ANALYSIS
SEPTEMBER 2015
G7 COAL PHASE OUT: JAPAN
A REVIEW FOR OXFAM
TAYLOR DIMSDALE, JULIAN SCHWARTZKOPFF &
CHRIS LITTLECOTT
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G7 COAL PHASE OUT: JAPAN
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ANALYSIS
SEPTEMBER 2015
G7 COAL PHASE OUT: JAPAN
A REVIEW FOR OXFAM
TAYLOR DIMSDALE, JULIAN SCHWARTZKOPFF &
CHRIS LITTLECOTT
3
G7 COAL PHASE OUT: JAPAN
G7 COAL PHASE OUT: JAPAN
Contents
Introduction .....................................................................................................................4
Headline messages ..........................................................................................................4
Introduction to role of coal..............................................................................................7
Coal use in electricity sector ............................................................................................9
A new wave of coal plants in conflict with climate action ............................................12
Can Japan act to retire its coal plants? ..........................................................................16
Applying a 35 year plant lifetime limit...........................................................................17
Introduction
On 8th June 2015, G7 members agreed that the decarbonisation of the global
economy should be completed by the end of this century; that this requires deep cuts
in CO2 emissions; and that it must include a transformation of their own energy
sectors by 2050. The G7 communiqué failed to mention any particular fossil fuel, but
the implication is clear: there is no future for unabated coal in a world that is acting to
avoid dangerous climate change.
This analysis looks at the current context of coal use in Japan and identifies how a coal
phase out can be accelerated. It is one of a series of reviews of each of the G7
countries.1
Headline messages
Japan is the only member of the G7 looking to significantly increase its coal generating
capacity. While all other G7 countries are facing the challenge of retiring existing coal
plants, Japan is instead proposing to construct new coal plants. Current plans could
see it increase its coal fleet by 55-75% over the next decade. This puts Japan on a
pathway that would lock in CO2 emissions for decades and undermine delivery of its
climate commitments:
>
Japan has historically seen the majority of its coal consumption linked to steel
production and other industrial sectors, with coal demand for electricity
generation expanding significantly over the past two decades to reach its current
level of 41GW. Total coal use by industry and electricity generation combined was
responsible for 31% of Japan’s CO2 emissions in 2012.2
>
The Fukushima Daichii nuclear disaster in 2011 resulted in Japan taking the
decision to shut down 30% of its electricity supply virtually overnight. Japan was
already the world’s second largest importer of coal, but rather than diversifying its
1
A working version of this paper was prepared in advance of the G7 summit, as an analytical input to Oxfam’s report ‘Let
them eat coal’. This revised version integrates a new Figure 5 that incorporates updated data on plant retirements and the
status of the coal plant development pipeline across the G7 countries.
2
This review provides an overview of Japan’s coal use, before focusing on electricity generation as the sector most
appropriate for accelerated action to retire plants and reduce CO2 emissions. A full coal phase out will in turn also require
action to reduce emissions from other sectors.
4
G7 COAL PHASE OUT: JAPAN
energy mix through an accelerated deployment of renewables, the Japanese
government and utility companies have acted to further increase coal use.
>
Electricity demand has been significantly reduced since 2011, but fossil fuels have
increased output. The share of coal in the electricity mix rose from 25% to 30%
between 2010 and 2013. In 2013 it was responsible for 19% of Japan’s total CO2
emissions.
>
Three new coal plants entered into operation in 2013. As of September 2015
there are 48 named coal projects under development accounting for 23.5GW of
capacity, with further capacity tenders being developed by utilities. Collectively,
the total scale of the post-Fukushima project pipeline now amounts to at least 54
projects totaling over 30GW of capacity. If all of the proposed new plants were to
be constructed they would account for about half of Japan’s CO2 emissions in
2050 under the government’s long term emission target.
>
There is strong public opposition to the re-commissioning of nuclear plants and
Japan’s utilities, backed by influential business and industry groups, have
campaigned aggressively against the use of renewables. This combination could
result in an even larger share of coal being used than current government
forecasts. Japan’s electricity companies have proposed voluntary reductions in
carbon intensity in the period to 2030, but this has been criticised as insufficient
by the Ministry of the Environment.
>
More positively, the uncertainty surrounding Japan’s future energy pathway
means there is still an opportunity for a change in course. Investment decisions
have not yet been taken for the majority of the proposed new coal plants.
