Achieving Energy Independence

Energy independence is a goal for many nations, especially now with added geopolitical and resource constraints. Due to its external resource reliance, Japan will likely remain a net importer of energy. Yet energy diversification is growing in Japan with technological improvements in wind and solar power production, biomass energy, and nuclear generation. Hydroelectric, geothermal, and fusion power are even now being discussed as hopeful alternatives to traditional oil, gas and coal. But how does Japan get there realistically? 

Let’s explore some options.

Key to achieving energy self-reliance will be rural Japan, which is already leading the way in energy innovation for the future. In the countryside, there are exciting projects underway with emerging technologies that will reduce Japan’s dependence on outside energies, but this will take time.

While energy innovation can benefit rural Japan, right now Japan’s lack of energy independence puts rural communities at risk. Key industries like agriculture and manufacturing require power, and the more expensive that power is, the harder it becomes to run a profitable business.

First, a snapshot of things as they stand now. According to the Agency for Natural Resources and Energy, part of Japan’s Ministry of Economy, Trade and Industry (METI), Japan had an energy self-sufficiency ratio of just 12.1% in FY2019. Japan clearly needs to reinvent itself, as it has in the past, to reach impactful energy independence, and progress is being made each year. By 2021, up to 16% of Japan’s energy came from solar, 11% from hydropower, 5% from wind, 5% from biomass, and 1% from geothermal.

Meaningful energy independence is years away, but Japan is no stranger to embracing change. The Meiji Restoration (1868 – 1912) was a case in point. Realizing Japan was not competitive with the West, leaders pushed hard to study Western ways and apply targeted principles at home. This, combined with domestic innovation, served as a powerful combination that led to rapid industrial and social change.

Yet even before the Meiji period, the city of Kamaishi in Iwate prefecture was on the path to transforming itself into a steel production powerhouse. In 1857, Japan’s first European-style blast furnace was constructed in Kamaishi, an action that showed leadership on the local level. That same type of forward thinking can be seen in many places around Japan today.

This is the first article of a six-part series on Japan’s Rural Revitalization. Together with each article, we’re also discussing each topic on Japan Unleashed, Parthenon Japan’s new official podcast.

Energy Transformation

Meiji’s era of modernization coincided with rapid growth in the Japanese population, which had remained steady around 30 million for 400 years during the Edo period. However, Japan’s domestic resources couldn’t keep up with the consistent increase in demand for energy, so self-sufficiency was destined to decline. 

With Japan’s population now in decline, can energy independence grow? Perhaps it is useful to take a quick look at key pivot points in Japan’s modern era energy evolution.

Japan has relied heavily on domestic coal and gas for industrial, military and consumer needs.  Perhaps unsurprisingly, oil became a popular alternative to coal over time. As the search for domestic energy sources grew, oil field development reached its peak production in 1915 when a large underground reserve was tapped at the Akita-Kurokawa oil field in Akita prefecture.  The outbreak of World War I interrupted imports of development equipment, hampering work on new oil fields, and domestic production began to decline. It has been downhill ever since. Just prior to the outbreak of WWII, Japan was dependent on imports for more than 90% of its oil, and embargos from major Allied oil producers as an Axis power was one of the catalysts that led Japan to wage war.

Post-war Japan’s growth continued to increase its demand for power, which led to an ever-dwindling rate of self-dependence. Japan was 58% self-dependent in 1960, but only 6.4% self-dependent in 2014, the nation’s all-time low. Japan’s path to seriously embracing renewable energy isn’t just about appeasing CO2 reduction advocates: it is the only means by which the nation can ensure economic security and maintain competitiveness.

Energy Initiatives

Today, Japan is well on its way toward creating an effective energy mix for the future as a result of national government initiatives. Japan’s energy policy is based on the principle of “S + 3E” (Safety, Energy Security, Economic Efficiency, and Environmental Sustainability), a multi-layered energy supply structure focused on gradual deregulation in which energy sources are targeted to reach optimal performance.

Linked to this effort are national energy campaigns spurred by the Fukushima disaster to enhance collaboration between businesses to cope with disasters, build resilient power transmission and distribution networks, and introduce disaster-resilient dispersed electricity systems. Reconfiguring power grids to integrate renewables and discuss how to share costs is underway on a national level, but how about locally?

Local Efforts

The Fukushima disaster spurred local governments around Japan to jointly establish renewable energy networks such as the Renewable Energy Council. Additionally, cooperatives and citizens’ organizations, local renewable power producers, and other institutions are becoming more proactive in sharing information with the public.

Japan’s power market opened up to new entries into the retail electricity business in 2016, which encouraged municipalities to establish local companies focused on supplying energy directly. This has resulted in a positive by-product: better control of electrical supply and reduced rates for local consumers. Regional programs have also gained acceptance in recent years. The Japan Climate Initiative (JCI) is an effort by over 100 Japanese companies, local governments, research institutions and NGOs to strengthen communication and exchange strategies designed to help meet climate goals in Japan.

Furthermore, local governments have joined global efforts to achieve COP27 targets to limit emissions via Japan’s nationwide carbon credit system. This provides domestic and overseas players with opportunities to enter the Japanese energy market and sell their carbon credits.

Here are just a few examples of notable local initiatives in action:

  • Kanagawa prefecture has been promoting the installation of cost-effective solar power through joint purchases of solar power generation equipment. 
  • Yokohama City and 12 local governments in the Tohoku region established a collaboration agreement in 2019, encouraging small and medium-sized enterprises in Yokohama to purchase electricity from renewable energy sources in Tohoku.

