agency for natural resources and energy ministry …...ministry of economy, trade and industry...

Ministry of Economy, Trade and IndustryAgency for Natural Resources and Energy

Sep. 2013

Agency for Natural Resources and EnergyMinistry of Economy, Trade and Industry (METI) JapanDirector-General for Energy and Environmental Policy

Osamu Goto


1

Table of Contents1. Energy Policy2. Nuclear3. LNG4. Renewable Energies5. Electricity System Reform


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1. Energy Policy


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%1953

1955

1957

1959

1961

1963

1965

1967

1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

７５％

Japan’s Energy Supply Structure

3%

4%

23%

22%

Coal

Oil

Natural gas

Nuclear powerHydro

Coal

Renewables etc.

* “Renewables etc.” consists of solar power (0.1%), wind power (0.2%), geothermal heat (0.1%), and biomass (3.3%).

4%*

43%

Source: Prepared based on “Comprehensive Energy Statistics” issued by the Agency for Natural Resources and Energy.”

(in crude oil equivalent kL)

3

Japan’s Primary Energy Supply

First Oil Shock


0

100

200

300

400

500

600

0

50

100

150

200

250

300

350

400

450

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Trends in Final Energy Consumption in Japan

Sources: “Comprehensive Energy Statistics” and “Annual Report on National Accounts.”

(millions kL of crude oil equivalent)

Transport sector

Residential & Commercial sector

Industry sector

(¥trillions)

Final energy consumption

1973→2011

1.3-fold growth

Transport

1973 2011

1.9-fold growth

Residential &

C

omm

ercial

1973 2011

2.5-fold growth

Industry

1973 2011

0.9-fold growth

Real GDP1973 2011

2.4-fold growth

23.3%

33.8%

42.8%

16.4%

18.1%

65.5%

4


Japan is poorly endowed with energy resources, which are indispensable to economic and social activities. To meet the changing economic and energy situation of the time at home and abroad, Japan has reviewed its energy policy in order to ensure “energy security,” “economic efficiency,” and the “environment.”

Energy security

Energy security

Economic efficiency

Energy security EnvironmentEconomic

efficiency

Energy security EnvironmentEconomic

efficiency

1973: First oil shock

1970s

1990s

2000s

+

+ +

+ +

[(4) Enhancing resource security (2000s)]

[(1) Responding to the oil crises (1970s-80s)]

1980s[(2) Promoting regulatory reform (since 1990s)]

[(3) Coping with global warming issues (since 1990s) ]

[(5) Current Basic Energy Plan]

1979: Second oil shock

1997: Kyoto Protocol adopted2005: Kyoto Protocol came into effect

Enhanced resource security

2002: Basic Act on Energy Policy enacted2003: Basic Energy Plan established (revised in 2007 and 2010) 5

3Es=

History of Japan’s Energy Policy


○The current Basic Energy Plan anticipates the increase of the energy self-sufficiency rate (18% 40%) and the zero-emission power source ratio (renewable energy: about 10% 20%, nuclear power: about 30% 50%) by 2030

Oil13%

Oil2%

LNG28%

LNG 13%

Coal25%

Coal11%

Nuclear26%

Nuclear53%

0

2000

4000

6000

8000

10000

12000

2007年度実績 2030年推計

Total: 10,305Total: 10,200

Oil39% Oil

27%

LPG3%

LPG3%

Natural gas:19%

Natural gas:16%

Coal23%

Coal17%

0

100

200

300

400

500

600

700

2007年度実績 2030年推計

（M

illio

n kL

cru

de o

il eq

uiva

lent）

Current energy self-sufficiency ratio: 18％

Energy self-sufficiency ratio in 2030: about 40%

Total: 592

Total: 517

(100 million kWh)

【Generated output】

Zero-emission power source: 34%

Zero-emission power source: about 70%

Nuclear：10%

Nuclear: 24%

【Primary energy supply】

Renewables, etc.6%

Renewables, etc:13%

Renewables, etc: 9%

Renewables, etc:21%

2007 record 2030 estimate 2007 record 2030 estimate

Supply Forecast in the current Basic Energy Plan

6


7

○ Prime Minister’s direction to Minister of Economy, Trade and Industry (January 25, 2013)・To review from scratch “Innovative Strategy for Energy and the Environment” decided by the former administration and to establish a robust and responsible energy policy from various perspectives, including stable supply of energy, reduction of energy cost.

