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A crossroads for Japan: Revive nuclear or go green?

In the wake of the Fukushima disaster, Japan has idled all 50 of its nuclear reactors. While the central government and business leaders are warning a prolonged shutdown could spell economic doom, many Japanese and local officials see the opportunity for a renewable energy revolution.

May 5 marked the shutdown of the last of Japan’s 50 viable nuclear reactors, with poor prospects for any restarts before the summer. The central government, the nuclear industry, most big business associations, and many international observers seem convinced that this will invite chaos through escalating fossil fuel costs and the risk of blackouts.

But polls suggest a growing segment of the Japanese population see things differently. Indeed, many believe that the current crisis presents the nation with a powerful spur to go green. The long dominance of nuclear-centered power monopolies has constrained Japan’s ample capacity to ramp up efficiency, conservation, renewables, smart grids, storage innovations, and other core aspects of a sustainable, 21st-century power-generating economy. Now, led by the charismatic and highly popular right-wing mayor of Osaka, Japan’s local governments are keen to move forward in this direction, and fast. And they have eager support among the public and innovative businesses.

So more than a year after the Fukushima nuclear disaster, Japan is at a crossroads, and there is a profound division of opinion about what is going on. A suddenly nuclear-free Japan might be heading for yet another big fall, consistent with the sorry pattern of the past two decades. Or this aging society could be sprinting toward green growth and a sustainable future, leading the way for the rest of the world. We are likely to have an indication of the outcome this summer, when Japan could either face widespread power outages or avert disaster via aggressive conservation and efficiency efforts.

One thing is clear: In a world beset by economic and environmental crises, and confronting several tough, seemingly mutually exclusive choices on energy and climate change, Japan is a key country to watch.

Japan is the world’s third-largest power-generating nation. Its economy is dominated by 10 regional monopolies, of which the biggest and best known is Tokyo Electric Power, or “Tepco.” Until last year, Tepco was also one of the triumvirate that ran Japan’s most powerful business association, Nippon Keidanren, which negotiates crucial energy and growth policies with the political and bureaucratic elite. These collusive interests have been pro-nuclear for decades. So it was no surprise in recent years when they took advantage of the rising costs and risks of fossil fuels and declared that the best balance of cost, national security, and environmental protection would be a power economy centered even more on nuclear assets.

Their goal was to raise the share of nuclear-generated electricity from roughly 30 percent in 2010 to at least 53 percent by 2030. That target, codified in the government’s 2010 “Basic Energy Plan,” became unquestioned conventional wisdom until last year. That plan melted down with the reactors at Fukushima.

Fukushima has made nuclear power unacceptable to the majority of the Japanese public, especially older citizens, who vote in the largest numbers. These voters oppose nuclear not just because its sobering costs and risks in earthquake-prone Japan are a staple of the daily news. Anti-nuclear sentiment also runs deep because the face of nuclear power is Tepco, easily the country’s most vilified company. Tepco’s continued obstinacy and irresponsibility are breathtaking, especially for a company alive only through taxpayer bailouts. So while the regime of Prime Minister Yoshihiko Noda keeps trying to scare voters into acquiescing to nuclear restarts, voters’ steadfast opposition has convinced local governments to block the Noda regime’s efforts.

But taking this non-nuclear path is a leap in the dark. Prior to last year, Japan’s pro-renewable policymaking community had no serious scenario for abruptly withdrawing from nuclear power. The core position was to block new construction of nuclear plants and impose age limits on existing plants. Galvanized by the public’s rejection of nuclear power, green power advocates are now working to cut power demand in the short run through conservation and efficiency and then ramp up renewables over the medium- and long-term. Compulsory 15-percent power cuts in Tokyo last summer kept the lights on and also eliminated much of its “heat island” difference with the surrounding suburbs. But doing anything like that again, voluntarily and nearly nationwide, will be a tall order. So will expanding the renewable energy sector, which at present produces only 10 percent of power generation, and just over one percent if hydropower is excluded.

Not surprisingly, pro-nuclear factions are predicting economic mayhem. Nobuo Tanaka, the former head of the International Energy Agency, has declared that a non-nuclear Japan would be a “disaster” since he sees no serious alternative beyond fossil fuels. And the would-be kingmaker of the governing Democratic Party, Yoshito Sengoku, warned in April that shutting down nuclear power plants is “mass suicide.” For its part, Nippon Keidanren has repeatedly and stridently claimed that uncertainty about power supplies and price increases due to greater reliance on gas, coal, and oil will accelerate the hollowing out of Japan’s industry. On May 22, Fitch ratings agency added to the overall impression of sheer recklessness with a downgrade of Japan’s debt to A+, ranking it just one grade above Spain.

