Ever-present
Why gas and LNG escape critical scrutiny in Japan
In a close election, Ishiba Shigeru won the Liberal Democratic Party leadership and is slated to become the next prime minister. Next week, the LDP will announce the new Cabinet. We’ll see how this will impact Japan’s climate and energy policies over the coming weeks and months.
In the meantime, I’d like to explain continuity. In particular, I want to take an in-depth look at why Japan is likely to keep relying on natural gas and liquefied natural gas (LNG) as sources of electricity, and why gas and LNG have largely escaped criticism from clean energy advocates.
This is the third article in a series of deep-dives on the role of gas and LNG in Japan.
The first article traced how Japan became one of the top LNG importing nations in the world. The second article zoomed in on why Japan can’t give up its stakes in Russian LNG projects even after the outbreak of Russia’s full-fledged invasion of Ukraine.
Slowly and unevenly, the age of coal is coming to an end. Renewable energy, especially utility-scale solar, is growing at a ferocious pace around the world. But at the same time, another fossil fuel — natural gas — has quite the staying power.
Like many other industrialized economies, Japan still relies heavily on gas-fired electricity generation. About one-fifth of Japan’s primary energy source came from gas in 2023. In the electricity sector, that share was about one-third. Those are big shares.
Gas is, obviously, a fossil fuel. It emits carbon dioxide when burned. Worse, recent studies show that all across the gas supply chain — digging it up, processing it, transporting it, and storing it — there are leaks of methane, gas that’s much worse for global warming that CO2.
Despite this, policy discussions about Japan’s clean energy transition seem to have an odd blind spot for natural gas. You’ll find no shortage of climate advocates arguing that Japan’s coal and nuclear plants need to be retired. Compared to that, there’s virtually no one raising their voice about a gas phase-out.
Why? I have a pretty good hunch:
When they talk about fossil fuel phase-out, clean energy advocates are rightly focused on Japan’s continued use of coal-fired power plants. Gas is a much less glaring problem.
Gas-fired power plants are reliable and flexible sources of base load power and complement renewable energy, whose power generation varies with the weather and time of day. At least until energy storage systems can make renewables more reliable, it makes sense to keep gas.
Clean energy advocates are pragmatic. They expect and even recommend that Japan hold onto its gas power plants as more renewables come online because they want to avoid being perceived as too radical by policymakers and incumbent energy interests. But if we read the fine print, clean energy groups advocate for gas phaseout by the middle of this century.
Let’s get into the details.
Japan isn’t the only country gas-dependent country
As I mentioned at the outset, Japan is far from the only country dependent on natural gas and LNG for a big portion of its power supply.
Many other developed and developing nations have turned to coal as they lower their coal-fired generation capacity. The policy narratives in these economies are similar to Japan’s: gas emits less CO2 (i.e. the “transition fuel” idea) and is a reliable and flexible source of base load power as renewables get scaled up.
But the tension between the need to reduce greenhouse gas emissions and gas-fired power plants feel particularly acute in Japan, a country deeply worried about its energy security.
Gas power in Japan
Natural gas and LNG are important parts of Japan’s energy mix. According to Global Energy Monitor, there are 265 operating gas power plants in Japan, amounting to 5,334 megawatts of generation capacity.
The government, with its target to cut 46% of the country’s emissions by 2030 compared to 2013, takes a “portfolio” approach in its energy strategy. That means policymakers plan to maintain a diverse mix of energy sources, including fossil fuels and nuclear energy, on top of renewables and other technologies like hydrogen and carbon capture and storage.
The energy industry and METI see natural gas as uniquely crucial to Japan’s energy transition. They cite a few reasons for this.
First, as a fuel with fewer CO2 emissions than either coal or oil, they think of gas as a “transition” fuel in the shift away from a predominantly fossil fuel-based energy system to one mainly based on renewables. This is especially true if the emissions from gas power plants can be captured and stored, or if gas plants can used as a production source for hydrogen and ammonia.
Second, they argue that gas reserves are more evenly distributed across the world than petroleum. This makes reliance on LNG imports a sound strategy from geopolitical and energy security perspectives.
Third, as Japan increases its share of renewables, gas-fired power generation is seen as a reliable base load power source to complement solar and wind. Since solar and wind are intermittent — they don’t produce electricity when the sun doesn’t shine or when the wind doesn’t blow — gas power plants can be the back-up power source.
For these reasons, the Japanese government projects that LNG will remain an important power source. Its 6th Strategic Energy Plan, published in 2021, projects that LNG will constitute 20% of the electricity generation mix in 2030 (compared to 37% in 2019) even while renewables will increase to between 36% and 38% (compared to 18% in 2019). The 7th Energy Plan that’s currently under discussion will likely maintain a similar projection for gas.