<Former Administration’s Statement>○ “Innovative Strategy for Energy and the Environment” (September14, 2012)1. Realization of a Society Not Dependent on Nuclear Power in Earliest Possible

Future.・Japanese Government will mobilize all possible policy resources to such a level as to even enable zero operation of nuclear power plants in the 2030’s.

Dependence on Nuclear Power


8

○ Statement by Prime Minister Abe (Plenary Session of the House of Councilors on March 6, 2013)

• Regarding the safety of nuclear power plants (NPPs), the administration will defer to the professional judgment of the Nuclear Regulatory Authority (NRA), so no NPP will be restarted unless the NRA assures its safety. On the other hand, once the safety of NPPs is assured by the NRA, the administration will respect its judgment and the NPPs will be restarted, from viewpoint of establishing a robust and responsible energy policy from various perspectives, including stable supply of energy, reduction of energy cost.

<Former Administration’s Statement>○ “Innovative Strategy for Energy and the Environment” (September14, 2012)・…the operation of nuclear power plants whose safety is assured will be restarted as an important power source.

<Ref. Main activities of the Nuclear Regulation Authority (NRA)>• Sep.19, 2012 : Established NRA• Nov.2, 2012～ : Investigation of Fracture Zone (at Ohi , Tsuruga ,and Tohoku-Higaashidori NPP)• Jul.18,2013 : Deadline of the enforcement of new Nuclear Regulation

(for Commercial power reactors)

Restart of Nuclear Power Plants


Establishment of the New Strategic Energy Plan

1. To formulate a responsible energy policy aimed at ensuring a stable supply of energy and lower energy costs, the New Strategic Energy Plan is being discussed in the Advisory Committee for Natural Resources and Energy from March 2013.

2. Based on the discussion in the committee, the Japanese government will establish the new Strategic Energy Plan by the end of this year.

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10

2. Nuclear


11

●Mid-and-Long Term Roadmap towards the Decommissioning of Fukushima Daiichi NPP Units 1-4

Step 1, 2 Phase 1

December, 2011 Within 2 Years

<Achieved stable conditions>-Condition equivalent to

cold shutdown-Significant suppression

of emissions

Period to the start of fuel removalfrom the spent fuel pool (Within 2years)

Within 10 Years After 30-40 Years

Phase 2 Phase 3

Period to the start of fuel debrisremoval(Within 10 years)

Period to the end of decommissioning (after 30-40 years)

Actions towards systematic staff training and allocation, motivation improvement, and securing of workers’ safety will becontinuously implemented.

Current status of restoration from nuclear accident and next steps

To reduce risks,(i) removal of the fuel from the spent fuel pool and(ii) removal of the fuel debris will be carried out at the earliest possible time. According

to the condition of each unit, work processes will be accelerated and multiple planswill be formulated.


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Countermeasures for the contaminated ground water leakage at TEPCO’s Fukushima Daiichi Nuclear Power Station

Contaminated ground water was detected in the area between the turbine buildings and plant port of the Fukushima Daiichi NPS.Fundamental countermeasures will be taken in several phases in addition to the immediate countermeasures.

Three principles for contaminated water countermeasures 1. Securing the source of the contamination2. Isolating ground water from the contamination source3. Preventing leakage of the contaminated water

Sea-side impermeable walls

Soil improvement

About 200m

About 500m

Ground water observation holeSub-drainGround water bypass

Pumping out the ground water for bypass

Unit １〜４

Drain from the trench

Facing (paving the surface)

Mountain Side

Seaside

Ground w

ater flow

Overview of the countermeasures

Installation of land-side impermeable walls adopting the frozen soil method

Pumping out the ground

water by sub-drain

Current situation of the ground water

TEPCO estimates that the whole area of units 1 to 4 has approx. 1000 m3

of ground water flow every day and 400 m3 of this flows into the basement of the facility buildings. And some part of the other water is considered to be contaminated by the water in the trench and flows into the port through the soil.

No.2holes

No.3holes

No.1holes

Att. 3

○The nuclear power ratio in domestic electricity production has dramatically decreased due to long‐termshutoff of each Nuclear Power Plant (NPP) for periodical inspection after the quake disaster. (Oh‐I No. 3and 4 resumed in July, 2012.)

○ On the other hand, the thermal power generation ratio has increased up to 90%, especially LNG thermalwhich is about 50%.