Instead, Japan has the advantage of decades of leadership in clean energy
innovation and energy efficiency that it could further advance through domestic
deployment.
>
During summer 2015 the Environment Ministry has objected to three new
proposed coal plants, stating that their development would not be compatible
with Japan’s climate change commitments. Final decisions on coal plant proposals
are however taken by Japan’s Ministry of Economy, Trade and Industry (METI)
which has not considered climate change impacts in decisions to date. Japan’s
government is now visibly split as to the role of coal in the electricity system.
>
Prime Minister Shinzo Abe and Minister of Economy, Trade and Industry Yoichi
Miyazawa have been challenged by members of the parliamentary committee for
energy, trade and industry regarding the incompatibility of expanded unabated
coal power generation with Japan’s G7 commitments to reduce CO2 emissions
2050. Their response was to reaffirm the government’s support for ‘high
efficiency’ coal.
>
The existing coal power stations in Japan have been running at near full capacity,
giving little scope for further electricity generation from coal without the
construction of new plants. Conversely, this means that the current level of coal
generation in Japan could be seen as a peak from which the use of coal should
decline going forward.
5
G7 COAL PHASE OUT: JAPAN
>
Independent analyses show that Japan can phase-out almost all coal use for
electricity generation by 2030, using existing technologies, with low or zero use of
nuclear. This would be in line with the pursuit of deep decarbonisation objectives,
but would require further reforms to electricity markets and interconnection
between currently isolated electricity grids.
>
Applying a 35-year lifetime filter to Japan’s coal fleet would see 4.95GW of the
oldest capacity immediately scheduled for retirement in 2015. 23GW would
follow in the period 2016-2025, and 14.1GW between 2026-2035, at a rate of 12GW annually – a level easily replaceable through a continued rollout of
renewables. Beyond this date 12.4GW of the newest coal plants would be at risk
of facing early closure.
>
But a new wave of coal plants entering operation from around 2020 onwards
would, under normal circumstances, still be operating post-2050. Given the
importance of continued reductions in CO2 emissions, these plants will be at risk
of becoming stranded assets. This will mean that it will be increasingly difficult for
Japan‘s soon-to-be-deregulated utilities to secure private finance for such plants.
>
Looking internationally, it should also be noted that coal plays a large role in
Japan’s export policy. Japanese companies are amongst the world’s biggest
manufacturers of coal technology, including Toshiba, JGC, Mitsubishi Heavy
Industries (MHI), and Hitachi. Between 2007 and 2013 Japan provided $16.8bn in
financing for overseas coal projects – more than double that of any other OECD
country. Japan’s coal technology manufacturers benefit from generous export
credits and other development assistance that would more appropriately be
directed to renewable energy.
>
Japanese companies also manufacture CO2 capture technologies, which are being
used in CCS projects in the USA – but which are not being required on new
domestic coal plants, nor those built overseas through Japanese financial support.
This is a fundamental challenge to the coherence of Japanese coal policy. The risk
of lock-in to unabated emissions is such that either the coal plants should include
CCS from the outset or they should not be built at all. Japan’s G7 peers in Canada,
the UK and USA have all introduced policies that require ‘no new coal without
CCS’.
>
Collectively, the domestic drive towards new coal plant construction and its
international promotion of unabated coal mean that Japan is pursuing an
increasingly high-carbon pathway, which sets it at odds with the approach being
taken by the other members of the G7 – and indeed by key international
competitors such as China. This poses a direct challenge to Japan’s international
leadership position, reduces the scope for its industrial sectors to effectively
engage in growth markets for low-carbon technologies, and poses a substantial
risk to the Japanese economy of future stranded assets.
>
Japan’s membership of the G7, and its shared commitment to reduce carbon
emissions, require it to reconsider its approach to coal. Cooperation with its G7
peers can help it to transition away from coal. A failure to change path will see
Japan risk losing international influence and standing.
