review of japan energy policy

8/10/2019 Review of Japan Energy Policy

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Review of Japan's Energy Policy andrec on o e oa o cy

Se tember 4 2012

Hisayoshi AndoDirector-General,

Natural Resources and Fuel Department, ANRE, METI


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Index

1. Review of Japans energy policy 1

2. Overview of the resource security strategy 6

.

and direction of policies 8


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1. Review of Japan's Energy Policy


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Japan is poorly endowed with energy resources, which are indispensable to economic and social activities. To meet the

History of Japans Energy PolicyHistory of Japans Energy Policy

,ensure energy security, economic efficiency, and the environment.

1 Res ondin to the oil crises 1970s-80sEnergysecurity

1973: First oil shock

Energysecurity

Economicefficiency1990s +

[(2) Promoting regulatory reform (since 1990s)]: econ o s oc

Energysecurity Environment

Economicefficiency+ +

[(3) Coping with global warming issues (since 1990s) ]

2000s4 Enhancin resource securit 2000s

1997: Kyoto Protocol adopted2005: Kyoto Protocol came into effect

Energysecurity Environment

Economicefficiency+ +

Enhanced resource security

[(5) Current Basic Energy Plan]2002: Basic Act on Energy Policy enacted2003: Basic Energy Plan established (revised in 2007 and 2010) 2


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Developing the Strategy From ScratchDeveloping the Strategy From Scratch

The current Basic Energy Plan adopted in June 2010 seeks to increase power dependence onnuclear energy to more than half by 2030. This should be reviewed from scratch.Energy saving

(in 100 millions of kWh)

12,000 GDP: 1.4-fold increaseby 2030Power demand: 1-fold

increase by 203010,20010,239 Renewablesetc.

8,000

, Including about 30%energy saving

21%Renewables etc. 21%26%

6,000

Improved capacityutilization rate(60.7% in 2007

approx. 90% in 2030)28%

4,000

53% Nuclear 53%Fossil fuels

66%

Renewablesetc.

25%

2,000

Coal

Natural gas

11%

13%25%

Fossil fuels

26%Fossil fuels74%

25%

59%

13%

01970 1980 1985 1990 1995 2000 2005 2007 2009 2030

Oil etc.2%Basic Energy Plan

First oil crisis (material for the third meeting of the Energy and Environment Council on October 3, 2011) 3


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In preparation for the formulation of the new Basic Energy Plan, the Fundamental Issues Subcommittee of the Advisory Committee for

(Fundamental Issues Subcommittee of the Advisory Committee for Natural Resources and Energy: Released on June 19, 2012)

Points in the Draft for Energy Mix OptionsPoints in the Draft for Energy Mix Options

Natural Resources and Energy began the considerations in October, 2011. After 26 discussions total, they summarized the Draft for EnergyMix Options, which is a report for the Energy and Environment Council, on June 19.

.

(1) With considerations to consumers behaviors and social infrastructure reform,

fundamentally enhance energy saving/power saving policies(2) Maximize the acceleration of the development/utilization of renewable energy

(3) Effectively utilize fossil fuel while fully considering for environmental load, such as

.

(4) Reduce the power dependence on nuclear energy as much as possible

2. Fundamental perspectives in energy mix options

4 Relationshi with lobal warmin issues

(2) Correlation with the energy system reformmeasures

(5) Importance of technical innovations mpor ance o n erna ona perspec ves

(6) Recognition of uncertainty in the future

SOURCE:FundamentalIssues Subcommittee of the Advisor Committee for Natural Resources and Ener : Released on June 19, 2012


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2030

Three Scenarios for 2030Three Scenarios for 2030

2010 scenar o 15% scenario 20-25% scenario

Current StrategicEnergy Plan ofJapanBefore additionalmeasures

After additionalmeasures

Share of nuclear 0% 0% 15% 20 to 25%energy (-25%) (-25%) (-10%)

(-5 to -1%)

Share of renewableenergy 10% 30%+20% 35%+25% 30%+20% 30 to 25%+20 to +15% 20%

Note 1

Share of fossilfuels coal, gas, oil 63%

70%

28%,36%,6%

(+5%)