○ And with the shutoff of NPP, replacement fuel costs from thermal generation are estimated to increase3.1 trillion Yen from FY2010 to FY2012. In FY2013, it is estimated that fuel costs will increase 3.8 trillionYen over FY2010 based on the assumption that $1 = ¥100 and the exchange rate and nuclear powerplant operation will be the same as in FY2012.

○ Trend of PWR Formation for Power Suppliers (general electricity utility and wholesale electricity utility) after Quake Disaster

Power Category

Fuel Cost(FY2012)

Cost Impact Amount

Estimation in FY2012

Estimation in FY2013 (※)

Nuclear ¥1/KWh ‐ 0.3 Trillion ¥ ‐ 0.3 Trillion ¥

Coal ¥4/KWh + 0.1 Trillion ¥ + 0.1 Trillion ¥

LNG ¥11/KWh + 1.4 Trillion ¥ + 1.6 Trillion ¥

Oil ¥16/KWh + 1.9 Trillion ¥ + 2.4 Trillion ¥

Total － + 3.1 Trillion ¥ + 3.8 Trillion ¥

○ Fuel Cost Increase from Nuclear Power Shutoff

20% 25% 26% 25%20% 27% 26% 26%

23%

38%41% 42% 47% 50%

46% 48% 48%

32%

5%

7%13%

17% 16% 13% 16% 18%

5%

28%16%

10% 5% 1% 1%3% 2%

32%

9% 11% 8% 5% 12% 12% 7% 6% 8%

63%73%

81% 90% 87% 87%90% 92%

28%

16% 10%5%

1% 1% 3% 2%

11年4月７月１０月 12年1月４月７月１０月 13年1月 10年度

石炭火力発電比率 LNG火力発電比率石油火力発電比率原子力発電比率

水力発電等火力発電比率原子力発電比率

※ For FY2013, estimation was made on fuel cost used for FY2012estimate based on the assumption of nuclear power operation beingthe same as FY2012, and by correcting exchange rate in accordancewith recent rate, $1 = ¥100.

Apr., ’11 Jul. Oct. Jan., ’ 12 Apr. Jul. Oct. Jan.,‘13

FY10

Nuclear PWR RatioCoal Thermal PWR Ratio

Hydraulic PWR Ratio

LNG Thermal PWR Ratio

Thermal PWR Ratio

Oil‐Fired Thermal PWR Ratio

Nuclear PWR Ratio

Change in Power Formation and Fuel Costs after Quake Disaster

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14

Discussion with academicsat the Commission of NRA

Review by experts* Listening to other academics and electric

utilities

Compile an outline of New Nuclear Safety Regulation (February 6)

Public Comment(until February 28)

Hearings from Experts,Electric utilities

(severe accident countermeasures only)

Draft texts of Nuclear Safety Regulation (April 10, 2013)

Public Comment (until May 10)

Publication・Enforcement (July, 2013)

Schedule of the Introduction of the New Nuclear Safety Regulation

Applications for restart were made in 12 reactors in 6 power-stations (as of Today)


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There are 50 units of nuclear power plants in Japan. 48 units (in red) are in stoppage, and 2 units of them (in blue) are now in

operation.

1 2 3 4 5 6 7

1 2

1 2

1 32

1 2 3 4

1 2 3 4

1 2

1 2 3 4

11 2 3

1 32

1 2

NPP in operation

NPP in Stoppage

5 6

1 2 3 4

3 4 5

1 2 3

Nuclear Power Plants in Japan

Under review by NRA


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3. LNG


17

○After the Great East Japan Earthquake, Japan’s LNG demand has increased by 30%due to the shutdown of nuclear power plants. （2010fy 70million tons → 2012fy 90million tons）

○In addition, Japan’s LNG import price, linked to crude oil import price, has soared.

