Fortress of Fossil Fuels: Reading the 7th Strategic Energy Plan (Part 4)

Image credit: Ania Korsunska (Background data: Our World in Data)

Hey Power Japan readers,

On February 18, the Ishiba Cabinet approved three big documents: the 7th Strategic Energy Plan, the Nationally Determined Contribution (which sets Japan’s climate mitigation targets), and the GX 2040 Vision. There was virtually no change in the three plans from their draft stage (in the SEP, a one percentage point increase in the 2040 outlook for solar was literally the only difference).

So, there it is. The SEP charts the path for Japan’s energy system at least until the year 2040. So does the GX 2040 Vision. The climate targets extend the horizon of Japan’s greenhouse gas emission to 2035 and 2040. While some of these plans will be reviewed again in a few years (SEP in three years; the climate target in five), practical policies and private-sector investments to bring these targets about are already in motion. These policies and investments are carving the path to the future, foreclosing potential paths to alternative futures.

For better or for worse, this is how history gets built. We are in the front row seat.

Since the SEP was approved essentially without modification, my last several posts on it (first on the broad context; second on nuclear energy; and third on renewables) remain relevant. Check them out if you haven’t yet. In this post, we look at what the SEP says about the Japanese government’s thinking about the future of fossil fuels in its energy mix.

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A bit of housekeeping before we begin:

• Two pieces I wrote on Japan’s new climate targets appeared in Energy Tracker Asia and Climate Home News last month. I dig into how the targets remained unchanged from their proposal stage and how, according to analysts, the targets aren’t 1.5°C aligned despite the government’s claim.

• I will also host the first quarterly Ask-Me-Anything webinar for paid subscribers at the end of March. I’ll send out information and a registration form tomorrow so be on the lookout for that.

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As was the case with renewables, fossil fuels consist of different energy sources — mainly petroleum, gas, and coal. The trends and outlooks for each fuel vary, so here is the high-level takeaway from this post:

1. Liquefied natural gas (LNG): key to a steady energy transition & global influence. Japan positions LNG as a crucial bridge fuel in its energy transition for reducing reliance on inefficient coal-fired power plants while ensuring stable electricity and urban gas supplies. It sees LNG infrastructure as a strategic asset—not only for energy security but also as a potential future hub for LNG across Asia and for lower-emission fuels like hydrogen.

2. Petroleum and coal: last line of defense. Oil and coal are both positioned as indispensable thanks to their high energy density, their role in emergency reserves, and the relatively low geopolitical risk in supplying them. Yes, Japan will continue using oil and coal, in addition to gas, in its future energy system. That’s despite its pledge to get to net-zero carbon emissions by 2050.

3. More upstream self-development. Shocks in international energy markets can easily shake up Japan because of its high import dependence on fossil fuels. To mitigate this risk, the SEP calls for ramping up upstream oil, gas, and coal production by Japanese organizations in resource-rich countries.

4. CCUS: cutting fossil fuel emissions. Japan sees CCUS (carbon capture, utilization, and storage) as essential for cutting emissions from hard-to-abate sectors like steel and chemicals as well as from power generation. The strategy aims to secure 6-12 million tons of CO2 storage per year by 2030 while promoting investments in a competitive CCUS value chain.