6
G7 COAL PHASE OUT: JAPAN
Introduction to role of coal
Coal mining
Coal consumption
Thermal coal imports
Metallurgical coal imports
CO2 emissions from coal combustion
Ceased in 2002
170.8 Mt (2012)
144 Mt (75% of total) (2014)
48 Mt (25% of total) (2014)
419.7 Mt CO2e (31.25% of total)
(2012)
Change in CO2 emissions from coal combustion
+44.4% (1990-2012)
Sources: IEA, EIA, Institute of Energy Economics Japan, Bureau of Resources and
Energy Economics
Historically, coal use in Japan was primarily for industrial processes, particularly steel
production. Coal use in electricity generation only reached similar levels of demand in
the early 2000s, as illustrated in Figure 1 below. Coal demand from the power sector
fell slightly as a result of the global economic crisis before rebounding following the
Fukushima Daichii nuclear accident in 2011. We discuss this context further below.
43% of the coal that Japan consumed in 2012 was used in electricity generation, while
44% was used in the industrial sector. Of this, the vast majority was used as inputs for
steel production, which alone accounted for 38% of coal consumption.3 With 110.6
Mt of steel production in 2013, Japan is the world’s second largest steel producer
after China. Japan’s decarbonisation pathways therefore also need to consider the
potential means of reducing CO2 emissions and coal demand from industrial sectors.
The Japanese steel sector has already been active in considering technology options
including CO2 capture,4 but as yet there is no policy requirement for Japanese industry
to reduce emissions. Overall, coal combustion was responsible for 31.25% of Japan’s
greenhouse gas emissions in 2012.
Figure 1: Japan’s coal consumption by sector
Source: METI Energy White Paper 2014
3
METI (2014) Annual Report on Energy 2014
4
See e.g. the industry-sponsored COURSE-50 programme.
7
G7 COAL PHASE OUT: JAPAN
Japan’s last coal mine, Mitsi Ikeshima, closed in 2002. While the country still had 25
coal mines in 1970, all but 7 had closed by 1990.5 Japan has therefore not had
significant coal mining activity for decades, and is now completely dependent on coal
imports to satisfy its demand. Coal imports amounted to 0.5% of GDP in 2013 – or
$23.6bn.6 Japan was the largest global coal importer for three decades until it was
surpassed by China in 2012.7 8
Japan is very dependent on a few regional exporting countries for its coal
consumption. In 2014, 64% of its coal imports came from Australia. As a result,
Japan’s coal import bill is largely determined by annual import contracts negotiated
between Japan’s utilities and a few Australian mining conglomerates.9 A further 20%
of coal imports are sourced from Indonesia, as shown by Figure 2.
Figure 2: Coal imports by country of origin (2014)
Looking internationally, it should
also be noted that coal plays a
large role in Japan’s export
policy. Japanese companies are
amongst the world’s biggest
manufacturers of coal
technology, including Toshiba,
JGC, Mitsubishi Heavy Industries
(MHI), and Hitachi. Between
2007 and 2013 Japan provided
$16.8bn in financing for
overseas coal projects – more
than double that of any other
OECD country.10 Japan’s coal
Source: Ministry of Finance
technology manufacturers
benefit from generous export credits and other development assistance.
While the Japanese government has argued that its international coal financing is
good for the environment because its technology is very efficient, a recent study led
by the Kiko Network reveals that only a very small percentage of Japan’s financing
goes to the best available technology, and coal projects supported by the Japan Bank
for International Cooperation (JBIC) are less efficient than the global average.11
Additionally, there are risks that Japan’s proposed approach to overseas credits could
allow financial support for unabated coal power plants in developing countries to be
counted against its domestic 2030 target.12
5
Wikipedia List of coal mines in Japan.
6
METI (2014) Annual Report on Energy 2014
7
World Coal Institute Coal Statistics.
8
EIA (2014) International Energy Data and Analysis
9
Reuters (2015) Glencore, Japan's Tohoku set annual coal price down 17 pct. 7 April 2015.
Financial Times (2015) Japan’s annual coal benchmark influence n the wane. 8 April 2015.