○As a result, the overall cost of LNG imports to Japan has increased from 3.5 trillion yena year to around 6 trillion yen. ※1 trillion yen = $10.7 billion

Natural Gas price trend（unit: US dollar／MMBTU）

$3.5/MMBTU

$19.1/MMBTU

$15.8/MMBTU

2001 2003 2005 2007 2009 2011 2012

Japanese LNG Cost Nearly Doubled After Fukushima


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Increasing in trade deficit, change of current account balance structure, acceleration of the hollowing out of manufacturing industry

Increased LNG and crude oil prices

Increased fuel imports due to the shutdown of nuclear power plants

Rapid increase in fuel import costs

Trade deficit in 2012(6.9 Trillion yen) wasthe lowest in history

Trade balance：‐13.6trillion yen （2010→2012)Increase in net imports of fossil fuels ：+6.7 trillion yen（17.4→24.1）Crude oil ：2.9 trillion yenLNG ：2.5 trillion yenPetroleum products ： 1.1 trillion yenCoal ：0.2 trillion yen

Net reduction of exports in transportation equipment： 0.6 trillion yen

Other factors ： 0.7 trillion yen（trillion yen）

Trade deficit in 2011was 2.6 Trillion yen

○The shut down of nuclear power plants and increasing LNG and crude oil prices have led to a rapid increase in fuel costs. In 2011, Japan recorded its 1st trade deficit in the last 31 years. Lowering the costs is an urgent task.

Changes in trade balance and current account balance

Current account surplus in 2012 was

4.7 Trillion yen

Fuel Import Cost Hitting Japanese Economy Hard


19

New area / businessUS, Russia, MozambiqueJapanese companies in the upstream (Australia)

Utilities changingStringent assessment on raising electricity tariff, focusing on fuel cost cutElectricity market reform: direction and roadmap released in FebruaryNuclear re‐start: new safety standard by NRA in July 2013

Supporting policies and measures 1 trillion yen loan guarantee program for cheaper LNG projects2nd LNG Producer / Consumer Conference @Tokyo, fall 2013India‐Japan Joint study, Korea‐Japan Gas dialogue

Developments in Japan towards cheaper gas


LNG Projects by Japanese Firms （USA）・Freeport LNG Project・Cove Point LNG Project・Cameron LNG project・Total LNG expected to be claimed by Japanese firms: 15 M Tons/ yr

Vladivostok LNG Project (Russia)・Under review by Gazprom and JFG (Itochu,

Marubeni, JAPEX, INPEX)・Production scheduled to start in 2018,

Max 15 M tons/ yrFar East LNG Project・Under study by Rosneft and Exxon・Production scheduled to start in 2018, 5M tons/yr・Use of gas from Sakhalin is under consideration

Rovuma Offshore Gas Field Area1 Project(Mozambique)・Under review by Mitsui Co. Ltd.(Japan) and Anadarko Petroleum (USA)

・Production expected to start after 2018.・Substantial portion of 10 M Tons/ yr is expected to be exported to Japan.

Ichthys LNG Project (Australia) ・Operated by INPEX. First large project to be led by a Japanese firm.・Production expected to start after end of 2016・6 M Tons/ yr to be exported to Japan

○By supporting upstream development projects by Japanese firms, we believe new projects will rise in countries such as Russia, Mozambique,etc. which will encourage competition among oil countries/suppliers leading to more competitive and stable supply.

○Also, in order to secure competitive and stable energy, we encourage end‐users such as electric power companies and gas companies to participate in upstream development.

Efforts to diversify supply source

20


21

4. Renewable Energies


22

Japan's Use of Renewable EnergyThe contribution of renewable energy (excluding hydro power) to the total power generation in Japan has covered around 1%. Since the launch of the Residential Surplus Electricity Purchasing Scheme for Photovoltaic Power in November 2009 and the Feed-in Tariff Scheme in July 2012, Japan's use of renewable energy, led by solar power, has steadily increased. Renewable energy accounted for 1.6% in FY2012.

＊ Created by the Agency for Natural Resources and Energy using Electric Power Statistics, RPS data, buyback under the Feed-in Tariff Scheme, etc.

(Percentage to the total power generation)

Residential Surplus Electricity Purchasing SchemeFeed-in Tariff Scheme

Japan’s use of renewable energy in percentage

0.2% 0.2% 0.3% 0.3% 0.3% 0.3% 0.3% 0.4% 0.5% 0.5%0.1%0.2%

0.2%0.2%

0.3% 0.3%0.4%

0.4%0.5%

0.5%

0.3%0.3%

0.3%0.3%

0.3% 0.3%0.3%

0.3%

0.3%0.3%

0.0%0.0%

0.0%0.1%

0.1% 0.1%

0.1%0.1%

0.2%

0.4%

0.6%

0.7%0.8%0.9%

0.9%1.0%

1.1%1.2%

1.4%

1.6%

0.0%

0.5%

1.0%

1.5%

2.0%

0

2,000,000,000

4,000,000,000

6,000,000,000

8,000,000,000

10,000,000,000

12,000,000,000

14,000,000,000

16,000,000,000

18,000,000,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

太陽光

地熱

風力

バイオマス

再生可能エネルギー合計（水力除く）

SolarGeothermal WindBiomassTotal(excluding hydro)

