Energy

Japan relies heavily on imports to meet its energy requirements because of a scarcity of natural resources. It is estimated that imports cover 80% of Japan’s primary energy needs. Prior to the Fukushima Daiichi nuclear disaster of 11 March 2011, Japan relied heavily on nuclear energy, with around 30% of electricity originating from this source. However, the devastating consequences of the 2011 disaster highlighted the safety concerns surrounding nuclear energy and alternatives are actively being sought by Japanese firms. Renewable energy, natural gas and oil are projected to take the market share previously occupied by nuclear fuel in the coming years.

 

Fossil Energy

According to data from the US Energy Information Administration (EIA), Japan is currently the second-largest importer of fossil fuels in the world, second only to China. This is a direct consequence of the 2011 Fukushima nuclear disaster. The ensuing shutdown of most of Japan’s nuclear reactors required the Japanese government to import far greater quantities of oil and gas instead. Japan is now the world’s largest importer of liquefied natural gas, and the third largest importer of oil, behind the United States and China. Although Japan is now investing heavily in renewable energy sources and hopes to significantly reduce its reliance on fossil fuels in the coming years, it is clear that in the medium at least term Japan is going to be a significant consumer and importer of fossil fuels. Below you will find more information about Japan’s fossil energy consumption.

 

Renewable Energy

Japan is one of the most advanced innovators in renewable and new energy technology, undertaking huge amounts of research and development in these areas. Following the 2011 earthquake and tsunami, the Japanese lost confidence in nuclear energy and sought to restructure their energy sector, with renewable energy being one of their options. The country’s renewable energy policy was reviewed and extended through legislation passed in 2009, as well as a Basic Energy Plan passed in 2010. Following the Fukushima Daiichi disaster in 2011, the Japanese government released, in September 2012, its Innovative Strategy for Energy and the Environment, the aim of which was to reduce the country’s reliance on nuclear power. The new strategy called for renewable power generation to increase threefold from 2010, which would amount to about 30% of total power generation. According to Business Monitor International, the renewable energy sector in Japan will continue to grow in 2014, particularly in solar energy. This is driven mainly by Japan’s high feed-in tariff for renewable energy sources. There are however several contingent factors which may alter this outcome, such as a reduction in the feed-in-tariff, or an ongoing shortage in grid infrastructure which could affect the construction of renewable energy installations. In addition to the newly-introduced feed-in tariffs system for solar, wind power and other renewable energy forms, the Japanese government created further subsidy mechanisms such as loans, investment grants and tax reductions.

 

Smart Grid

Japan has been a world leader in smart grid investment since the 1990s, when it invested over $100 billion in smart grid projects over the course of the decade. As a result of this period of heavy investment and changes, the country is currently focusing mainly on “last mile” smart grid investment, such as domestic smart grid use, bringing solar power to the home, for instance. In addition to investing in its domestic smart grid market and integrating more renewable energy into the power grid, Japan is also engaged in smart grid trial projects in other countries, including the United States.   Reference: EU BUSINESS IN JAPAN