Japan plans nuclear restart in response to LNG prices and supply volatility
Japan plans to restart mothballed nuclear facilities and could develop more projects, Prime Minister Kishida Fumio said on Wednesday, reversing a more than decade-old policy that has increased the country’s dependence on LNG.
At a press conference, Kishida said he had ordered energy officials to launch concrete plans by the end of the year to restore electricity generation from nuclear power. The move would reverse Japan’s policy of phasing out nuclear power before 2040.
“In order to overcome our looming electricity shortage crisis, we must do everything we can to mobilize all possible policies in the coming years and prepare for any emergency,” Kishida said, according to The Associated Press.
Japan was on track to source almost 50% nuclear energy by 2030 before the collapse of the Fukushima Daiichi nuclear power plant in 2011. Since then, the country has grown to become the one of the largest LNG importers in the world, relying largely on supplies from Australia, Russia and the United States.
Focus on nuclear
Toby Copson of Trident LNG, global head of LNG trading in Shanghai, said that while it is difficult to predict, he expects Japan’s return to nuclear to impact LNG demand in the country. He noted that it would take time for the reactors to come online, but said that once they did, Japan would rely “more on nuclear for power generation than on imported gas products”.
Copson told NGI he also expects the move to eventually free up additional LNG supplies for other big buyers around the world.
Japan’s reliance on LNG imports exposed it to outsized costs and supply implications after Russia invaded Ukraine in February. The dispute drove commodity prices to record highs during the year and increased competition for LNG cargoes. The country has also been embroiled in Russia’s battle against Western sanctions, as the country nationalized key LNG facilities that supply nearly 9% of Japan’s total gas imports.
The United States was Japan’s fourth-largest LNG supplier in 2021, accounting for nearly 10% of imports. It is the second-largest recipient of US LNG behind Korea since the United States began exporting large-scale shipments in 2016.
Australia also contributed to Japan’s supply problems. The country, which contributed around 36% of Japan’s LNG imports last year, has faced plant outages, industrial action at key terminals and calls for export drawbacks in a context of regional domestic shortages.
Several questions remain about whether Japan’s nuclear restart would be able to stave off the growing energy crisis in the near term, Jason Feer, global head of business intelligence at Poten Partners, told NGI.
One of the biggest questions, Feer said, is whether the new strategy “can win over the public,” as the nuclear strategy could not only impact LNG demand, but also investment projects. of Japan in renewable energies. The country’s government established policies last year that could encourage the development of solar and wind generation while limiting imports of natural gas.
“But that plan didn’t include a long-term increase in nuclear power,” Feer said. “Bringing more nuclear bombs faster and building new ones is a big change and would affect LNG imports. The demand for LNG is gradually decreasing in Japan as the population ages, they move away from manufacturing and they adopt more renewable energy. But if they put more emphasis on nuclear energy, it will affect the demand for LNG.
Jamison Cocklin contributed to this report.