RPS Scheme

180

160

140

120

100

80

60

40

20

(100 million kWh)

(FY)


23

Shifts in Japan's Measures to Increase Renewable Energy Use

Japan’s measures to increase the use of renewable energy shifted from (1) financial support through subsidies, (2) aid through placing an obligation on electric power companies to source part of their electricity from renewable sources (the RPS scheme), to (3) the feed-in tariff (FIT) scheme that requires electric power companies to purchase electricity at fixed prices.

(1) Support through subsidies (1997–)Enactment of the Act on the Promotion of New Energy Usage (New Energy Act)

Provides partial financial aid to private companies implementing new-energy projects and guarantee on loans taken from financial institutions.Provides financial aid to local governments implementing new-energy projects.

(2) Support through placing an obligation (the RPS scheme) (2003–2012)Launch of the RPS Scheme in 2003

Requires electric power companies to source a specified proportion of their electricity from renewable sources (without fixed prices).

(3) Support through buyback at fixed prices (to give prospects for recovering investment) (2009–)Launch of the Residential Surplus Electricity Purchasing Scheme in 2009

Requires electric power companies to purchase home-generated solar power of less than 500 kW at the procurement price and for the procurement period set by the government.

Launch of the Feed-in Tariff (FIT) Scheme in 2012Requires electric power companies to purchase electricity produced from renewable sources, including solar, wind, hydro, geothermal and biomass at the procurement price and for the procurement period set by the government.

Japan


24

Note: “Etc.” of “Renewable energy, etc.” includes the recovery of energy derived from waste, refuse derived fuel (RDF) products, heat supply utilizing waste heat, industrial steam recovery, and industrial electricity recovery.

Source: Prepared based on the Agency for Natural Resources and Energy’s “Outline of Electric Power Development in FY 2010”

Among the total electricity generated in fiscal 2011, renewable energy, etc. accounted for approximately 10.4%; approximately 9% of which is hydraulic power generation.Renewable energy other than hydro is still cost prohibitive.

Approx. 24%

Approx. 31%

Approx. 27%

Approx. 8%

Approx. 9% Approx. 1%

PetroleumCoal

Natural gas

Nuclear power

Hydropower

Renewable energy excluding hydropower

Natural gas

Coal

Approx. 25%

Petroleum

Approx. 14.4%

Nuclear power

Approx10.7％

Hydropower

Approx. 9%

Approx. 1.4%Renewable energy excluding hydropower

Approx39.5％

Composition of annual electricity generated in Japan

FY 2010 FY 2011

Current Composition of Power Sources in Japan


25

5. Electricity System Reform

Problems Revealed by 3.11

Chugoku EPCO

Kansai EPCO

Hokuriku EPCO

Hokkaido EPCO

Tohoku EPCO

Kyushu EPCO

Chubu EPCO

Tokyo EPCO (TEPCO)

Okinawa EPCO

Shikoku EPCO

• Negative aspects of regional monopoly system were revealed:

1. Lack of options for consumers to choose suppliers, rate plans and power sources ; Necessity of using demand response

2. Necessity of using generation in an ascending order of electricity rates (merit order)

3. Necessity of using various power sources such as renewables and co‐generation (CHP); Lack of smooth connection of renewables to the grids

4. Lack of system to transmit electricity beyond regions

5. Necessity of establishment of system to transmit various type of power in a neutral and fair manner

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Cabinet Decision on Electricity System Reform

• Based on the report by Expert Committee, the Cabinet decided to approve the Policy on Electricity System Reform on April 2, 2013.

• The reform aims to achieve three purposes:(1) Securing the stable supply of electricity(2) Suppressing electricity rates to the maximum extent possible(3) Expanding choices for consumers and business opportunities.

• To achieve these purposes, a dramatic reform will be steadily carried out according to a realistic schedule, focusing on the following 3 steps:

Step1: Establishment of the Organization for Nationwide Coordination of Transmission Operators (tentative title) (at around 2015);

Step2: Full liberalization of entry to electricity retail business (at around 2016); and

Step3: Further securing neutrality of the power transmission/distribution sector and full liberalization of retail electricity rates (at around 2018 through 2020)

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