Japan’s “fantasy” energy plan; Japan’s gas problem; Coal - to quit or not to quit; and more

Japan Energy Currents

Apr 02, 2025

Hey Power Japan readers,

From where I sit, spring keeps peeking out from around the corner and then disappearing again. But the cherry blossoms sure are beautiful!

Now that the big energy and climate strategies have been passed in Japan, and with the Trump administration causing a decade’s worth of panic among political and business leaders around the world in the span of two months, Japan’s energy policy landscape feels pretty quiet. As you’ll see in today’s Energy Currents, most of what I gathered are commentaries and industry news rather than policy-level movements.

But let’s not be quick to discount these stories. Commentaries shape narratives (that’s why they’re often called “thought leadership,” as much I dislike that term). Industry news is where the rubber meets the road (i.e., policy directions and corporate strategies get implemented).

I’ll frame them broadly. Two hard-hitting commentary pieces criticize the new Strategic Energy Plan and Japan’s (JERA’s in particular) LNG strategy, while Japan’s coal-fired power plant operators can’t seem to decide what to do with a few of their aging plants. At the same time, the Japanese government and utilities are going all-in on LNG, hydrogen and ammonia, even if this means relying heavily on other countries.

With that, I bring you eight stories that caught my attention.

1. Japan’s new “fantasy” energy plan relies on unproven tech (Solar Journal | in Japanese)

The 7th Strategic Energy Plan that the Ishiba Cabinet approved in February is now old news. But here’s a refreshing critique of the plan by Kazuya Kitamura of the Japan Renewable-energy Research Institute.
The 7th SEP aims for a 2040 energy mix of 40-50% renewables, 30-40% fossil fuels, and around 20% nuclear. But Kitamura calls this plan a “fantasy”: there’s no way enough nuclear reactors can be restarted or built to supply 20% of Japan’s electricity and it’s dubious also if renewables can be scaled to meet the 40% target. So realistically, fossil fuels’ share of 30-40% of the total electricity supply is, in all likelihood, a severe underestimate.
Squaring the circle of keeping that much fossil fuels and trying to achieve Japan’s climate target of 73% emissions cut by 2040 will require “zero emission thermal” energy. This means curbing emissions from fossil fuel power plants through carbon capture and storage (CCS/CCUS), hydrogen and ammonia co-firing.
Kitamura points out that the problem with these “zero-emission thermal” tech is that they’re far from proven at the commercial scale, highly costly, and lack domestic infrastructure. Japan is relying on overseas markets to produce hydrogen and ammonia (see story #8 below 👇), and to store the carbon captured in Japan, but this means Japan’s energy security won’t be improved.
Kitamura concludes by advocating for going big on renewables. Sure, massive adoption of renewables in Japan may also be a “fantasy” today, but it’s a much more feasible and desirable fantasy than “zero-emission thermal.”

2. Japan has a gas problem (Nikkei Asia)

Another hard-hitting opinion piece, this time by Tim Daiss, energy and geopolitical journalist and analyst. He says Japan’s utilities remain locked into oversized long-term LNG contracts, even as domestic demand shrinks. Instead of breaking contracts and cutting LNG imports, these utilities are now offloading excess gas in secondary markets, especially in the Asia-Pacific.
JERA, Japan’s top LNG importer and global gas player, faces heavy criticism for greenwashing—only 2.2% of its business is renewable, yet it brands itself as a clean energy leader.
JERA plans to invest $6 billion in blue hydrogen (from fossil fuels) and expand LNG operations in Australia, the US, Vietnam, and Bangladesh, while representing a whopping 15% of Japan’s total greenhouse gas emissions.
“The way forward for JERA,” Daiss writes, “would be to re-examine what it labels as clean energy, pivot away from false climate solutions and cease new LNG project development, all the while ramping up investment in renewables, including solar power and both onshore and offshore wind power.”

3. Hokuriku Electric Power postpones the phase-out of coal-fired power again (Japan Beyond Coal)

Electric utility Hokuriku Electric Power Co. has delayed the retirement of its 250 MW Toyama Shinko Coal Unit 1 until FY2028 — marking a decade-long postponement from its original 2018 phase-out plan.
Despite previously claiming it would replace the coal unit with LNG, the company continued operating both; now it cites energy demand growth as spelled out in the 7th SEP, unstable global fuel supply, and earthquake-related disruptions as justification for the delay.
The Shika Nuclear Plant’s uncertain future and a lack of renewable energy investment leave Hokuriku reliant on coal power, slowing Japan’s broader energy transition.
Hokuriku Electric Power’s new 600 MW LNG Unit 2 is under environmental review, but its large carbon footprint raises questions about whether Japan is truly moving away from fossil fuels.