10
WWF (2014) European countries talk climate but finance coal
11
Kiko Network (2015) Dirty Coal: Breaking the Myth About Japanese Funded Coal Plants
12
http://climateactiontracker.org/countries/japan.html
8
G7 COAL PHASE OUT: JAPAN
Coal use in electricity sector
Operational coal power plants (2015)
Total installed electricity generation capacity (2012)
Installed coal generation capacity (2015)
Electricity generation from coal (2013)
Average age of coal power plant fleet (2015)
CO2 emissions from coal power generation (2013)
56
293GW
41.8GW
292 TWh (30% of total)
24 years
267 Mt CO2-eq. (19% of
total)
Sources: METI Annual Report on Energy 2014, Kiko Network, National GHGs Inventory Report of
Japan 2015
Prior to the Fukushima disaster Japan’s electricity portfolio was diversified among
conventional generation sources, with nuclear, gas and coal accounting for 29%, 29%,
and 25% of net generation, respectively. Since 2011, the shortfall caused by the
nuclear shutdown has been replaced largely by fossil fuels. Net electricity generation
of fossil fuels accounted for an estimated 820 TWh in 2013, representing more than
86% of the total generation, up from about 62% in 2010. Oil and natural gas replaced
all of the lost nuclear generation in 2011 and 2012, and coal supplanted some in 2013
rising to 30% of net generation.
Some coal-fired plants were damaged by the 2011 earthquake and tsunami, which
accounts for the decline in coal use in 2011. The government subsequently removed
some regulatory barriers for the construction of coal-fired capacity and use. The
existing coal power stations in Japan have been running at near full capacity, giving
little scope for further electricity generation from coal without the construction of
new plants. Conversely, this means that the current level of coal generation in Japan
could be seen as a peak from which the use of coal should decline going forward.
Securing a peak and decline in Japan’s coal use in electricity generation would require
greater action to deploy renewables, which so far has not been sufficiently prioritised.
The feed-in tariff programme that was implemented after Fukushima spurred the
installation of more than 8GW of renewable energy capacity since July 2012 – mostly
in solar. But Japan's electricity industry is dominated by 10 vertically integrated utility
companies that act as regional monopolies, which have argued that renewables pose
a risk to the stability of the electricity grid, despite much higher levels of renewables
being easily integrated into grids elsewhere.13 Due to industry lobbying the FiT has
been reduced several times since 2012, most recently by 16% in March 2015, while
renewables have increasingly been denied access to the grid.14
The government had approved 88GW of renewable energy through May of 2015, with
solar energy accounting for more than 90% of the total. But only 23% of those
projects were actually connected to the grid.15 In 2013 renewables (other than hydro)
13
Energy Transition (2015) How is Germany integrating and balancing renewable energy
14
METI (2015) Settlement of FY2015 Purchase Prices and FY2015 Surcharge Rates under the Feed-in Tariff Scheme for
Renewable Energy, http://www.fit.go.jp/statistics/public_sp.html
15
9
Reuters As Japan eyes nuclear restarts, renewables get shut out of grid. Reuters, 16 October 2014.
G7 COAL PHASE OUT: JAPAN
made up 4% of Japan’s total electricity generation. Japan also has 49GW of hydro
accounting for 8% of the total net generation mix.
Figure 3: Japan’s net electricity generation by fuel, 2000-2013 (TWh)
Source: EIA, METI
This late and hesitant adoption of renewables contrasts with the continued
construction of over 20GW of new coal plants during the last two decades, including
after the Kyoto Protocol was agreed in Japan in 1997, as shown by Figure 4 below. As
a consequence (and in comparison with other major industrialised countries), Japan’s
coal power station fleet is relatively young.
Figure 4: Japan’s coal power emissions since 1990
Source: Oxfam
10
G7 COAL PHASE OUT: JAPAN
Japan’s energy policy since Fukushima
Following the Fukushima Daiichi disaster, Japan made relatively radical changes
to its energy policy, given its historically conservative approach to energy
resources. In 2013, it adopted a power sector reform package, aimed at
increasing interconnection and compatibility between the eastern and western
grids, full liberalisation of the electricity market and legal unbundling of
generation, transmission and distribution.
In 2014, however, Japan adopted a Strategic Energy Plan that outlined a ‘new’
vision for Japan’s energy supply that included an increased reliance on coal.16
The plan tellingly defines energy security and economic efficiency as goals to be
achieved “first and foremost”, while adding that “it is also important to make
maximum efforts to pursue environment suitability.” One of the primary ways of
achieving this is “building a diversified, flexible [and] multilayered” supply
structure, which in practice means that the government is planning to rely
increasingly on fossil fuels, including coal. The strategy document states that the
use of coal is being “re-evaluated as an important base-load power supply”
because of its low geopolitical risk and its lower cost.
