Japan – Gas Policy Brief

Japan was the world’s fifth-largest energy consumer in 2019, importing almost 90% of its energy needs. Oil, coal and LNG accounted for 85% of Japan’s primary energy mix in 2020 with renewables and nuclear contributing most of the remainder. Oil was the largest source of primary energy in Japan (36.4% in 2020), 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 23.8% of total primary consumption, all imported LNG, equivalent to 20.9% of the world’s traded LNG volumes and making Japan the world’s second largest importer.

With a commitment to be carbon neutral by 2050, the sixth edition of Japan’s Strategic Energy Plan sets electricity generation mix targets for 2030 at 20% LNG, 19% coal, 20-22% nuclear and 36-38% renewables. This means more than half the energy used would be from non-fossil sources.

By 2050, it is estimated that Japan’s 50-60% of electricity demand will be met by renewable energy (non-nuclear), 30-40% by nuclear plus thermal power generation including CO2 recovery and approximately 10% by hydrogen and ammonia power generation.

Natural gas, specifically imported LNG, still has a pivotal role to play in the renewable transition. LNG as the lowest emission fossil fuel can help to maintain stable energy generation reducing dependence on oil and coal with renewable projects progressively developed and brought onstream. Further reducing the carbon impact of natural gas is a key part of the plan, introducing hydrogen to the feedstock for gas-fired power plants and increasing carbon neutral LNG cargoes. A new industry group started in 2021 to promote carbon-neutral LNG with the first cargoes already being delivered to Japanese customers.

The plan depends on the resumption of the nuclear industry with 27 operational nuclear plants needed to achieve the 2030 target providing essential base-load power supply. Currently nine are operational and others will re-start when declared safe by the Nuclear Regulatory Commission though the timing of this remains uncertain in the wake of the Fukushima disaster.

Japan’s Strategic Energy Plan includes a commitment to support other Asian countries to introduce or step-up LNG-powered power generation and renewable energy use with financial support and trade. The government plans to create a USD10 billion public and private fund to support this initiative.

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.

There remains an argument for replacing nuclear power and coal power generation 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 through to 2050 and beyond.