Japan – Gas Policy Brief

Japan was the world’s fifth-largest energy consumer in 2019, importing almost 90% of its energy needs. That year, oil, coal and LNG accounted for 85% of Japan’s primary energy mix with renewables and nuclear contributing most of the remainder. Oil was the largest source of primary energy in Japan (37.2% in 2019), while coal supplied a quarter of total energy consumption making Japan the world’s third-largest coal importer behind China and India.

Natural gas, mainly used for power generation, accounted for 22.4% of total primary consumption, all imported LNG, equivalent to 22% of the world’s traded LNG volumes and making Japan the world’s largest importer.

With a commitment to be carbon neutral by 2050, Japan issued its draft 6th Basic Energy Plan in July 2021 which significantly accelerated the transition to renewables and reduction in fossil fuels in the energy mix.

Natural gas, specifically imported LNG, still has a pivotal role to play in that transition. LNG as the lowest emission fossil fuel can help to maintain a stable energy supply while dependence on oil and coal is reduced and renewable projects are progressively developed and brought onstream. A new industry group has started in 2021 to promote carbon-neutral LNG with the first cargoes already being delivered to Japanese customers.

Under the draft 6th Basic Energy Plan, the government aims for a 2030 electricity generation mix of 20% LNG, 19% coal, 20-22% nuclear and 36-38% renewables. This means half the energy would come from non-fossil sources.

This would depend on the resumption of the nuclear industry with at least 30 operational nuclear plants needed to achieve the 2030 target. The plan is to restart the nuclear plants when declared safe by the Nuclear Regulatory Commission and to continue to use the energy for essential base-load power supply. The timing of this remains uncertain in the wake of the Fukushima disaster. There remains an argument for replacing nuclear and coal power with LNG to reduce the carbon footprint and mitigate the risk of nuclear accidents that still prey on the minds of many people, as well as backing out dirty coal.  This would lead to a longer and high-profile role for natural gas beyond 2050.

The government has announced it will reduce the use of outdated coal-fired power generation by 2030, while maintaining its intention to restart nuclear power plants. It plans to mothball 14 inefficient coal-fired power plants, of which nearly 80% are in-house power generation facilities primarily for the steel and chemical industries. Building new power generation infrastructure using alternative fuels would increase costs and present a major challenge for these industries.

Renewables currently generate 18% of the country’s electricity (9% of primary energy mix) mostly from solar and will need to contribute more than half to meet the 2050 commitment.

The challenge will be scaling up the renewables’ contribution three-fold from today which will mean a major focus on developing offshore wind power.

The gas industry is urging a diversification of energy sources for reliability as the renewables share increase.

Other clean energy initiatives being followed up include developing hydrogen and ammonia to be adopted widely as a fuel for power generation, iron and steel making, transport and other uses, replacing fossil fuels such as coal and LNG.

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