To expedite the expansion of coal power generation, the government has
slashed the time required for environmental impact assessments from three
years to one. Tendering and approval procedures for new power plants have also
been cut, with smaller power plants exempted from Environmental Impact
Assessment procedures.17 The government proposes that research and
development to develop more efficient coal power plants and then deploy CCS
around 2030 will be sufficient to address greenhouse gas emissions from coal
power. It doesn’t provide any data to back up that assertion, however.
The Strategic Energy Plan also conspicuously refrained from producing
projections of Japan’s future energy mix, citing uncertainty over the future of
nuclear energy in Japan, the expansion of renewables, and the outcome of
international climate negotiations. However recent reports envision that fossil
fuels would account for 56% of the energy mix in 2030, with coal accounting for
26% of this total. Renewables would roughly double to 24%, although solar and
wind would only make up 9% of this total.
Under this approach, nuclear would make up 20-22% of electricity production in
2030.18 There is however strong public opposition to the re-commissioning of
nuclear plants, suggesting that coal could end up accounting for an even higher
proportion of the future electricity mix than the current pipeline would suggest.
16
METI Strategic Energy Plan 2014
17
http://www.bloomberg.com/news/articles/2015-05-27/size-matters-as-japan-coal-revival-ducks-scrutiny-due-big-plants
18
Nikkei Asian Review (2015) Japan plans more renewables, less nuclear
11
G7 COAL PHASE OUT: JAPAN
Recent expert analysis of the Strategic Energy Plan found that it had consistently
failed to consider the cost reductions and deployment potential of renewables
technologies, and that it had overstated without justification the benefits of
continued use of coal.19
A new wave of coal plants in conflict with climate action
Uniquely among the G7 countries, Japan is planning to significantly expand its coal
power capacity. Three new coal plants entered into operation in 2013.20 As of
September 2015 there are 48 named coal projects under development amounting to
23.5GW of capacity, with further capacity tenders being developed by utilities, some
of which span multiple projects.21 Manufacturing industries are also being encouraged
to develop small coal units to increase on-site generation capacities and avoid
permitting procedures required for larger plants.22 Collectively, the total scale of the
post-Fukushima coal development pipeline now amounts to at least 54 projects
totaling over 30GW of capacity.23 If constructed, these plants would add 55-75% to
existing coal plant capacity.24 Figure 5 below compares the scale of Japan’s coal
pipeline over the period 2010-15 with that of its G7 peers.
At the start of the period 2010-15, both Germany and the USA had large coal
development pipelines, with multiple projects planned. In the case of Germany, the
investment decisions for new coal plants were taken before 2010. Over the past five
years both countries have seen the majority of these plants cancelled or shelved.
When the impact of the retirement of existing plants is included there has been a net
decrease of coal capacity in the USA of 13GW and a net increase (to date) of 1GW in
Germany. Furthermore, the new coal plants that have been built in Germany are
proving to be massive financial disasters for the utility companies.25
19
Bruce C. Buckheit for Kiko Network (2015) Japan’s Path to Sustainable Electricity Supply: A review of current Japanese
energy policies
20
EndCoal plant tracker
21
Kiko Network (2015) List of coal power plants (August 2015). The list is updated monthly.
22
http://www.bloomberg.com/news/articles/2015-05-27/size-matters-as-japan-coal-revival-ducks-scrutiny-due-big-plants
23
Across this series of papers we have used the EndCoal plant tracker as the primary source of information regarding the
status of the coal development pipeline in each of the G7 countries. For Japan, however, this resource fails to capture the full
scale of recent coal plant proposals. We therefore sought to integrate the most recent data from Kiko Network with the
EndCoal categorisation of plants in order to provide an equivalent basis for comparison, as shown in Figure 5 below. We
assigned the majority of the 46 named plants in Kiko Network’s update from June to the ‘pre-permit development’ category,
and have used the ‘announced’ category as the heading for unspecific tender processes and EndCoal projects not captured by
the Kiko Network analysis. There is greater certainty regarding the number of plants under construction (identified by Kiko
Network) or which have become operational since 2010 (identified by EndCoal tracker). Two additional small projects of
100MW each have been added to the Kiko Network list between June and August 2015, which do not feature in Figure 5.