Critics of the swift retreat from nuclear power also note that about 90 percent of Japan’s power is now generated with fossil fuels, compared to roughly 60 percent before Fukushima. In addition, they point out that Japan’s liquid natural gas imports rose a whopping 52 percent from March 2011 to March 2012.

Yet the pro-renewables sector also responds with compelling arguments. It stresses that Japan has ample financial, human, and material resources to make efficiency and renewable energy a cornerstone of its economy. Advocates of a shift to sustainable power have long envisioned a role for natural gas in this process. They point out that imported energy costs today are roughly equivalent to early 2008, when oil was above $100 and analysts were saying Japan would just get increasingly more efficient.

On the policy front, the central government’s energy plan is unraveling, and the earliest we can expect a new road map is autumn. In the meantime, the government is riven by the conflicting goals of maintaining the status quo, versus making full use of increasingly potent incentives to maximize energy efficiency and deploy sustainable energy. It is determined to coddle Tepco, having so far pumped 3.5 trillion yen ($44 billion) of public funds into a firm effectively bankrupted by the still-mushrooming costs of multiple meltdowns. The government also seeks to restart nuclear assets even though it missed its own April 1 deadline to set up an independent regulator and thus has no credible safety regime in place.

At the same time, the central government is pouring funds into sustainable cities programs, focusing on renewable power and smart grids, especially in the rebuilding of the devastated Tohoku region. In recent weeks, central agencies have introduced well over 100 deregulation measures meant to speed the diffusion of renewables, conservation, smart grids, and other initiatives.

And thanks to the stubbornness of former Prime Minister Naoto Kan, the government will implement the world’s most robust feed-in tariff on July 1, aimed at stimulating investment in alternative energy by guaranteeing the market for renewably produced power. The feed-in-tariff requires utilities to purchase electricity generated by solar, wind, small hydro, geothermal, and biomass. It will pass on the extra costs to consumers through what is projected to be a modest increase of 100 yen — about $1.25 — in their monthly utility bills.

In contrast to the divisions in the central government, Japan’s prefectures (states), big cities, and other local governments are virtually all committed to a shift to sustainable energy. This fact matters a great deal because local governments represent about two-thirds of total government-sector spending in Japan. They are investing 52 billion yen ($654 million) of their own funds directly into renewable energy in this fiscal year, while their investments in conservation and energy efficiency are many multiples of that. They are also introducing an array of indirect supports to encourage citizen power cooperatives, bulk-buying of solar panels, and other policies to promote the diffusion of renewables.

In addition, Japan’s prefectures and cities are organizing themselves into regions, or blocs, and pressing with increasing effectiveness on the central state for energy deregulation and decentralization. They see the green economy as a source of sustainable growth, good jobs, local resilience, and reduced reliance on the power monopolies. Their initiatives to cope with power and related crises have bolstered an increasingly broad-based social movement that, among other things, mobilized for the feed-in tariff and continues to press recalcitrant or lethargic local governments to emphasize efficiency. Together, these forces may overthrow the vested energy interests that have hindered Japan from reaching its full potential in pursuing green jobs and a green economy.

In the wake of last year’s crisis, a vast, constantly expanding number of energy-related collaborative institutions have sprung up within and among local governments. These institutions organize and assist local residents and small business with conservation programs, launch renewable energy projects, set up their own power firms, diffuse energy management systems more rapidly, introduce dynamic pricing and other innovations, and work to open up more land and facilities for deploying renewables. First among local leaders — and the biggest threat to the entrenched political class — is the charismatic mayor of Osaka, Toru Hashimoto. He is not only deeply committed to a sustainable energy revolution and has national political ambitions, but he outpolls every other politician in the country.

Japan has a solid green-economy base on which to build quickly in a dash to conservation, renewables, efficiency, storage, and smart grids. A report this month by Japan’s Ministry of the Environment showed that the green economy in 2010 was already worth 69 trillion yen ($868 billion) and boasted 1.85 million jobs. And in one possible indication of the acceleration of green growth, high-efficiency LED (Light-Emitting Diode) ceiling lamps in the Japanese household market went from 2.2 percent of sales in February 2011 to 57.7 percent this May.

With the nuclear lobby severely weakened and its generating capacity taken offline, Japan might be in trouble. But it is also possible that it has lucked out, just as it did in the 1970s when its incentives to ramp up efficiency, cut oil use in electricity production, and build smaller cars helped it emerge from the oil shock faster than other countries. Perhaps now the nuclear shock will drive Japan much faster than anyone expected toward a renewable energy future.

Andrew DeWit is a professor in the School of Policy Studies at Rikkyo University in Tokyo. With Iida Tetsunari and Kaneko Masaru, he is coauthor of “Fukushima and the Political Economy of Power Policy in Japan,” in Natural Disaster and Nuclear Crisis in Japan, edited by Jeff Kingston.

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