So far, Japan’s drastic increase in fossil fuel imports, namely oil and liquefied natural gas (LNG), has kept the country from the short-term crisis of power outages and darkened cities, even as more of its nuclear plants come offline.
But the import surge also comes with a dire side effect, analysts say, that strikes at the heart of the world’s third-largest economy. By relying on pricey, imported alternatives to nuclear energy, Japan this year is facing an ominous cycle in which energy costs rise and business conditions erode.
Even if thermal plants operate at full capacity this summer, the country will still be short on electrical power in peak months, hampering industrial production. That means industrial exports could shrink at the same time energy imports are on the rise, shriveling growth rates and leaving the country more vulnerable to global price shocks.
There is a solution to all this — restarting the nuclear power plants — but given Japan’s mounting objection to atomic energy, it draws only a dark laugh.
Even before last year’s nuclear crisis, a triple meltdown triggered by an earthquake and tsunami, Tokyo ranked as the world’s largest importer of LNG and third-largest importer of crude oil. But nuclear reactors powered one-third of the country’s needs, and the country planned for that share to increase to 50 percent.
Thirteen months later, only one of Japan’s 54 reactors is operating; some were shuttered because of the disaster, and most of the others have come offline for scheduled maintenance. Despite attempts by politicians in Tokyo to persuade them to do so, provincial governors and local communities won’t allow them to restart.
In February, nuclear plants produced just 3 percent of the total power generated in Japan. By next month, when the sole remaining reactor, on the northern island of Hokkaido, is due to shut down, Japan will be nuclear-free just as temperatures begin to climb.
In recent months, to fill the void, Japan’s imports of LNG, crude oil and heavy fuel oil have increased by 15 to 30 percent, compared with comparable periods before the disaster. A recent Deutsche Bank report calculated that Japan’s power generation costs in February were $1.9 billion higher than during a typical month in which nuclear plants were in operation.
“The cost of generating electricity from oil is so far above that of nuclear,” the report said, “that at some point the economics are likely to become a more important consideration in the ongoing political debate in Japan over whether, when, and by how much to start returning idle nuclear capacity to the grid.”