Clean energy advocates’ moderate stance on gas & LNG
In Japan’s energy policy discourse, coal and nuclear energy have been highly politicized. This is especially true after the March 2011 Fukushima Daiichi accident. Gas- and LNG-fired power generation, on the other hand, seems to have been spared the most intense criticisms from clean energy advocates.
A good example of this is the policy position of one of Japan’s leading climate advocacy organization Kiko Network. Four years ago, when Kiko Network issued a statement urging the government to set a bold renewable energy target in its the 6th Strategic Energy Plan, the organization spelled out a moderate position regarding gas and LNG:
Natural gas emits relatively little CO2 among thermal power plants, has flexibility in power generation compared to nuclear power and coal, and is a power source with high compatibility with renewable energy. As we move away from coal and aim for a 100% renewable energy society, we need to continue using it for the time being.
Following a very similar logic, the Renewable Energy Institute elaborated its thinking about gas-fired electric generation in a March 2023 report:
Although natural gas is a type of fossil fuel, natural gas-fired power generation emits less CO2 than other types of thermal power generation. By simply increasing the capacity factor of natural gas-fired power plants to replace coal-fired power generation capacity, the CO2 emissions from that amount of coal-fired power generation can be halved. Natural gas-fired power is also superior to nuclear in the sense that its power output can be flexibly adjusted, making it useful when combined with variable renewable power sources.
Reflecting this rationale, REI’s recent simulation for an electricity sector with 80% renewables projects that gas-fired generation will supply the other 20%.
Another environmental organization with a big presence is WWF Japan. In June this year, WWF Japan presented its own scenario for Japan to cut 60% of its emissions by 2035. Not surprisingly, one of its top recommendations was retiring Japan’s coal plants by 2030.
At the same time, WWF Japan positions gas-fired power plants as the power source that should fill the gap left open by coal phase-out: “This gap can be filled by increasing the operating rate of gas-fired power plants from the current 35-50% to 60-70%, so there is no need to build new gas-fired power plants.”
Why gas escapes critical scrutiny
Why do these groups, which otherwise make a forceful case for why Japan should take a more progressive approach toward clean energy, let gas and LNG off the hook?
There are a few good reasons for this.
First, when they talk about fossil fuel phaseout, climate and clean energy advocates are rightly focused on Japan’s dependence on coal. Japan is an outlier among G7 countries in that it doesn’t expect to stop using coal, and in fact technologies like ammonia co-firing and CCS are expressly designed to maintain the use of coal in the long-term.
Second, I think we can take the logic of gas at face value. It’s true that the carbon intensity of gas is much lower than coal and it’s a reliable and flexible power source that can play nice with renewables, especially as renewables and large-scale energy storage systems are being slowly rolled out. Until renewables can supply most of Japan’s electricity, gas is the lesser of all evils.
The third and more interesting reason is that clean energy NGOs and think tanks are being politically pragmatic. They want their message to be heard and accepted by incumbent energy companies and policymakers who see gas as a necessary. Urging gas phaseout would make them radical in the eyes of incumbent interests. So their talking points become: 1) coal phase-out, 2) deploy renewables, and 3) reduce nuclear. Critical discussion of natural gas and LNG therefore take a back seat.
But gas will need to go by mid-century
As far as we’ve seen so far, clean energy groups’ stance on gas-fired power plants mirror the government’s views: the carbon intensity of gas and LNG is lower than that of coal or oil and the ability to use gas power plants flexibly makes it complementary to intermittent renewable energy. Given these points, clean energy advocates’ short-term recommendation for the government is to stop building new LNG and gas power plants, not a complete phaseout.
But of course, they’re fully aware of the climate impacts of gas plants. Looking across a longer time-horizon, they do want gas phaseout in the future. Kiko Network, immediately after explaining that gas is necessary in the short term, points out that “On the other hand, natural gas is also a fossil fuel, and we must also reduce it to zero to achieve a decarbonized society.” REI, too, sees no role for gas after 2035: “Since it will be necessary to achieve 100% renewable energy as soon as possible after 2035, natural gas-fired power will need to be phased out. Until then, however, gas-fired power can be used to supply the power requirements that cannot be met by renewables.”
Let’s bring this back to today’s policy discussions in Japan. More voices are calling for aggressive renewable energy targets (in line with the COP28 pledge to triple global renewable energy capacity) and an early retirement of coal plants. But again, domestic use of gas and LNG power generation is largely missing from these recommendations. As the Japanese government revises its Strategic Energy Plan and Nationally Determined Contribution, gas-fired power plants are likely to stay in Japan.