Japan Energy Currents

Climate and energy targets up for public comment; JERA's news think tank; Tokyo's own hydrogen society; Offshore wind auction winners; Grid-scale battery in Yamaguchi; Malaysia-Japan energy ties

Image credit: Ania Korsunska

Hey Power Japan readers,

Happy Quarter-Into-The-Twenty-First-Century.

Time flies, even by historical standards, doesn’t it? Y2K feels like just yesterday (Sort of. Okay, I’ll stop aging myself).

Speaking of time flying, half of January is now behind us. The last few weeks have seen plenty of new developments in the world of energy in Japan and elsewhere.

With the updated climate targets set to be submitted to the UN by February, Japan is putting its own target, along with two other important energy & decarbonization strategies to public comment. Behind the scenes, the economy ministry is also putting together a plan B in case Japan falls short of that climate target, while the country’s largest energy company is investing in its own think tank. Japan’s capital is poised to establish a microcosm of a hydrogen society, the country’s offshore wind and energy storage capacities slowly and (maybe) surely grows, and the PM Ishiba is forging ever-closer ties with Southeast Asian leaders for secure supplies of LNG and hydrogen in an increasingly uncertain world.

This week, I bring you seven stories that caught my attention.

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1. Key energy and climate plans are up for public comment

• Old news by now but I’ll put it here anyway.

• These three big plans for Japan’s energy and climate future are up for public comment (i.e., the policymaking process whereby anyone can submit their comments, concerns and recommendations on a proposed policy draft):

  • The updated Nationally Determined Contribution, which sets Japan’s greenhouse gas reduction target for 2035 and 2040.

  • 7th Strategic Energy Plan, a comprehensive approach and roadmap that shapes Japan’s energy system until 2040. But the Plan’s renewable target is shown as a wide range (between 40% - 50%) and it doesn’t specify the share of each fossil fuel that will make up thermal energy. Kikkawa Takeo of the International University of Japan points out that this lack of clarity may make it hard for businesses to invest in energy projects.

  • GX 2040 Vision, a wide-ranging industrial policy for linking Japan’s decarbonization and economic competitiveness.

• The deadline for the public comment for all three plans is January 26. Revision and cabinet approval are expect to follow soon after.

2. METI’s plan B for 2040 sees a bigger role for fossil fuels (Denki Shimbun | in Japanese)

• On December 25, a committee of the Agency for Natural Resources and Energy, a core office in METI, unveiled five scenarios for Japan’s 2040 energy system.

• Three of the scenarios assumed that the large-scale adoption of either renewables, hydrogen and its derivative fuels, and CCS would succeed. A fourth assumed the success of all three. The fifth scenario envision a future in which only existing technologies would be used and the proposed NDC targets isn’t met.

• In that last scenario, fossil fuels will supply 45% of the electricity in 2040, whereas renewables will supply 35%. In this case, LNG imports will be critical for ensuring Japan’s energy security.

3. JERA launched a think tank to watch market trends (JERA)

• Ah, speaking of LNG! On Jan 1, JERA, Japan’s largest power generator and biggest LNG buyer, launched a think tank to analyze domestic and international energy, economic and political trends. It’s calling it the JERA Global Institute.

• Modeled after the research teams at oil majors like Shell and BP, the JERA Global Institute will produce long-term forecasts to help JERA’s senior management and the board navigate the uncertain conditions in energy markets worldwide. Topics will range widely, from macroeconomic trends, politics and policy, social trends, and geopolitical risks.

• 30 people have already been recruited to make up the think tank, drawn from the Ministry of Foreign Affairs, consulting firms, think tanks, finance, and journalism. Headquartered in Tokyo, it has branches in the US and Indonesia, according to Denki Shimbun. This hints at the strategic value these regions hold for JERA.

4. Tokyo is building its own hydrogen society (FNN | in Japanese)

• Having committed to halving its CO2 emissions by 2030 and carbon neutrality by 2050, the Tokyo Metropolitan Government is building its every own hydrogen supply chain within the city, from production, transport, and end use.

• A hydrogen production plant using renewable electricity is under construction in the Ōta ward. The Metropolitan Government is working with companies to reduce costs on pipelines for hydrogen transport. Hydrogen fuel cell buses are already on Tokyo roads, and the Metropolitan Government will subsidize businesses to adopt fuel cell trucks and families to buy FCEVs.

5. 3rd round of offshore wind auction (Nikkei | in Japanese)

• Old news once again, but here it is. METI and the Ministry of Land, Infrastructure, Transport and Tourism announced the results of the third auction for two offshore wind projects on Dec 24 last year.

• JERA-led consortium won the bid for the 61.5 MW project off the coast of Aomori Prefecture. For the 45 MW Yamagata Prefecture project, the Marubeni-led consortium topped the auction.

• Both projects are fixed-bottom and expected to begin commercial operations in June 2030. Both will use Siemens Gamesa’s wind turbines, according to Wind Journal.

• Nikkei notes that over 15 companies participated in the environmental assessment before the auction but decided not to put in bids, a sign of market uncertainty marred by inflation, rising equipment costs, and a shortage of skilled workforce. These challenges have recently driven some major players — most notably JERA and BP — to consolidate their offshore wind segments.

6. Chugoku Electric Power Co. to build a utility-scale battery in place of retired oil power plant (Denki Shimbun | in Japanese)

• Chugoku Electric Power, one of Japan’s ten major electric utilities, announced that it will build a utility-scale lithium-ion battery in place of the heavy fuel oil Kudamatsu Power Plant in Yamaguchi Prefecture, which was decommissioned in early 2023.

• The energy storage system’s generating capacity will be 10 MW. Construction is set to begin in July this year and the company is aiming to complete the project in the second half of 2028.

• Chugoku Electric Power is tapping METI’s subsidy for renewables and grid-scale batteries expansion to offset the construction cost. This battery project is a key part of the company’s plan to add more renewables in its service area.

7. Malaysia-Japan energy ties to strengthen via LNG and hydrogen (Nikkei Asia)

• On his 4-day tour of Southeast Asia last week, Japanese PM Ishiba met with Malaysian PM Ibrahim. On the agenda was deepening ties on energy security, with a focus on LNG and hydrogen projects.

• Malaysian oil company Petronas already provides LNG to Japan’s Shikoku Electric and Hiroshima Gas. Japanese companies are involved in a major hydrogen project in Sarawak, Malaysia’s eastern state.

• This is part of a broader move by Japan and Southeast Asian countries to forge closer economic, energy, and diplomatic ties against the backdrop of Trump’s return to the White House and the thickening uncertainty this is causing, as well as the region’s growing importance in the international community.

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That’s it for this week’s Japan Energy Current. Be sure to share this edition with your network.

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