24
There is always uncertainty as to the likelihood of early stage project proposals continuing through to construction, as not
all project opportunities are sanctioned by developers and investors. In the case of Japan there is an additional element of
overlap with some utilities developing projects for their own capacity tenders. The situation is in flux and will require ongoing
scrutiny.
25
The paper in this series reviewing Germany’s coal phase out potential considers this dynamic in further detail.
12
G7 COAL PHASE OUT: JAPAN
Figure 5: G7 coal dynamics 2010-201526
Source: Endcoal Global Coal Plant Tracker, additional figures for Japan from Kiko
Network, retirement calculations by E3G.
The stark comparison between Japan and its G7 peers, as illustrated by Figure 5,
therefore illustrates how far out of step Japan’s approach is in comparison with all
other members of the G7. All of the plants remaining under development in Canada
and the UK incorporate CCS, as do four out of the seven remaining plants in the USA.
All of the other members of the G7 have actively retired existing coal capacity over
the past 5 years, with further retirements announced and / or planned as a result of
government policies.
Japanese government split on the coal vs climate conflict
While Japan’s existing coal power stations are among the most efficient in the world
due to their recent construction, coal is still the dirtiest fossil fuel in use.27 As a result,
the intended pursuit of new coal is acting as a brake on the ambition of Japan’s
emissions reductions commitments before COP21 in Paris later this year.28 The
Japanese government has approved a plan to reduce emissions by 26% below 2013
levels by 2030.29 This is less ambitious than the pledges made by either the US or the
EU.
Similarly, Japan’s approach to power sector decarbonisation is also in contrast to the
approach taken in other G7 countries. Rather than using legislation and regulatory
instruments to secure reductions in emissions, Japan’s electricity companies have
instead proposed voluntary reductions in carbon intensity in the period to 2030.
26
27
Canada retirement profile includes 1 plant closed in 2005 as part of the Ontario coal phase out programme.
METI (2014) Energy Situation in Japan and Japanese new energy strategy
28
Kiko Network (2015) Immediate Action Must be Brought to New and Existing Japanese Coal-Fired Power Plants
29
Nikkei Asian Review (2015) Japan aims to cut greenhouse gas emissions by 26% by 2030
13
G7 COAL PHASE OUT: JAPAN
During summer 2015 these proposals have been criticised as insufficient by the
Ministry of the Environment.30 As a consequence, the Ministry has objected to three
new proposed coal plants, stating that their development would not be compatible
with Japan’s climate change commitments.31 Final decisions on coal plant proposals
are however taken by Japan’s Ministry of Economy, Trade and Industry (METI) which
has not considered climate change impacts in its decisions to date.
Japan’s government is thereby now visibly split as to the role of coal in the electricity
system. In addition, Prime Minister Shinzo Abe and Minister of Economy, Trade and
Industry Yoichi Miyazawa have been challenged by members of the parliamentary
committee for energy, trade and industry regarding the incompatibility of expanded
unabated coal power generation with Japan’s G7 commitments to reduce CO2
emissions and transform the energy sector by 2050. Their response was however to
reaffirm the government’s support for ‘high efficiency’ coal.32 This approach continues
to isolate Japan as the ‘odd man out’ among the G7 members,33 a position which is
increasingly being recognised within Japan itself.34
Still time to escape from the coal trap
The planned expansion of coal would lock Japan into a high-carbon development path
and create a massive stock of assets that would be left stranded by stronger climate
policies and stricter emissions standards in the future. The plants under development
would account for about half of Japan’s CO2 emissions in 2050 under the
government’s long term emission target35 –which is already inconsistent with Japan’s
fair share of emissions reductions.36
Despite the significant risk of lock-in to high emissions of CO2 associated with these
expansion plans, it should be noted that so far only 0.75GW of the planned capacity
expansion is already under construction. A further 1GW has received government
approval or is ready to construct without approval due to being of small scale (e.g.
under 112.5MW). Small scale coal projects have been exempted from Environmental
Impact Assessments (EIAs), with more onerous requirements in place for wind
projects. However EIAs are currently underway for much of Japan’s planned coal plant
fleet, which could open the door to legal challenges.
