Page 1 of
2 Japan
builds a Galapagos of power By
Andrew DeWit
This article assesses the
political economy risk of the return of Japan's
nuclear village. The campaign for the December 16
general election and its aftermath may see the
nuclear village and its allies seize even greater
momentum in key central-government agencies.
With a welter of parties and their
confusing positions on energy policy, an election
seems hardly likely to lead to coherence. The
general political and policymaking chaos of the
present invites comparison with Japan's early
post-war years. The upshot could lead to a gradual
return to the concentration on nuclear power that
was written into the June 2010 basic energy policy
and remains the de jure energy policy,
notwithstanding the March 11, 2011, Fukushima
shock and all that has happened since.
If
this "back to the future" scenario eventuates, I
argue that Japan
risks building a "clean"
Galapagos in its power economy, one relatively
sterile in business potential, at a time when
power is becoming perhaps the world's most dynamic
sector.
This risk also encompasses Japan's
energy policy in general, since the innovative
dynamism of the power economy is spreading to
efficiency, fuels and other energy sources outside
of the electricity sector per se.
If
you start me up... As we know from Jeff
Kingston's excellent work, [1] Japan's "nuclear
village" is on the comeback trail within the
central government's chaotic politics and
policymaking. Key decisions on reactor restarts
are being moved from the cabinet to the new
Nuclear Regulatory Agency, which is clearly
dominated by pro-nuclear interests.
The
public remains very skeptical about the merits of
nuclear power, as are publics just about
everywhere. That fact, and its impact on the power
policy debate over the past year and a half, is
clearly one reason that a host of decisions are
being shifted to the new regulatory institution
where the nuclear village holds sway. [2]
It is clear, that at the central
government level, the nuclear village and much of
the establishment's political and business actors
insist that the power-policy status quo
ante-Fukushima is the proper basis for weathering
Japan's daunting total of eight major challenges
and moving towards a sustainable recovery.
These challenges include the world's most
rapid rate of aging, the weakening global economy,
and the continuing nuclear crisis. [3] Looking at
the bottom line on power prices, the Japanese
establishment sees increased imports of gas and
other fossil fuels as costing more than restarting
the country's currently idle 48 out of 50 nuclear
reactors.
These direct pecuniary costs are
not insignificant. Japanese utilities' fuel costs
appear likely to double this fiscal year from two
years ago. In the fiscal year ending March 2013,
the nine monopoly utilities, excluding Okinawa's
monopoly, appear likely to pay about 6.8 trillion
yen (US$85.2 billion) for liquefied natural gas,
coal and crude oil. By comparison, in the year
before the Fukushima shock (the fiscal year ending
in March 2011), the utilities imported 3.6
trillion yen worth of fuel. And last year, they
imported 5.9 trillion yen worth of fuel.
The utilities losses as a result of last
year's costs and other factors totaled 1.6
trillion yen in 2012. [4] With Tokyo Electric
Power (TEPCO) now asking the Japanese government
for more assistance to cope with Fukushima
disaster costs of over 10 trillion yen, they are
also pressing to have their massive nuclear
capacity at Kashiwazaki-Kariwa and elsewhere
restarted. [5]
Crass calculations play a
significant role here. The peak business
association, Keidanren, remains dominated by
energy- and resource-intensive industries with
significant ties to the nuclear village. [6] For
the most part they are either not interested in
the revolutionary "green growth" opportunities of
our era, not aware of them, or believe they can
have their nuclear cake and robust green growth as
well. They look at power costs, ignoring the
trillions of yen in Fukushima costs that will be
passed on to taxpayers, repeat the slogans that
Japan is the world's most efficient economy and
that renewables are unreliable, and make their
decisions accordingly.
They are not simply
being cynical: like all other observers of
Japanese business, they see the sobering spectacle
of such huge firms as Sharp on the edge of
bankruptcy and Sony's debt downgraded to a notch
above junk. [7] They are also poignantly aware
that, in early November, the Japanese economy is
entering its fifth recession in 15 years.
They will find no relief in, for example,
the 2013 Global Manufacturing Competiveness Index,
compiled by Deloitte and the US Council on
Competitiveness. Based on a variety of measures,
the report places Japanese competitiveness at
10th, just behind Singapore, and sees it slipping
to 12th in five years, beneath Indonesia and just
above Mexico. [8] In short, Japanese business
interests are quite reasonably worried about their
capacity to survive in a very competitive and
unstable global marketplace. Deeply risk-averse
and perceiving risk largely in pecuniary terms,
they are trapped in a tunnel vision.
Out of the tunnel Let's not
share their tunnel vision. Rather, let us look
instead at the rapidly changing global environment
in which Japan has to find a new niche. The major
opportunity for Japan is in the energy sector, and
infrastructure related to it. This sector is at
least 10% of the global economy. [9] Energy is not
only the world's largest industry; it is also its
most damaging via direct health costs [10] as well
as being the source of over 80% of anthropogenic
greenhouse gas emissions. [11]
Japan's
demographic, economic and other crises are real.
But deep, systemic crises are now humanity's
common reality. Among the most evident of these
systemic crises are long-term trends of population
growth, economic development and urbanization that
are driving resource constraints. By 2030, roughly
five billion people, or two thirds of the global
population, are projected to live in cities, with
massive and potentially catastrophic increases in
energy demand.
For example, the US Energy
Information Agency's 2011 International Energy
Outlook projects world power generation as
increasing from 19.1 trillion kWh in 2008 to 25.5
trillion kWh in 2020 and 35.2 kWh by 2035. It also
sees the bulk of power generation coming from
conventional fuels, such as coal, natural gas and
nuclear. [12] If this "business as usual" scenario
on power generation eventuates, then the already
escalating costs of fossil fuels will continue.
