are skeptical about this cleansing procedure because of the massive scale of work to be done and its inefficiency in removing some radioactive elements as tritium (Kiger, 2013). The Tepco has also worked on the construction of a shielding wall, but its effectiveness in the long run is doubted.
The Fukushima Daiichi incident has impacted the nuclear industry both in Japan and the world. The Japanese government ordered to control operations at its nuclear plants, carry out inspections, and implement new safety measures in 2011. Safety regulations for nuclear plants have been revised and improved since then. Most plants like the Oi have been closed for maintenance, but there is no set opening date for any of 48 reactors (The Economist, 2013). Reopening would require the parliament’s approval (CNN, 2014). All nuclear plants have upgraded their safety measures. For example, the Kashiwazaki-Kariwa plant has invested $2.6 billion in upgrading safety by building a new higher tsunami wall, a multi-million gallon water reservoir right above reactors that can ensure uninterrupted cooling of reactors for a week without electricity, new turbine generators, and fire engines (PBS Newshour, 2014). The LDP and Prime Minister Abe are willing to reopen the plants, but there is a strong public opposition (The Economist, 2013). Therefore, Japan has to find other ways to satisfy its energy needs. It is not easy in a completely electrified country, which is the main reason some lobbyists advocate the restart of nuclear plants.
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International Reaction to the Fukushima Incident
International reaction to the Fukushima Daiichi incident has been different. The UK has resolved that it would cooperate with Japan on nuclear issues through expertise exchange (Grimes et al., 2014). The UK has reviewed safety procedures at its own nuclear plants, but it is not going to abandon nuclear power. On the contrary, Germany has decided to reconsider its nuclear policy. In 2011, right after the incident, Chancellor Merkel announced that all seven reactors that started working before the end of the 1980s would be closed for three months minimum (The Associated Press, 2011). The government also declared that it would reconsider its decision to extend the life of all 17 reactors beyond 2021 (The Associated Press, 2011). Finally, Germany decided to switch to renewable energy by 2021 and shut down all its reactors by then (CNN, 2014). The reaction of Switzerland was similar as it decided not to build any new reactors and to decommission the existing nuclear plants by 2034 (CNN, 2014). The Swiss government took this decision despite the population’s support for nuclear power. Most other nuclear countries, including the BRIC, France, and the USA, did not follow the Germany’s suit and decided to continue using nuclear power. China has now 20 reactors and wants to triple their amount by 2020 (CNN, 2014). Russia plans to get 45% of all energy from nuclear power by 2050 (CNN, 2014). Brazil has announced its wish to build five reactors by 2030 (CNN, 2014). France hopes to get revenues from the increased safety regulations as its state-owned company Areva produces reactors of the 3rd generation that are deemed safer than widely-spread reactors of the 2nd generation (The Economist, 2011). These reactors were not in high demand before the Fukushima incident because of their high price, but now Areva expects a rise in demand from China and India (The Economist, 2011).
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Japan Going Back to Coal and Developing Coal Technology
Japan has not reached a final decision about the future of nuclear plants, but it has to satisfy its needs in power somehow now. Since renewables are underdeveloped in the country, it has to return to gas, oil, and coal with the last option being the most cost-effective. Japan has concluded an agreement on shale gas import contracts from the USA at a relatively cheap price, but it cannot be enough for its industries (The Economist, 2013). For this reason, the country has turned to coal. Such a move goes against the Kyoto Protocol, but the country does not have another choice today. So far, it has already “run 20 consecutive months of trade deficits” (Watanabe & Suge, 2014). To sustain its economic growth, the Abe’s government has announced a new energy plan that considers coal as “an important long-term electricity source”, which has disappointed environmentalists (Watanabe & Suge, 2014). In 2012, coal generated approximately 90% of electricity in the country, which was a stark rise since 2011 (Watanabe & Suge, 2014). In fact, power stations working on fossil fuels saved the country from black-outs after the Fukushima incident when they started functioning at full capacity. However, fossil fuels require a lot of funding, for example, $93 million in 2013 (The Economist, 2013). Electricity costs and utilities have become more expensive in Japan, but coal still remains the most cost-effective, even if not the cleanest solution to its energy problems. In 2012, power companies used almost six million metric tons of coal in January, which was a record amount (Watanabe & Suge, 2014).
Japan plans to balance out its increase of carbon emissions with scientific improvement of coal technologies. It has developed its Clean-Coal-Cycle Initiative since 2004 and plans to develop it further and export the technology to other countries where industries consume a lot of coal (Lim, 2007). Japan has introduced the Integrated Gasification Combined Cycle technology that is a sort of gasification thanks to which coal is turned into gas and carbon emissions are decreased as compared to traditional burning of coal (Watanabe & Suge, 2014). The Tepco has installed the IGCC generator at the Nakoso power station and plans to add it to the Hirono and some other plants (Watanabe & Suge, 2014). Other innovative coal technologies include the A-USC that is to be commercialized by 2020, but environmentalists are dissatisfied with this move and call for clean energy. Meanwhile, the Japanese government insists on using coal as the most efficient energy supply means and plans to export its coal technologies abroad. In this case, “the U.S., China and India can reduce a combined 1.5 billion tons of carbon dioxide emission per year” (Watanabe & Suge, 2014). The IGCC power now costs more than conventional coal-produced power, but specialists claim that the price will reduce in the nearest future.
Withal, energy policy is an integral element of sustainable economic growth. In resource-poor countries like Japan, efficient energy policy becomes even more important. In the past, Japan has been almost energetically self-sufficient thanks to its nuclear power capacities, but the Fukushima incident led to the suspension of nuclear plants and increase in expenses on fossil fuels. The country lacks renewables to satisfy its energy demands and has therefore turned to coal. The use of coal has both benefits and shortcomings. Although it may be more cost-effective than other currently available options, it makes the country breach its obligations under the Kyoto Protocol. Thus, restart of its nuclear plants, at least the safest ones that have invested in new safety measures since 2011, looks like a reasonable move according to some Japanese. Besides, Japan has to solve the contamination problem that has become an emergency in the Fukushima prefect.