April 26, 2012
By R. Nastranis
Japan risks jeopardising its energy security if it abandons nuclear power, warns the prestigious World Economic Forum (WEF) in a new report published nearly one year after the Fukushima nuclear power plant disaster took the world by surprise.
The report titled New Energy Architecture: Enabling an Effective Transition looks at the willingness of 124 individual countries for a transition to the sustainable and secure energy architecture required to harness economic growth.
“Whether rationalising and reorganising mature energy systems, capitalising on significant hydrocarbon resources, growing energy supply to support economic expansion or striving to access basic energy resources at affordable prices, countries will have to deal with trade-offs and “difficult choices”, the report notes.
“Never before have we experienced such pressure for change in the way we source, supply and consume energy,” explained Roberto Bocca, WEF senior director and head of energy industries. “Decision-makers must understand how they are being impacted by the changing dynamics and how they can effectively create desired change, especially as the choices they make will determine the speed, direction and cost of the transition.”
Japan forms the focus of one of two in-depth studies prepared in support of the report, as an example of an archetypal country that in WEF parlance needs to “rationalise” and re-organise mature energy systems.
Such reorganisation has become a more prominent concern in Japan since the Fukushima accident, which has led to an unprecedented level of debate and stakeholder engagement about the future directions that the country’s energy architecture will take. The ensuing review of Japanese energy policy “will result in the most significant shocks to the sector since the response to oil shocks in the 1970s,” the report finds.
Prior to Fukushima, Japan had been planning to meet 60% of its national primary energy demand with nuclear power, in line with environmental sustainability targets to reduce CO2 emissions by 54% (from 2003 levels) by 2050. In the months following the March 11, 2011 earthquake and tsunami, worries over the sustainability of nuclear power as well as increasing concerns about safety and security, have lead the public and policy-makers alike to question Japan’s energy policy.
It has also made the issue of creating a New Energy Architecture much more prominent; the Japanese government has already responded to the concerns of civil society by committing to reduce dependency on nuclear power and promising to find alternatives to non-renewable sources.
The report notes that a hasty withdrawal from nuclear could be disastrous for Japan. “Decommissioning nuclear power plants is expensive and any rapid change would jeopardize Japan’s energy security and increase its dependence on fossil fuel imports. Equally, a major shift towards renewables would require a transition on a scale never seen before and necessitate vast amounts of financial investment,” the in-depth study notes.
Instead, it urges Japan to focus in the coming years on restoring a secure energy supply. The country should “rethink” its approach to nuclear energy, including looking to continue R&D in an effort to “build a stronger nuclear industry” as well as making “fundamental changes” to how its nuclear energy sector is run and regulated to ensure transparency and accountability, vital to secure the public acceptance it needs.
WEF’s New Energy Architecture report is at pains to point out that decision-makers worldwide need to take into account the effects of decisions across the energy value chain, and balance competing imperatives. It uses the example of Germany’s post-Fukushima experiences to highlight the way “trade-offs” can be unconsciously made, with hurried decisions leading to unintended consequences.
Germany’s response to the Fukushima incident of immediately closing its oldest nuclear plants and foreshortening the lives of its remaining reactors, alongside a renewed commitment to renewables, was intended to bring long-term environmental and economic benefits. However, these actions may instead have negative economic and environmental impacts, the study finds, citing impacts on German employment, predicted electricity price increases and rising carbon emissions as Germany turns to coal and gas plants to replace nuclear generation in the short term.
The study points out that to enable Japan to address its objectives, an enabling environment will be needed. The creation of an enabling environment will require support from across all four pillars, says the report:
It urges the government to create a policy framework to encourage the private sector to invest in renewables by providing further clarity on how the feed-in tariff will function. Planning regulations across local, regional and national bodies must be simplified and rationalized to facilitate deployment of renewables. An independent regulatory body for the nuclear industry must be created that regulates and fosters development.
The study notes that lack of infrastructure is preventing the deployment of renewable generation. Many of Japan’s prime renewable generation sites are not covered by the power grid, thus preventing investment in the industry. In addition, a lack of interconnections between the 10 separate transmission networks is further preventing the deployment of renewables and reducing load levelling opportunities.
“Japan has one of the lowest Aggregate Technical and Commercial (AT&C) losses globally and a world-class reputation in scientific and engineering excellence; it must look to become the supplier of choice to the Asian markets through continued development and investment in “new” energy technologies,” says the report.
The WEF study argues that new market structures can lower prices and increase security. The government is therefore asked to create Special Economic Zones in the tsunami affected areas to reinvigorate the economy and develop sustainable technologies. Japan has some of the highest industrial electricity prices in the world and the government needs to perform a cost-benefit analysis into more complete deregulation of the power market.
The study pleads for a pan-Asian energy network, which would bring security of supply to the region and enable improved demand side management. “Japan must leverage its technical, economic and political strengths to lead the way in the creation of a regional power market.”
All this would require highly skilled scientists and engineers. Japan has been long renowned for its scientific and engineering excellence, avers the report, but a decline in new engineering graduates has been witnessed since the late 1990s.
The availability of highly skilled engineers for innovative renewable energy research and other clean technologies such as electric vehicles is low. Opening up international science and engineering education programmes at universities will help to attract new talent.
The WEF report emphasizes that the provision of information must be clear, transparent and honest. The population has already shown itself to be interested in the nuclear debate and capable of responding to information as seen with the need for energy efficiency in the aftermath of Fukushima. The establishment of clear communication channels will enhance the flow of information, increase trust of the energy sector and drive further change.
The study also stresses the need for transparency and pleads for government, industry and civil society to work together.
“Government must become more transparent and responsive to change, instigating developments in policy and regulation in response to the demands of civil society. Industry must demonstrate that it can innovate and has the capacity and expertise to deliver change to Japan and the wider Asian market. Most importantly, civil society must utilize public sentiment and opinion in a post-Fukushima world to drive the creation of effective policy and fully engage debates over how the future energy architecture will be shaped,” says the WEF report.
The World Economic Forum is an independent international organization, which claims to be committed to improving the state of the world by engaging business, political, academic and other leaders of society to shape global, regional and industry agendas.
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