Additionally, the construction of Japan’s proposed new coal plants may only be
feasible through the provision of government subsidies and financial guarantees given
the risk that these plants may become stranded assets. Along with other members of
the G20, Japan has committed to phase out use of such instruments. Thankfully, there
30
http://sekitan.jp/en/info/taketoyo_20150820/
31 Reuters, Japan environment ministry to object to another coal-fired power plant,15 August 2015
32
http://sekitan.jp/en/info/yamaguchiubepower20150620/
33
Business Insider, Japan may be the odd man out at the G7 summit, 6 June 2015
34
Japan Times, Misplaced emphasis on coal, 27 September 2015
35
Bloomberg, Japan’s New Coal Plants Threaten Emission Cuts, Group Says.9 April 2015.
36
Climate Action Tracker (2015) Japan
14
G7 COAL PHASE OUT: JAPAN
is still a chance to turn the tide and avoid funnelling massive amounts of money into
these unsustainable investments that will contribute to runaway climate change.
Japan hides behind CCS, without a credible plan
While the Japanese government has previously suggested that new coal plants could
fit CCS around 2030,37 there is at present no strong regulatory requirement for project
developers to ensure that coal plants are ‘carbon capture ready’ and able to access
CO2 storage – only a loose request from the Environment Ministry that CCS should be
considered in the EIA. This is in contrast to the UK, US and Canada, which have all
implemented policies of ‘no new coal without CCS’, leaving Japan further isolated
among its G7 peers.38 This lack of regulatory requirements for domestic CCS
deployment is also in contrast to the proactive financial support given for the use of
Japanese CO2 capture technologies in projects in the USA.39
At present, Japan is only taking forward a pilot scale CCS project at the Tomakomai
refinery.40 This is an insufficient basis on which to assume the feasibility of large-scale
CCS deployment, making Japan’s current references to CCS a shield to hide behind
rather than a means of achieving its climate objectives. If Japan is serious about
deploying CCS on coal power plants (which is an expensive technology choice
compared with further incremental deployment of renewables) then it must act to
ensure CCS is integrated fully from the start, not simply offer a vague promise that will
never be delivered.
Indeed, Japan faces geographical and geological constraints to CCS deployment: the
majority of Japan’s usable CO2 storage is likely to be situated off its Northern coasts,
away from tectonic fault zones, while the main centres of electricity demand are
located along the Southern coast.41 Coal plants located in these locations would
therefore be at extreme risk of never being able to connect to a coherent CO2
transportation network or access CO2 storage.
Beyond the power sector, the high level of use of coking coal for steel production and
other industries increases the importance of Japan taking early action to chart
credible decarbonisation pathways for its world-leading industries. CCS may well
become required for sectors such as steel and cement production where CO2 is
emitted during the manufacturing process. Given the long lead-times required to
develop CO2 infrastructure and characterise geological storage sites there is currently
a significant risk that large volumes of CO2 emissions from coal power plants could
crowd out industrial CO2 sources from available CO2 storage sites.
37
Zero CO2 NO Japan (2013) Energy & Climate Change Policy and Progress
38
Keith Johnson (2015) Japan Bets on Nuclear, and Coal, for Future Power. Foreign Policy 2015.
39
See e.g. the Petra Nova CCS project, which, is a joint venture between NRG Energy and JX Nippon, uses MHI CO2 capture
technology, and has been financed by the Japan Bank for International Cooperation and Mizuho Bank Ltd.
40
Japan CCS Large-scale demonstration project at Tomakomai area.
41
IEA (2014) CCS 2014 –What is in store for CCS?
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G7 COAL PHASE OUT: JAPAN
Can Japan act to retire its coal plants?
Japan’s government views coal as an important source of electricity generation and
therefore fundamental to the country’s energy security. As noted above, there are no
plans to phase out coal from the energy mix in the foreseeable future. The Kiko
Network has identified just 850MW of coal capacity that might be shut this decade as
a result of replacements planned under Japan’s coal expansion drive.42
Figure 6: Power generation pathway for Japan – 2010-2050
Despite the government’s
position, research has
shown that it would be
technically and
economically feasible to
significantly reduce the
amount of coal used for
electricity production. The
Deep Decarbonisation
project led by IDDRI and
SDSN has explored the
feasibility of pathways for
Japan’s electricity sector.
It found that it would be
possible to phase out all
coal without CCS by 2030,
Source: IDDRI (2014) Pathways to Deep Decarbonization
with a complete phase out
of coal power by 2050.
