Japan to cut fossil fuels & up renewables

 From a Twitter feed by Stephen Stapczynski, a Bloomberg business reporter

Japan revises its 2030 power mix targets, cutting fossil fuels and raising renewables in a bid to reduce pollution

The biggest loser? LNG

Under the draft plan, annual LNG power generation is slated to fall roughly 50% by the end of the decade. That's more than coal.  

This is a surprising shift for Japan, the world's top LNG importer that pioneered the industry.

Japan will require less LNG in 2030 than its previous plan, posing a potential dilemma for its suppliers from Qatar to Australia.  

Nuclear power's role in Japan's energy mix remains unchanged from the previous plan: 20-22% of power generation by 2030.  Japan will require 27 of its remaining 36 reactors to resume operations to hit this target.  That won't be easy. only 10 have restarted.

The renewable energy target is just as ambitious.  Japan wants renewables (solar, wind, hydro) to make up 36-38% of the power mix by 2030. That's nearly double current levels and will require solar panels on millions of rooftops. The old target was 22-24%

Japan aims for hydrogen and ammonia-fired power generation to make up 1% of the 2030 power mix.  That's a new addition to the nation’s energy plan. Over the long-term, utilities aim to shift to green hydrogen/ammonia to meet 2050 net-zero goals.

So why is Japan revising its power mix targets?

It is all about its Paris deal commitments.  Earlier this year, Japan strengthened its 2030 Paris goals, raising its target to reduce greenhouse gas emissions to 46% by 2030 from 2013 levels.

Looking further out, Japan will need to significantly reduce its dependence on fossil fuels to hit its 2050 net-zero pledge

That means they must:

> Build a whole lot of offshore wind

> Consume a ton of green hydrogen/ammonia

> Boost energy efficiency

There is no doubt that Japan's revised 2030 energy targets are ambitious. It's unclear if they will be able to meet them.  But the new plan does indicate that the government is shifting its view on LNG, which for a very long time it touted as a cleaner alternative to other fuels.

The 20% nuclear target is incredibly challenging to meet, said Woodmac’s Whitworth, who sees atomic generation only hitting 9% in 2030.  “Over-optimism on nuclear makes the plan look unrealistic and could undermine plans to reduce coal and gas share”

Great analysis from

@BloombergNEF

on Japan's revised 2030 power mix targets BNEF analysts expect gas to make up just 15% (!) of the power mix by 2030, well below coal. Japan seen missing nuclear target, and that gap will be filled with coal (not LNG)

A few thoughts about this plan:

• Is it plausible that the nuclear power stations will be restarted?  It's true that the marginal (operating) cost of nuclear is much lower than those of coal and gas, even if the cost of new-build nuclear is much higher.  But after Fukushima ......?
• Stanczynski talks about rooftop solar.  Surely utility-scale solar will play at least as important a part.   Net solar additions have slowed .  Even at current growth rates, the percentage of solar will more than double by 2030.  At 15% per annum, solar's contribution could exceed 30%.
• Growth in wind power in Japan has been low over the decade.   If the growth rate doubles to 15% p.a., then wind's contribution will reach 8% up from 2% now.  
• A price on carbon will accelerate these shifts.  With the EU introducing carbon border tariffs, Japan, like other countries, will have to decide whether to pay taxes on its exports to the EU, or to levy its own taxes which will be  returned to itself.  It's obvious what makes sense, and indeed the country is cautiously supportive of the EU's carbon border tax.
• None of this is good news for LNG/coal  exporters such as Australia.