Several municipalities are also committing to long-term energy goals:

  • More than 200 municipalities, with a combined population of over 90 million people, have committed to becoming zero-carbon cities.
  • Nagano prefecture, working with the Tokyo Metropolitan Government, has initiated a solar mapping project to determine the energy potential of solar power generation for buildings in the region.

These kinds of efforts are helping Japan embrace renewable energy. As metropolitan governments with high local demand face challenges to supply renewable energy, their path to net-zero carbon emissions is greatly supported by collaboration with rural municipalities.

Renewable Concerns

While Japan’s energy mix has rapidly diversified, renewable energy is not without downsides and challenges.

The Fukushima nuclear meltdown in 2011, a direct result of having built a nuclear plant in a known earthquake and tsunami zone, severely damaged public trust in nuclear energy. Japan shut down all of its nuclear plants in the immediate aftermath of the disaster, with only 2.5% back in operation by 2015. Each restart has been met with local opposition. With public opinion on nuclear plants overwhelmingly negative, the future of nuclear power in Japan is unclear.

While solar power is often cited as the darling of renewables, even with panel efficiency and decreasing production costs, it too does not come without its shortcomings. Japan’s desire to increase solar power generation post-Fukushima led to government initiatives to buy solar power from the private sector at extremely favorable rates. This resulted in a gold rush-like movement among domestic and foreign firms to quickly develop solar fields to take advantage of this scheme. This devolved into the rise of mega solar projects, many of which are poorly managed and built on cheap land in rural hilly areas. This lack of regulation has led to devastating landslides and anti-solar movements among local residents who don’t want mega solar farms in their backyards.

Other renewables are also not without demerits. Wind farms require constant maintenance and are also seen by some local communities as eyesores. Japan has abundant geothermal resources, but efficient use makes required flow and high temperature only possible in some areas. Most of those areas are unsurprisingly hot spring resort destinations. Fueled by rumors that geothermal can alter hot spring temperatures and quality, local accommodation owners and stakeholders overwhelmingly oppose geothermal plants in their communities.

Future Goals

Despite some shortcomings, renewables are clearly the key to solving Japan’s energy issue. In order to meet growing energy needs to serve Japan’s rising number of datacenters and other power-intensive facilities, Japan’s current energy grid system lacks long-term generation capability. Although grid and storage capacity are limited, advanced storage capabilities, both on and offshore, look promising. Even so, obstacles remain.

What could speed up energy revitalization? Here are a few of our ideas:

  • Increase local and national spending on renewable energy projects, such as R&D financial support for Made in Japan battery storage and efficient solar technology.
  • Improve Japan’s Feed-In-Tariff (FIT) system. This would expand the ability of homeowners, business owners, farmers, and private investors to pay a cost-based price for the renewable electricity they supply to the grid. Additionally, it would promote further development of diverse renewable resources and provide return-on-investment to investors.
  • Continue efforts to create and strengthen demand-supply connections between metropolitan areas and smaller grid players.
  • Stimulate additional investment in renewable energy by further integrating private sector initiatives.

Renewable Energy Initiatives

The Government of Japan will continue to develop rules, systems, and guidelines that promote renewable energy development that may reduce rural pushback. But where is the future of renewable energy headed?

Various initiatives are underway, but public buy-in is unfortunately absent from the picture:

  • Tokyo Governor Koike recently announced that newly built homes and apartment complexes will be required to have solar panels installed by FY2025. This was approved by the Tokyo Metropolitan Assembly in December 2022 in a bid to reduce carbon emissions from the household sector. Tokyo’s goal is to halve carbon emissions by 2030 from the level of those in 2000. While Tokyo took decisive action, this development did not involve public dialog, which is not ideal.
  • Private sector plans to build a mega solar farm in Ogawa Town in rural Saitama Prefecture highlights the need for additional reform. A massive solar farm in an area experiencing an influx of new residents who are moving to the town largely for its natural beauty requires government oversight and public discourse. The lack of both of these elements has led to strong local opposition. Transparency and rules that enforce sustainable development is the only way to build trust with local communities.

Trust is crucial. Painful memories of the Fukushima disaster caused by lack of preparedness are still fresh in the public mindset. The fallout of public trust in science lingers even today. On the other hand, if Japan’s quest to increase energy independence is to be realized in the near term, Japan’s nuclear reactors will need to be reactivated. Collectively, they supplied approximately 30% of the country’s electric power before the Fukushima disaster. As of June 2022, only 10 out of Japan’s 54 nuclear reactors have been restarted with local approval.

Since trust in large-scale nuclear power by the Japanese public has not recovered since Fukushima, and current reactors continue to age, Japan could shift its focus to investment in new types of nuclear reactors that promise less footprint, higher safety, and better efficiency. Clear and honest communication is the only way to regain public trust.

Looking towards the future

Longer-term, renewable energy production costs should decline as scale grows. This will be good news for rural areas that suffer from a lack of working capital and investment incentives. In addition, systems that are currently off the grid can benefit from using locally-available resources to directly generate electricity for rural communities. This will contribute to local economic revitalization and lower electricity prices through increased competition.

Further development of sustainable business models, combined with technical and policy initiatives, are key to growing a renewable-focused energy mix in Japan. Rural initiatives are at the core of Japan’s quest for energy self-reliance. 

Realizing this development requires nationwide efforts, so effective communication between the national government and local stakeholders is crucial. By building public understanding of the importance of energy independence, and trust and confidence in government initiatives, Japan can overcome the obstacles to achieving this important movement towards sustainable economic security.

Words: Parker J. Allen and David Wagner

Parker J. Allen is President & CEO of Parthenon Japan. David Wagner is Parthenon Japan’s Senior Advisor overseeing the media training and crisis communications practices.