65%

21%, 38%, 6%

(Current level)

55%

20%, 29%, 5%

(-10%)

50%

18%,27%,5%

(-15%)35%

Share of non-fossil energyresources

37% 30%(-5%)

35%(Current level)

45%(+10%)

50%(+15%)

65%

Electric energygenerated

1.1 trillionkWh

pprox.trillion kWh

(-10%)

pprox.trillion kWh

(-10%)

pprox. r onkWh

(-10%)

pprox. r onkWh

(-10%)

Approx. 1.2trillion kWh

consumption

390 million kl m on(-72 million kl)

m on(-85 million kl)



340 million kl

Greenhouse gas- - -23% -23% -25% (Around -

(compared to 1990).

(-21%) (-22%) (-25%)

Note 1: The share of nuclear energy under the current Strategic Energy Plan of Japan (53%) is the share of large-scale power sources (excluding cogeneration and private power generation) Note 2: Figures in parentheses indicate only energy-related CO2 emissions.

The shares mean those in the electric energy generated. Figures in parentheses indicate changes from 2010 before the Great East Japan Earthquake.

o e

7

5SOURCE: O tions for Ener and the Environment Outline The Ener and Environment Council Decision on June 29 2012 Jul 2012 National Polic Unit


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2. Overview of the resource security strategy


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3. Current situation surrounding coal

and direction of policies


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Coal accounts for about one quarter of the worlds energy demand and more than 40% of generated energy. Coal energy demand

The Role of Coal in the Worlds Energy ResourcesThe Role of Coal in the Worlds Energy Resources

an coa -generate energy are expecte to increase y a out 1.25 times an 1.50 times, respective y, towar 2035.Global coal resource competition is increasingly intense due to the rapid increase of coal demand in China, India and otheremerging countries .

30,000

35,000

40,000

16,000

18,000

20,000

(TWh)

RenewableHydroNuclearGasOil

RenewableHydroNuclearGasOil

15,000

20,000

25,000

2729

1.56,000

8,000

10,000

12,000

, oa Coal

0

5,000

10,000

2000 2005 2010 2015 2020 2025 2030 2035

Source: IEA, World Energy Outlook 2009

Source: IEA, World Ener Outlook 2011

41

About 1.5 times

0

2,000

4,000

2000 2005 2010 2015 2020 2025 2030 2035

Source: IEA, World Ener Outlook 2011

About 1.25 times27 2433

Power generation composition of major countries (2009)][Primary energy composition of major countries (2009)]

67% 17% 3%1%

1%

1%2% 10%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

IndiaChina 79%

0% 2%

2% 17% 1%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

IndiaChina

22%

16%

21%

22%

33%

35%

42%

37%

24%

25%

17%

25%

11%

14%

15%

10%

1%

2%

1%

1%

3%

9%

8%

2%

5%

UK

Germany

EU

Japan

USA

44%

27%

27%

45%

1%2%

3%

9%

1%

13%

23%

27%

23%

23%

28%

27%

20%

3%

10%

7%

7%

15%

9%

3%

4%

UK

Germany

EU

Japan

USA

Source: IEA, "World Energy Outlook 2011"& "Energy Balances of OECD/non-OECD Countries(2011 Edition)"

Source: IEA, "World Energy Outlook 2011"& "Energy Balances of OECD/non-OECD Countries(2011 Edition)"

27% 33% 21% 6% 2% 11%world total

Coal Oil Gas Nuclear Hydro Other renewables

41% 5% 21% 13% 16% 3%world total

Coal Oil Gas Nuclear Hydro Other renewables

9


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Recoverable Coal Reserves in the World(by country and grade)Recoverable Coal Reserves in the World(by country and grade)

Russia (157.0Bt)

Euro e 10.8Bt

Canada (6.6Bt)

China (114.5Bt)

U.S. (237.3Bt)

India (60.6Bt)

Other African countries (1.5Bt) Colombia (6.7Bt)

Other Asian countries (47.6Bt)

Other SA countries (5.8Bt)Indonesia (5.5Bt)

South Africa (30.2Bt)Australia (76.4Bt) bituminous

+anthracite

lignite(22.7%)

Source: WEC Survey of Energy Resources 2010, BP Statistics 2010

.subbituminous(30.3%)

10


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Coal reserve, consumption and tradeCoal reserve, consumption and trade

The worlds top 5 coal reservecountries1 U.S.2 Russia 75% of the

apan s coa mpor s n were a ou . m on ons.

