In Japan, energy saving takes its toll

Correction: An earlier version of this article misstated the proper name of the Institute of Energy Economics, Japan. This version has been corrected.


A worker adjusts a machine at a spring factory conserving electricity in Osaka, western Japan, on May 23, 2012. On average, three Osaka manufacturers have closed shop every day since the peak year of 1983. The latest blow comes from the uncertain outlook for power, with 48 of Japan’s 50 operable nuclear reactors still offline after last year's accident at Fukushima. (© Reuters Staff / Reuters/REUTERS)
August 10, 2012

In this summer of idled nuclear plants and energy shortages, corporate Japan is operating under duress.

Workers in short-sleeve dress shirts spend their days in 82-
degree offices, the new standard. Lights are dimmed and printers are on only when necessary. Companies chart their energy use, and at one bread factory on this northern island, an employee jumps on the PA system when electricity usage spikes, ordering air conditioners off and asking select workers to stop what they’re doing.

“This is a demand warning,” the announcer says, reading from a script. “We ask for your cooperation.”

But many Japanese companies are tired of cooperating. Asked by the government to use less electricity, companies say the cutbacks curb their productivity, thin their profits and could eventually stall the world’s third-largest economy.

The energy-saving push was seen on a smaller scale last year after an earthquake and tsunami triggered a crisis at the Fukushima Daiichi nuclear plant on Japan’s east coast and caused shutdowns at several others, and Japanese companies obliged without complaint. Electricity conservation, or “setsuden,” was a way to help the post-disaster cause.

But this year, Japanese business leaders say, the energy-saving feels more like a major drain than a goodwill duty. Unlike last summer, when severe shortages were confined to the northeast, even regions far removed from the Fukushima plant now face shortages, with all but two of Japan’s 50 viable reactors shuttered amid public opposition. Utility companies are importing record levels of fossil fuels, but even that hasn’t covered the gap. That leaves companies — many that were already energy-efficient — straining for unorthodox ways to meet peak-hour summer reduction targets.

Electronics giant Panasonic told employees at its Osaka headquarters to take a nine-day paid vacation in late July. Manufacturer Nippon Tungsten, in Japan’s southern island of Kyushu, bumped work shifts to the weekend to avoid peak hours and, to use less air conditioning, started spraying factory rooftops with cold water.

Breadmaker Nichiryo, based in Hokkaido, leased a 200 kilovolt-ampere diesel generator, which sits like a horse trailer outside its main factory and supplies electricity at four times the cost of the regional utility company.

“It makes no sense financially to use the generator,” said Hidetaka Matsuda, a Nichiryo manager in charge of energy use. “We’re doing it just to achieve the reduction target.”

Matsuda described the energy restrictions as “severe.” A Panasonic spokeswoman said they’ve had a “major impact” on business. At the Kawai Tekkou Iron Works plant in Hokkaido, some employees second-guess the need for conservation and point fingers at the utility company, which they feel should provide the necessary amount.

“Our work shouldn’t suffer,” said Hiroki Kawai, an employee who is a third-generation member of the family business. Kawai said he was describing others’ complaints, not his own.

The energy debate

The economy-sapping energy shortages hint at the stakes of the fierce debate over Japan’s energy future. At the root is whether Japan, in the wake of the triple meltdown at the Fukushima plant, should renounce nuclear power to build a less disaster-prone country or re-embrace it to fuel a more economically viable one.

At the 11 public hearings the government has held to discuss nuclear power, 70 percent of the citizens who spoke said they favored a no-nuclear policy by 2030. That is one of the three plans being considered, along with options under which nuclear power would make up 15 or 20 to 25 percent of Japan’s total energy supply by 2030.

It is the leaders of corporate Japan, along with top government officials, who form the powerful pro-nuclear minority. Persistent energy shortages, they say, will wreak havoc on a resource-poor nation whose energy costs — already among the world’s highest — will further rise with growing fossil fuel imports.

Japan needs nuclear power for a stable electricity supply, Prime Minister Yoshihiko Noda said in June, and without that, “Japanese society will not be able to function.”

A nuclear Japan, according to December 2011 projections from Tokyo-based Institute of Energy Economics, Japan, would have a GDP in 2012 roughly two points higher than a non-nuclear one, and experts say the difference could be even greater if oil prices spike.

Anti-nuclear activists say that Japan could replace nuclear power, which once supplied one-third of the nation’s electricity, with renewable sources. But that will take years of work and billions in investment. This summer’s shortages have convinced some corporations that nuclear power is essential, at least until progress on renewable energy is made.

“It’s preferable to reduce our dependency on nuclear power plants in the medium- to long-term,” said Cathy Liu, a Panasonic spokeswoman. “However, there is no other way but to keep using nuclear power plants, with attention to their safety, as we do not have an alternative energy at this point.”

The shortages, in theory, can disappear — or at least diminish — with just the flick of a few switches, as seen last month when Japan’s central government ordered the reboot of two reactors in the industrial heartland known as Kansai. With that restart, the Kansai region’s energy-saving request was trimmed to 10 percent of 2010 peak levels from 15 percent. Each region has different energy-saving targets, imposed on companies and households, depending on the severity of shortages faced by utilities in the area.

In Hokkaido, households and companies are being asked to shave 7 percent from their 2010 peak-hour consumption levels. Were the local utility able to operate even a single reactor, such a request wouldn’t be necessary.

The saving is not mandatory, and companies face no punishment for ignoring the request. But by doing so, they risk sudden blackouts that would come if demand by the utility’s customers exceeds capacity. So far this summer, this verdant island famous for its agriculture has avoided such a scenario — a sign, officials here say, that the voluntary cutbacks are working.

The energy-saving, though, is expected to get harder the longer it goes on. A 2011 report from the International Energy Agency on urgent electricity shortages said that “consumers may be more willing to conserve energy if they know the shortfall is short-term.” Japanese people “will become tired and exhausted” over the long haul as the country loses the feeling of post-disaster crisis, said Yu Nagatomi, an economist at the Institute of Energy Economics, Japan.

This year, some in Japan are brushing off energy-saving as a low priority — something unheard of last year after the disaster. At a spring meeting with regional farm leaders, Hokkaido’s powerful agricultural co-op recommended only a few modest ways for farmers and producers to cut back electricity — and mostly on the office side, not with actual machinery. Save electricity, a document outlining the meeting said, only to the extent that “it does not create any trouble for managing your business.”

Difficult to plan

The energy shortages are particularly vexing for companies because nobody knows how long they’ll last.

Energy experts say that the best way for corporations to reduce consumption is with heavy investment, particularly in energy-
efficient lighting and in modern machinery. Companies, though, are hesitant to spend the money before they know Japan’s long-term plan for the nuclear plants.

During a recent tour of his family’s iron factory, which employs 40 people, Kawai pointed out the many decades-old appliances he’d love to replace. Wiring. Machinery. The fire-hot mercury lamps that light up his factory “like a baseball stadium.”

But Kawai Tekkou has lost 28 million yen over the past two years. Major investment in ­energy-efficient machinery isn’t so smart if Hokkaido’s three reactors are operating by next summer. In the interim, Kawai Tekkou is trying to save electricity only on the office side, by using less lighting and air conditioning.

“It’s almost impossible to do energy conservation without [changing] the machines,” Kawai said.

He emphasized that energy-saving is an admirable goal, and he’d prefer that Japan not rely on nuclear power because of the safety risks. But he has come to think that the country has no choice.

“People say, ‘Shut down all the plants,’ ” Kawai said. “But then what do we do in the alternative? We’re stuck.”

Yuki Oda contributed to this report.

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