[13]
In addition, the October 29 shock of
Hurricane Sandy's US$50 billion destruction in New
York and New Jersey will almost certainly become a
mere foretaste of abrupt and truly devastating
climate change. [14]
An additional and
deeply troubling matter is the knock-on effects of
these price increases on food supply. Post Carbon
Institute senior fellow Richard Heinberg has for
example shown that the intense role of oil (as
fuel, input source for fertilizers, etc) in food
production has led to a correspondence between
rising oil prices and rising food prices. [15]
Lester Brown includes other factors - such as
population growth, changes in climatic patterns,
the use of corn and other food crops in biofuels -
and starkly details the risks in his new work
Full Planet, Empty Plates. [16] He warns
that food prices have climbed, roughly doubling,
between 1990 and 2012 with devastating effects for
the world's urban poor.
Rising resource
and food costs add to the increasingly
constraining effect the water-energy-food nexus
exerts on our energy and other choices. Among
other things, the water demands of conventional
energy - including nuclear - threaten to overwhelm
our capacity to cope with global population
increases and urbanization. This risk is evident
in so-called "water footprints", illustrated in
the chart below, which displays the amount of
water used, and then discharged, or consumed (and
then evaporated) for the various power generation
sources, per unit of power produced.
In
the United States, roughly half of freshwater
withdrawals are used in energy production, with
varying amounts of the water released as heated
water, as polluted water, and as vapour. [17] The
reliance of conventional energy on water, whether
in the exploitation stage or final cooling stages,
is another salient problem that is overlooked by
conventional projections of demand. That
downplaying of risk is bizarre, because there is
no substitute for water in these processes and
there is now a significant body of research on the
water-energy-food nexus.
There is also a
rapidly emerging investor risk, particularly in
areas where climate change has altered historic
rainfall patterns. Utilities, fuel producers, and
other interests ignore the increasingly stark
evidence of change. They tend to assume that water
supplies will not be a problem, certainly not
their problem, as has been the case in the past.
But particularly in India and China, water stress
is already becoming so significant that even the
world's largest power-unit maker, General
Electric, warns observers that projections of
coal-fired power-generation are to a significant
extent fanciful. [18]
But
again, water stress is not only a problem for
fossil-fuel generation. Nuclear power is also a
very thirsty form of generation, as we see from
the water footprint chart, and is increasingly
running into unanticipated problems. The 2003
European heat wave that resulted in 35,000 deaths
also had a deleterious impact on nuclear-power
production, especially in France. In total, 17
French reactors had to reduce output or shut down
altogether, due to reliance on river water for
cooling. In the United States in mid-August 2012,
a Waterford Connecticut Millstone reactor had to
be shut down for 12 days, due to sea water being
too warm for cooling, a fact that sent a shiver
through the global nuclear village. [19]
What seems clear from observation, rather
than fanciful projections, is that the more we
grow conventional power, including nuclear, the
more severe become our environmental, economic and
even political costs. Researches indicate that we
have evolved a resource-dependent and inequitable
conventional growth model that is unsustainable.
We have seen that it is unsustainable in terms of
the toll it exacts on nature, particularly the
knock-on effects through the water-energy-food
nexus.
In other words, markets and nature
seem to be driving development in a very
different, direction with respect to
sustainability. The best recent work on where we
are and where we are being driven, if we want
sustainability, is the 2012 Global Energy
Assessment (GEA).
The GEA is an initiative
that included 300 specialist authors over five
continents, and weighs in at 1865 pages. It is by
far the most comprehensive study of energy options
available, as it couches its analyses in terms of
such interactive issues as water. It argues that,
with aggressive efficiency, the global community
can derive up to 75% of primary energy (meaning
not just electricity) from renewables by 2050. It
sees nuclear power as at best an option, and not a
must, like renewables and efficiency.
Is radical efficiency
possible? One question that immediately
arises in this context is whether aggressive
efficiency is possible, especially in the Japanese
case. In spite of the rhetoric, Japanese energy
policymaking has long soft-pedaled the role of
efficiency. The country has, however, significant
scope for efficiency gains.
Japan is far
ahead of the United States, of course, which many
commentators tend to use as the benchmark for just
about anything concerning Japan. But as we saw in
the July 2012 release of the authoritative study
by the American Council for an Energy Efficient
Economy (ACEEE), Japan is ranked fourth in
efficiency, behind the UK, Germany, and Italy. The
Americans lag at 11th, but simply being ahead of
them is not in and of itself an achievement. [20]
And as to specific areas of efficiency
that are not limited to Japan, note the gains we
can expect from lighting. Lighting consumes about
20% of global electrical power production, and is
responsible for about 20% of Japanese household
power consumption. [21] The McKinsey consulting
group's September 2012 second edition of their
comprehensive analysis of the lighting industry,
the "first to provide a comprehensive and holistic
view" of this fragmented and very complex market,
highlighted its dynamism and efficiency potential.
As we see in the chart below, taken from
the report, 100% diffusion of LEDs in Japan by
2020 has the potential to displace seven nuclear
reactors' worth of power demand (that is
equivalent to about 7 gigawatts of power). [22]
The McKinsey study also
projects savings of roughly 19 nuclear reactors'
worth of power in the United States by 2020
through the use of LED lighting. LED lighting is
also in a very disruptive phase, according to the
report, with the evolution of new services, IT
applications, and even organics.
LED is
one area where we clearly see that the global
energy industry and energy applications are in the
midst of an industrial revolution that melds
energy, IT and biotechnology, well over 20% of GDP
for an industrial economy like Japan's.
Head
Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
Central, Hong Kong Thailand Bureau:
11/13 Petchkasem Road, Hua Hin, Prachuab Kirikhan, Thailand 77110