184.56 million tons in 2010Breakdown of 2011 coal import: fuel coal(about 112Mt), coking coal (about 69Mt), anthracite (about 5Mt)

About 80% of Japans coal imports are from Australia (60%) and Indonesia (20%)

4 Australia5 India

world reserveJapan is the second largest coal importer in the world. 99% of coal used in the country isimported. (Domestic production is about 1.3Mt (in 2011) accounting for about 1% of

domestic consumption.)

countries1 China 3.7Bt2 U.S. 0.9Bt3 India 0.7Bt

69% of theworlds

consum tion

,rapidly. Imports by China and India, in particular, are increasing sharply.

Global trade volume is about 1.2 billion tons (15% of which is imported by China)- About 15% of coal production is traded. (Coal is a resource of local production and local

consumpt on, n pr nc p e.

Coal reserve (2011)(including lignite)

Coal consumption (2011)(including lignite)

Worlds coal import (2011)(including lignite)

Coal exporter to Japan (2011)

Canada

10Mt6%

U.S.6Mt4%

China5Mt3%

Vietnam1Mt1%

Other1Mt1%

China212Mt

18%Other

320Mt27%Japan

Poland146Mt

2%

S. Korea130Mt

2%

Australia120Mt

2%Other

1,150Mt15%U.S.

237.3Bt28%Ukraine33.9Bt

Kazakhstan33.6Bt

4%

Africa30.2Bt

3% Other76.8Bt

9%

Australia105Mt

60%Indonesia

35Mt20%

Russia11Mt

7% Coal import175 million tons

(2011)

Recoverablereserves

860.9 billion tons(2011)

Japan175Mt

15%

IndiaRussia

Spain16Mt

1%

France15Mt

1%Coal import

1,177 million tons(2011 estimates)

China3,648Mt

48%

India687Mt

Germany230Mt

3%

South Africa183Mt

2%

2% Coal consumption7,628 million tons(2011 estimates)

Russia157.0BtAustralia76.4Bt

India60.6Bt

7%

Germany40.7Bt

5%

Source: IEA Coal Information2012Source: BP Statistics2012 Source: MOF Trade Statistics

S. Korea133Mt

11%

11%71Mt6%

Germany41Mt4%

U.K.

32Mt3%

2%

11

. .925Mt

12%Russia233Mt

3%

China114.5Bt

13%

9%


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Imports in India have increased by 5 times in 8 years between 2003 and 2011

Situation on coal resource development in the world Increased imports in China/India Situation on coal resource development in the world Increased imports in China/India

In China, domestic consumption has rapidly increased since 2003. Imports have sharply increasedby 17 times in the same time period. On the other hand, the exports have decreased toapproximately 25% of what it was in 2003.

- .largiest coal importer in the world)

Both countries economic growth is expected to continue in the future. The coal imports for thesecountries with high ratios of coal fired power generation are expected to increase.

India (excluding lignite) China (excluding lignite)120800 2504,000

80

100

600

700

C o a l i m p o

i l l i o n t o n s

)

2003,000

3,500

C o a l i m p o i

l l i o n t o n s )

40

60

300

400

r t s / e x p o r t s ( m c o

n s u m p t i o n

(

100

150

1,500

2,000

, r t s / e x p o r t s ( m i l

o n s u m p t i o n

( m

0

20

0

100

200 i l l i o n t o n s )

a l p r o

d u c t i o n

0

50

0

500

1,000 l i o n t o n s )

a l p r o

d u c t i o n

/

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11* C

Production Consumption Imports Exports

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11* C

Production Consumption Imports Exports

Note: Expected value as of 2011. Source: IEA, Coal Information 2012 12


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Coals long-term contract prices had been shifting in a relatively stable manner. However, due to the increase in coal

Shift in coal resource prices (long-term contracts)Shift in coal resource prices (long-term contracts)

, , ,etc., it has been on an increasing trend.

