Japan Energy Currents
New METI minister to continue energy status quo; Renewables are far cheaper than new nuclear; Japanese government to mandate solar panel recycling; NGOs urge JBIC bondholders to press for change
Every week, Japan Energy Currents will highlight recent news and analyses that give us a better understanding of the current moment in Japan’s energy landscape and its role in the global energy transition.
*Some articles will be in Japanese and some will be paywalled. But I’ll aim to summarize each article with enough detail so you won’t miss out.
This week, I bring you eight stories from Japan and across the world that caught my attention.
Japan
1. The Ishiba Cabinet unveiled (The Japan Times)
The LDP announced Ishiba Shigeru as the new prime minister last week, and at the same time unveiled the new cabinet. Ishiba’s picks reflect his attempt to maintain internal harmony within the LDP ahead of the October 27 general election.
Former General Affairs Chairman and close ally of former PM Kishida Moriyama Hiroshi was appointed the LDP’s secretary-general, the de-facto 2nd most powerful post in the party;
Koizumi Shinjirō — one of Ishiba's rivals in the leadership race — was chosen as chairman of the election committee. He’ll act as the party’s face during elections;
Former PM Suga Yoshihide as the party's vice president;
Former Defense Minister Onodera Itsunori will chair the party’s policy committee;
Finance Minister Suzuki Shunichi was named chairman of the general affairs council, a position he’s held in the past;
Agriculture minister Sakamoto Tetsushi will be the party’s new parliamentary affairs chief;
Asō Tarō, another former PM, has been named the party's senior adviser, an honorary role reserved for former party leaders;
Mutō Yōji is the new Minister of Economy, Trade and Industry;
Asao Keiichiro is the new Environment Minister.
2. New Economy Minister wants to maximize renewables and nuclear energy (METI )
Let’s zoom in on the new head of the Ministry Economy, Trade and Industry (METI). Yōji Mutō replaced Saitō Ken as the METI minister and he concurrently holds the posts of Minister for the Promotion of Green Transformation in the new Ishiba Cabinet. In his first press conference on October 2, Mutō told reporters that his priority in energy policy is to meet the projected increase in electricity demand (due to the use of AI and new data centers) in Japan by restarting nuclear power plants and deploying renewable energy. Overall, he signaled that he wants to continue former PM Kishida’s energy strategy, including his Green Transformation (”GX”) policy.
3. New nuclear plants are far more expensive than renewables (Renewable Energy Institute Japan)
Renewable energy sources like solar, onshore and offshore wind are 3-6 times cheaper than electricity generated by new nuclear power plants. This is according to a column by Japan’s energy think tank Renewable Energy Institute (REI). And while global renewable energy generation has increased 3.3x between 2000-2023, generation from nuclear pretty much been flat. That’s because most of the global nuclear plants are concentrated in Europe, the US, and Japan, and in all three markets, nuclear has stagnated for different reasons. Only in China is new nuclear still cost-competitive with renewables. REI is urging the Japanese government to consider these latest data, both in Japan and globally, to shape its discussion on the next Strategic Energy Plan.
4. Mandating solar panel recycling (Housing Tribune Online | in Japanese)
METI and the Ministry of Environment (MOE) will craft a legislative bill mandating solar panel recycling by the end of the year. Japan’s solar energy generation capacity has grown quickly starting in 2012, thanks to the Feed-in-Tariff scheme. But the government is worried about what to do with used solar panels and the carbon emissions from solar panel manufacturing. Advisory committees under both ministries have been discussing this issue since last year and issued an interim report in January. The bill is expected to establish a legal framework that makes solar panel recycling the obligation of electricity generators and ensuring that there’s a workable business model for recycling.
5. NGOs call on JBIC bondholders to engage with JBIC to stop financing new fossil fuel projects (Japan Center for a Sustainable Environment and Society)
Five environmental NGOs requested 50 institutional investors that hold bonds issued by of the Japan Bank for International Cooperation (JBIC) to engage with JBIC to stop financing new fossil fuel projects. JBIC is a public financial institution and export credit agency with a history of pouring billions into fossil fuel projects to support Japan’s energy security. Since 2023, even after the Japanese government committed to end new public support for international fossil fuel projects by the end of 2022, JBIC has signed loan agreements with seven overseas gas and LNG projects. The NGOs are requesting JBIC’s bondholders to engage with JBIC to stop supporting new fossil fuel projects and to set and disclose emissions targets for JBIC’s lending and investment portfolio for 2030 that’s aligned with the 1.5°C goal of the Paris Agreement. Most of the 50 institutional investors are financial institutions headquartered in North America and Europe.
For more background on fossil fuel financing by JBIC and other Japanese public financial institutions, see my recent post:
Global
6. Tripling renewable energy is “within reach” says IEA (The Verge)
In last year’s COP28, nearly 200 countries pledged to triple global renewables capacity by 2030. This goal is within reach to get us back to somewhere near the path to avoid the very worst climate crisis, concludes a new report by the International Energy Agency. But to do this, countries will need a lot more renewable energy and make major investments in infrastructure to succeed:
~25 million km (15.534 million miles) of electricity grids need to be built or updated by 2030;
By 2040, the equivalent of all of the world’s existing power grids would need to be refurbished or built new;
Power grids will need to add 1,500 GW of energy storage.
These investments must start ASAP. IEA executive director Fatih Birol said “To ensure the world doesn’t miss this huge opportunity, the focus must shift rapidly to implementation.”
7. China pumped in over $100 billion overseas in clean tech since 2023 (Reuters)
Private Chinese firms are pouring investments in clean energy technology overseas to avoid tariff in the US and elsewhere. That’s according to the Australian research group Climate Energy Finance (CEF). China is already responsible for 32.5% of global electric vehicle exports, 24.1% of lithium batteries and 78.1% of solar panels. But its dominance in these markets prompted the US and Canada to hike tariffs on China-made EVs, solar panels and lithium batteries. The EU raised its tariff on Chinese EVs just last week. Overseas investments by Chinese companies are driven by the need to circumvent these barriers.
The preponderance of cheap Chinese clean technology will continue to be a double-edged sword. As Chinese leaders say, cheap Chinese imports have been a boon to the global energy transition and efforts to combat climate change thus far. But as Western countries claim, heavy reliance on China for crucial technology can become a geopolitical risk and keep hindering countries from developing domestic supply chains in those tech.
8. UK closes its last coal plant (Euro News)
On September 30, the country’s last coal-fired power plant shut down, bringing its 142-year history of coal-powered electricity to a close. The five key policy lessons that facilitated the UK’s coal exit were:
Tightening decarbonization targets by setting a 2025 deadline for coal phase-out;
Raising the cost of coal through carbon pricing and further emissions requirements for new power stations;
Supporting offshore wind;
Reforming the market for renewables to incentivize investments in wind and solar;
Investing in the electricity grid to speed up the deployment of renewables.
Among the countries of the Organization for Economic Cooperation and Development, coal power has halved since 2007. Coal power accounted for 17% of the electricity mix in OECD countries last year, but 27 of 38 of them have pledged to be coal-free by 2030.
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