Over the same time period, renewable energy would grow to 59% of total electricity
generation primarily through deployment of solar PV and wind power, as shown by
Figure 6.43 This same study also considers model sensitivities that include no use of
nuclear power. Model outputs indicate a greater use of gas CCS as means of
complementing growth in renewables, while offering greater electricity output per
t/CO2 stored in comparison with coal CCS. Given limited CO2 storage volumes, this
could align with the deployment of industrial CCS as a stepping stone to deep
decarbonisation.
According to the Japanese Renewable Energy Foundation (JREF), Japan can reduce
emissions from the power sector by 40% by 2020 below 2012 levels without the use
of nuclear power by investing in efficiency, renewables and gas. Under this scenario,
coal is almost phased out of power generation by 2030.44 The Citizens’ Alliance for
Saving the Atmosphere and the Earth (CASA) has also released analysis demonstrating
that a 40% target by 2030 is achievable, mainly by reducing energy demand by
42
Kiko Network (2015) List of coal power plants (June 2015) The database is updated monthly.
43
SDSN & IDDRI (2014) Pathways to Decarbonization: Japan Chapter
44
JREF (2013) Recommendation for the ‘Basic Energy Plan’.
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G7 COAL PHASE OUT: JAPAN
energy-efficiency measures and shifting the energy mix by phasing out nuclear and
coal power.45
Analysis from the Kiko Network likewise suggests that Japan can phase out almost all
coal by 2030, without relying on nuclear power. Their modeling-based study
compares a business-as-usual scenario against two decarbonisation scenarios: one
with existing technologies and one that includes assumptions about technological
advances. In their scenario with only existing technologies, coal would account for
31% of power generation input in 2020 (approximately where it stands as of today)
but then fall to 4% in 2030 and 0% in 2050.46 Figure 7 below illustrates how these
scenarios would also encompass reductions in coal use across all economic sectors,
not just for electricity generation.
Figure 7: Projected primary energy supply under different scenarios
Source: Kiko Network (2014) Japan Climate Vision 2050: An energy future
independent of nuclear power and fossil fuels
Applying a 35 year plant lifetime limit
To illustrate the potential timing of an orderly coal phase-out in Japan, we
extrapolated from current data how coal capacity retirements could be spread out
over the coming decades if plants were decommissioned after 35 years of operations.
After 35 years, coal power plants can reasonably be assumed to have recovered their
investment costs, so shutting them down to achieve climate objectives would
generally not result in losses for the operator. 47
45
CASA (2014) Japan’s –40% GHG Reduction Target is Achievable without Nuclear Restart
46
Kiko Network (2014) Japan Climate Vision 2050: An energy future independent of nuclear power and fossil fuels
47
A 35-year lifetime should not be automatically assumed for plants where investment decisions were taken subsequent to
the agreement of domestic and international climate targets, as the likelihood of future emissions restrictions should have
been incorporated into project assessment.
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G7 COAL PHASE OUT: JAPAN
As shown in Figure 8 below, applying a 35 year cut-off date onto Japan’s coal fleet
would result in close to 5GW of the oldest coal plants shutting down immediately,
followed by a relatively consistent annual retirement of around 1-2GW per year
during the 10 years to 2025. This would leave just over 25GW still operational, with a
further 1GW of retirements each year continuing beyond 2025 – a rate that can easily
be exceeded through further incremental deployment of renewables and energy
efficiency improvements.
Figure 8: Japan’s coal fleet and retirement profile
Source: Kiko Network, E3G analysis
It should be noted that the speed of this transition would be slower than that
envisioned in the deep decarbonisation scenarios discussed above, and would not
represent a fair proportion of effort for Japan in the international effort to prevent
dangerous climate change.
The practical deliverability of this retirement profile does however reinforce the
central importance of Japan avoiding a new wave of investment in unabated coal. The
retirement and replacement of just over 40GW of existing plants is eminently feasible
in the period to 2035, but it would be nonsensical for this phase out challenge to be
nearly doubled in scale due to the addition of 30GW of new capacity and many smallscale generating units at industrial sites.
In the run up to the Paris COP21 negotiations, Japan needs to turn back from
investments in new coal plants and chart a course towards the phase out of coal use
for electricity generation over the next 20 years. Japan’s current approach sees it
isolated from its G7 peers and undermining its claim to a seat at the top table of
international influence.
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G7 COAL PHASE OUT: JAPAN