4. JERA to halt some coal plants in spring and fall for decarbonization (Nikkei | in Japanese)

Meanwhile, Japan’s top coal power producer, JERA, will suspend operations at some coal plants during low-demand seasons (spring and fall) starting in FY2026. The move shifts coal from year-round to seasonal use, prioritizing winter and summer when demand peaks. The inefficient Hekinan Power Station units in Aichi Prefecture are likely targets for shutdown.
Coal accounted for about 30% of Japan’s power generation in 2023. But it faces economic and environmental challenges. Coal-based electricity is still cheaper than energy from LNG and renewables in Japan, but the cost gap is shrinking. Carbon-intensive coal plants are struggling against market forces and global decarbonization trends. Japan’s reliance on Australian coal — where production could drop by two-thirds by 2040 — adds further uncertainty.
While Western nations phase out coal, Japan plans to keep some plants as emergency backup, even introducing subsidies for idle coal units. But these subsidies were too small to incentivize operators — there were no bidders in the first auction in fall 2024. Japan’s coal future hangs in the balance.

5. Alberta secures LNG deal with Japan as Trump struggles to sell Alaskan gas (Western Standard)

The premier of the Canadian province of Alberta, Danielle Smith, signed an MOU with Japan’s JOGMEC at the CERAWeek conference in March. The deal comes at an ideal time for the province, whose $40 billion LNG Canada project in Kitimat prepares for first shipments this year.
The MOU also flies in the face of the Trump administration’s attempt to strong-arm Japan into investing in and buying high-cost LNG from Alaska. Western Standard reports that Canada’s shorter shipping distance to Japan and stable investment climate challenge Trump’s vision of Alaska as a dominant LNG hub.

6. Osaka Gas charts multi-scenario path to 2050 (Nikkei | in Japanese)

Gas utility Osaka Gas launched its “Energy Transition 2050,” a decarbonization strategy outlining multiple emission reduction scenarios for the company’s operation.
The strategy’s most ambitious target is to avoid CO2 emissions from across the company’s supply chain by 10 million tons by 2040.
A core pillar is LNG. Osaka Gas has led efforts to shift heavy industry from coal and oil to LNG across the Kansai region and plans to keep doing the same to decarbonize industrial heat.
E-methane is another pillar. It’s synthetic methane made from CO2 and hydrogen that can reuse existing gas infrastructure. Osaka Gas is building a production plant in Niigata (operational FY2025) and plans to showcase the fuel at the Osaka-Kansai Expo 2025, targeting 1% of gas sales from e-methane by 2030.
The company is also expanding its renewable portfolio to 5 gigawatts (GW) by 2030 (currently at 3.56 GW as of Dec 2024) and is investing in battery storage to address output variability.
Osaka Gas is ramping up CCS research and co-founded an international group in 2024 to promote e-methane policy and awareness, believing global collaboration is essential to commercializing next-gen fuels.

7. KEPCO to power Osaka Expo with hydrogen co-firing (Nikkei GX | in Japanese)

Speaking of “zero-emission thermal,” electric utility Kansai Electric Power (KEPCO) unveiled a ¥13 billion demonstration plant in Himeji that will co-fire hydrogen and gas. It will supply electricity to the Osaka-Kansai Expo site beginning this month by blending 10% hydrogen in a gas turbine.
KEPCO plans to ramp up this percentage to 30% after 2030. By 2050, it wants to switch to 100% hydrogen-burning turbines.
The 30% hydrogen blend will be a big leap from previous 8% trials and signals Japan’s push to decarbonize power. Kanadevia Corp. will supply the electrolyzers and hydrogen tanks.

8. Japan eyes Indian green ammonia (Nikkei | in Japanese)

Six Japanese firms — MOL, IHI, Hokkaido Electric, Mitsubishi Gas Chemical, Mizuho Bank, and Tokyo Century — signed a memorandum of understanding (MOU) to explore investing in a green ammonia project in Odisha, India, led by the Indian renewables giant ACME Group.
The project aims to produce 400,000 tons of green ammonia annually by 2030, with plans to ship it to Japan for use in power generation, shipping, and chemical industries. If it comes to fruition, this will mark the first green ammonia imports to Japan.
Ammonia, which emits no CO₂ when burned, is emerging as a key clean energy carrier and fuel, especially for hard-to-decarbonize sectors. Japan is betting big on it to meet its climate goals.

That’s it for this week. Comments or questions? Put them in the comments section or in the subscriber chat.

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