In recent years, it has remained high due to natural disasters in coal producing countries and the sudden increase incoal demand in China and India, etc. In addition, the peak has very recently passed and is on a declining trend due to

330

350US $/t Shift in long-term contract prices for coal

e excess supp y ue o e wor w e econom c e er ora on.

Increase due to300 315

285300

Sudden drop in price due to thesimultaneous economic deteriorationworldwide caused by subprime loans

the lack of supplyfrom the heavyrain that started inDecember, 2010

Coking coal

Steaming coal

200

225

209225 235

206225

200

Sudden increase in the price due to;

(1) Production stop in part of the coal mine due to the heavy rain inQLD, Australia(2) Stagnation of coal transportation and temporary export stop due to

heavy snow in ChinaPrice dropped due to the

125115

25

125

98 98

130

130 130 130 115

150

Improved due to the increased productionin Australia and Canada

Price increased due toworldwide coal demand

2nd quarter of2012

worldwide economicdeterioration

46.9 50.452.8

51.8 51.3 49.345.4551 53.5 53.5 50.95

41.9 39.7542.7548.1 46.2

57.297

5352.555.5

6998 98

50

100

Price increased due to:(1) Increased demand for coal in China, India, etc.

crisis

35.6539.1540.85

39.8538.9 36.3534.3540.3

40.337.6534.5

29.9528.75 34.5 31.8526.75

01988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2011 2012

Year

*Prices are FOB prices of representative Australian coal

(2) Stagnation of coal transportation due to heavysnow in China

13


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It is essential to strengthen the relationship with main coal supply countries, such as

Resource Diplomacy for CoalResource Diplomacy for Coal

Australia and Indonesia, and build a relationship with countries expected to be newsuppliers, such as Mongolia and Mozambique.

Other

Russia

Expected as a stable supplier to Japan in mid Russia

Canada

5%

4%

China3%

2%

Reevaluated as supply sources

USA/Canada

*Eriga coal field (Sumitomo Corporation, etc)

Mon olia

175Million ton Australia60%Indonesia

20%

the Shale Gas Revolution, etc.

IndonesiaThe second largest coal

Gathering worldwide attention ofhigh quality coking coal

Large interests of Japanese Coal import by Country in

supplier to Japan

Increasing of Japans

import recently

companies

*Taban Tolgoi coal field

Japan (2011 actual)

The largest coal exporter in the worldMozambique Australia Columbia

Reevaluated as a supplysource in anticipation for

*BA mines (Mitsubishi Corporation ,

etc)

*Revboe mine (Nippon Steel Corporation, others )

the Panama anal

expansion

14


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Achieving low carbon societies with technical transfers for overseas coal fired power generationAchieving low carbon societies with technical transfers for overseas coal fired power generation

Coal fired power generation technologies in Japan is the most efficient in the world andproper operation and maintenance keeps high efficiency.

Maintenance and improvement of Efficiency for existingthermal power plantsChanges in the efficiency of coal fired power generation

by country(LHV)Thermal efficiency(%, HHV)

CoalCoal--fired Plants(Site A)fired Plants(Site A)DesignedEfficiency

DesignedEfficiency

CoalCoal--fired Plants(Site B)fired Plants(Site B)

EfficiencyDegradation

0 10 20 30 40Years since Commissioning

Source: Energy balances of OECD/Non-OECD countries-2011

15


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It will be critical to continue R&D for technologies to realize more efficient coal fired power generation

Outlook of high efficient of coal-fired power generation in JapanOutlook of high efficient of coal-fired power generation in Japan

(Roadmap for efficiency improvement of coal fired power generation)

including IGCC, IGFC and A-USC.

