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Japan has been largely forgotten as a source of demand for energy commodities, overshadowed by the rapid rise of China, but the country’s new electricity generation targets will shake the market up.

For many years Japan has been viewed as a largely steady source of demand for liquefied natural gas (LNG) and thermal coal used in power generation, with small variations in the volumes imported on a year-by-year basis.

But this comfortable situation for commodity producers supplying the world’s third-biggest economy may end if the draft of Japan’s latest energy policy is put into effect.

Japan aims to boost the use of renewable energy to 36-38 percent of the electricity mix by 2030, double the level of 18 percent achieved in the fiscal year to March 2020, according to a government report released on July 20.

The jump in renewable energy means that LNG and coal will have to surrender market share, with coal planned to drop to 19 percent of generation from about 32 percent in recent years, and LNG dipping to a planned 20 percent from around 37 percent.

Nuclear energy is targeted to provide 20-22 percent of electricity in 2030, which would by a sharp rise on the 6 percent it provided in the 2019 fiscal year, when many of the country’s reactors were still offline for extended safety checks implemented in the wake of the 2011 Fukushima disaster.

New fuels like hydrogen and ammonia are only expected to make up 1 percent of power generation by 2030, up from effectively zero currently.

The draft plan is certainly ambitious on renewable energy, very bullish on nuclear and surprisingly non-committal on new fuel sources.

It will likely be a stretch to achieve the targets, with massive investment needed in renewables such as wind and solar, most likely with battery storage as well.

The Japanese public may also baulk at the nuclear component, which will require restarting most, if not all the remaining reactors, with nine currently operating and some 24 still offline.

 

Source : https://www.arabnews.com/node