IntegratedGasificationFuel Cell (IGFC)

y

Integrated GasificationCombined Cycle (IGCC)

1700C-classG l

e f f i c i e n

Ultra Super

Critical Pressure Coal- t t h e r m

H V

) % 1500C-class

GT

750C-classFired ThermalPower (USC)

A vance U tra SuperCritical Pressure Coal-Fired ThermalPower (A-USC)

N ( H

600C-classGT

700C-classGT

GT

Source: Created based on the Action Plan for Achieving a Low-carbonSociety and Cool Earth-Innovative Energy Technology Program 16


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Comparison of CO2 emissions of each fuel in power generationComparison of CO2 emissions of each fuel in power generation

em ss ons per erma un are approx ma e y oa : pe ro eum : = : : Coal fired power has approximately twice as much CO2 emissions per kWh compared to LNG power. Since coal has more CO2 emissions per unit compared to other fossil fuel, clean utilization is

re uired.

-CO2 emission/kwh in power generating fuelCO Emission er Thermal Unit

Coal fired power (average)

Oil firedpower avera e

LNG power (average)

LNG power (combined

Source: Based on the development targets by the Central Research Institute ofElectric Power Industry (2009) and various research businesses

on Climate Change

17


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Coal fired power generation in Japan is the most efficient in the world and proper operation and

CO2 emission reduction overseas (International deployment of SC/USC coal fired power generation)CO2 emission reduction overseas (International deployment of SC/USC coal fired power generation)

maintenance keeps high efficiency. It is estimated that the adoption of Japanese advanced technologies by all of the existing coal firedpower plants in the US, China and India would realize CO2 reductions of 1.3 billion tons.

We will promote overseas deployment of Japans high efficiency coal fired power generation and aimto maintain technical competitiveness through the technical transfer of the high efficiency coal fired

power generation according to the industrial structure of each country and system exports along.

Coal-fired Thermal Power CO2 Emissions and Reductions Estimates

Source: IEA World Energy Outlook 2009,Ecofys International Comparison of Fossil Power Efficiency and CO2 Intensity 2010 18


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1. Development/introduction of gasification/slurry of low rank coal

Effective utilization of low rank coalEffective utilization of low rank coal

eve opmen o gas ca on s urry ec no og es accor ng o e energy eman s ruc ure o coaproducing countries

(2) Methane/DME, etc. made from gasification of low rank coal can contribute to supplying clean energy toJa an in the future

2. Development/introduction of upgrading technologies for low rank coal in order to efficiently utilizeunused resources

(1) Development of upgrading technologies, such as dehydrating/drying technologies, in order to improve

Coalproducing

countryMajor consumer

ranspor a on com us on e c ency

generate

power

Minemousepower

generation

Generating efficiencyimprovement throughhigh-efficiency drying

system

Exporting while

CO2recovery

and storage

Low rankcoal

Gasification

meeting domesticdemands

Liquid fuelproduction

Methanol,DME, FT

synthetic oil,etc.

s

CO2recovery/storage

Ash

SNGproduction

Liquefactionusing existing

facilities

Using the existing LNG transportationinfrastructure 19


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SummarySummary

.

Promotion of coal utilization technologiesSecurity of stable supply of coal resource

Security of stable supply of coal resource thatcontributes to stabilization of energy

Development promotion and overseasdeployment of clean coal technologies

maintenance of industrial competitiveness. Acquisition of interests Enhancement of relationships with coal

Efficiency improvement, CO2 reduction,utilization of low rank coal, etc. Contribution to CO2 reduction overseas

Policy tools

Moderation of coal demand/supply through

utilization of low rank coal through overseas deployment of clean coaltechnologies

Coal

Gasificationfurnace

Gas turbine

Exhaust heatrecovery boiler

Exhaust gas

Policy dialogues between governmentsUtilization of budget, investment/liabilityassurance, ODA, yen loan, JBIC, and NEXI

Steam turbine

20


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Thank our for our attention.


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Reference of P.5 (Three Scenarios for 2030)

ff


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Reduce the share of nuclear energy to 0% at the earliest possible time before 2030 and adopt the nuclear fuel cycle policy of direct

Reference 0% ScenarioReference 0% Scenario

.

Convert the energy structure to one consisting of renewable energy and fossil fuels in the end.Impose strict regulations, including restrictions on/prohibition of sales of products with poor energy conservation performance, in

broad fields, and implement a considerably drastic shift of energy sources to renewable energy, energy conservation and gas, even

2010 2030 Specifics in 2030

,level comparable to other scenarios.

Approx. 10% reduction100 million kWh

10,000

12,000 Thermal power

Renewableenergy

Nuclear po wer

26% 0% 0% (-25%) Nuclear power

1.1 trillionkWh 1 trillion

kWh

Before additional

measuresAfter additional

measures

6,000

8,000

10% 30% 35% (+25%)Renewable

energy

Thermal power

65%63% 70%

0

2,000

4,000(dependence onfossil fuels) (current level)

Share of non-fossil energy

35%

10%

26% 30%

resources

-0.3% -16% -23%Greenhouse gas

emissions

0% scenario2010

+ Further energy conservation efforts andCO2 reduction measures

Final ener consum tion 310 million kl 300 million kl

Amount ofimport of fossilfuels

17 trillion 17 trillion 16 trillion+ Shift to natural gas(Ratio of natural gas/coal in thermal power generation: 1.3 1.8)

(Reference ) -30%Prospect for 2030 in the current Strategic Energy Plan ofJapan. Including only energy-related CO2 emissions

Amount of energy conserved 72 million kl 85 million kl

23SOURCE: Options for Energy and the Environment [Outline](The Energy and Environment Council Decision on June 29, 2012) July 2012 National Policy Unit

R f 15% S iR f 15% S i


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Reference 15% ScenarioReference 15% Scenario

Steadily reduce dependence on nuclear energy to around 15% in 2030 and smoothly realize reduction ofdependence on fossil fuels and CO2 emission reductionReprocessing and/or direct disposal are possible in relation to the nuclear fuel cycle policy.

, ,various environmental changes, including those in the energy situation, in the international situation concerningthe global environment, and in technological innovation

26% 15% (-10%) Nuclear power 2010 2030

Approx. 10% reduction

compared to 2010

100 million kWh

10% 30% (+20%)Renewable

energy10,000

12,000 Thermal

power Renewableenergy

Nuclear

1.1 trillion

kWh 1 trillion kWh

Thermal power

-

Share of non-

fossil energy 37% 45% +10%6,000

8,000 power

55%63%epen ence on oss

fuels)

Greenhouse gasemissions -0.3% -23%

0

2,000

,

30%10%

26%15%

(Reference) -30%

Amount ofimport of fossil

fuels 17 trillion 16 trillion

15% scenario2010

current Strategic Energy Planof Japan.Including only energy-relatedCO2 emissions.


R f 20 25% S iR f 20 25% S i


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Reference 20-25% ScenarioReference 20-25% Scenario

Keep a certain level of dependence on nuclear energy while slowly reducing it and achieve a share of nuclear energy in2030 around 20-25%. Construction of new nuclear power plants and replace of existing plants are required.Reprocessing and/or direct disposal are possible in relation to the nuclear fuel cycle policy.

Specifics in 2030

.Strong public confidence in nuclear energy and administration thereof is the premise.

12,000 Thermal ower

26% 20% (-5%)to 25% (-1%)

Nuclear power

2010 2030

1.1 trillion

.compared to 2010

100 million kWh

8,000

10,000Renewable en ergy

Nuclear power 10% 30% (+20%)to 25% (+15%)Renewableenergy

1 trillion kWh

50%50%

4,000

6,00063% 50% (-15%)

Share of non- 10% 30% 25%

Thermal power(dependence on fossil

fuels)

0

2,000 +15%oss energyresources

-0.3% - 25%Greenhouse gasemissions

25%

20-25% scenario2010

26% 20%

Amount ofimport of fossil

fuels 17 trillion 15 trillion

e erence) -Prospect for 2030 in the current StrategicEnergy Plan of Japan.

Including only energy-related CO2 emissions.



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review of japan energy policy

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