Sep. 2013
Agency for Natural Resources and Energy
Ministry of Economy, Trade and Industry (METI) Japan
Director-General for Energy and Environmental Policy
Osamu Goto
Ministry   of   Economy,
Trade   and   Industry
Agency   for   Natural
Resources   and   Energy

Ministry   of   Economy,
Trade   and   Industry
Agency   for   Natural
Resources   and   Energy
1

Ministry   of   Economy,
Trade   and   Industry
Agency   for   Natural
Resources   and   Energy
2

Japan’s Primary Energy Supply
100%
Renewables etc.
90%
Hydro Nuclear power
80%
Natural gas
70%
60%
50%
Coal
First
Oil Shock
７５％
Coal
40%
30%
20%
10%
0%
Oil
Ministry   of   Economy,
Trade   and   Industry
Agency   for   Natural
Resources   and   Energy
(in crude oil equivalent kL)
4% *
3%
4%
23%
22%
43%
* “Renewables etc.” consists of solar power (0.1%), wind power (0.2%), geothermal heat (0.1%), and biomass (3.3%).
Source: Prepared based on “Comprehensive Energy Statistics” issued by the Agency for Natural Resources and Energy.”
3

Ministry   of   Economy,
Trade   and   Industry
Agency   for   Natural
Resources   and   Energy
(millions kL of crude oil equivalent)
450
400
350
300
250
16.4%
200
18.1%
150
100
65.5%
50
0
1973 Æ 2011
2.4-fold growth
(¥trillions)
600
Final energy consumption
Transport sector
Residential & Commercial sector
500
23.3%
400
1973 → 2011
33.8%
1973 Æ 2011
1.9-fold growth
Industry sector
200
42.8%
1973 Æ 2011
2.5-fold growth
100
0
1973 Æ 2011
0.9-fold growth
Sources: “Comprehensive Energy Statistics” and “Annual Report on National
Accounts.”
4

Ministry   of   Economy,
Trade   and   Industry
Agency   for   Natural
Resources   and   Energy
Japan is poorly endowed with energy resources, which are indispensable to economic and social activities. To meet the changing economic and energy situation of the time at home and abroad, Japan has reviewed its energy policy in order to ensure “energy security,” “economic efficiency,” and the “environment.”
1970s
1980s
1990s
2000s
[(1) Responding to the oil crises (1970s-80s)]
Energy security
1973: First oil shock
1979: Second oil shock
[(2) Promoting regulatory reform (since 1990s)]
Energy security
+
Economic efficiency
[(3) Coping with global warming issues (since 1990s) ]
Energy security
+
E conomic efficiency
+ E nvironment
=
3Es
1997: Kyoto Protocol adopted
2005: Kyoto Protocol came into effect
[(4) Enhancing resource security (2000s)]
Energy security
+
Economic efficiency
+ Environment
Enhanced resource security
[(5) Current Basic Energy Plan]
2002: Basic Act on Energy Policy enacted
2003: Basic Energy Plan established (revised in 2007 and 2010)
5

Ministry   of   Economy,
Trade   and   Industry
Agency   for   Natural
Resources   and   Energy
○ The current Basic Energy Plan anticipates the increase of the energy self-sufficiency rate (18%
Æ
40%) and the zero-emission power source ratio (renewable energy: about 10%
Æ
20%, nuclear power: about 30%
Æ
50%) by
2030
【 Primary energy supply 】 【 Generated output 】
Energy self-sufficiency ratio in 2030 : about 40%
700
600
500
400
300
200
100
0
Current energy selfsufficiency ratio: 18 ％
Total: 592
Coal
23%
Natural gas:19%
LPG
3%
Oil
39%
Renewables, etc.6%
Nuclear ： 10%
2007 年度実績
Renewables, etc:13%
Total: 517
(100 million kWh)
12000
Total: 10,305
Renewables, etc: 9%
10000
Zero-emission power source: 34%
8000
Nuclear
26%
Coal
17%
Natural gas:
16%
Nuclear: 24%
LPG
3%
Oil
27%
6000
4000
2000
0
2030 年推計
Coal
25%
LNG28%
Oil
13%
Zero-emission power source: about 70%
Total: 10,200
Renewables, etc:21%
Nuclear
53%
Coal
11%
LNG
13%
2030 年推計
Oil
2%
6

Ministry   of   Economy,
Trade   and   Industry
Agency   for   Natural
Resources   and   Energy
<Former Administration’s Statement>
○ “Innovative Strategy for Energy and the Environment” (September14, 2012)
1. Realization of a Society Not Dependent on Nuclear Power in Earliest Possible
Future.
・ Japanese Government will mobilize all possible policy resources to such a level as to even enable zero operation of nuclear power plants in the 2030’s.
○
・
7

Ministry   of   Economy,
Trade   and   Industry
Agency   for   Natural
Resources   and   Energy
<Former Administration’s Statement>
○ “Innovative Strategy for Energy and the Environment” (September14, 2012)
・ …the operation of nuclear power plants whose safety is assured will be restarted as an important power source.
○
Statement by Prime Minister Abe (Plenary Session of the House of
Councilors on March 6, 2013)
• Regarding the safety of nuclear power plants (NPPs), the administration will defer to the professional judgment of the Nuclear Regulatory
Authority (NRA), so no NPP will be restarted unless the NRA assures its safety. On the other hand, once the safety of NPPs is assured by the
NRA, the administration will respect its judgment and the NPPs will be restarted, from viewpoint of establishing a robust and responsible energy policy from various perspectives, including stable supply of energy, reduction of energy cost.
<Ref. Main activities of the Nuclear Regulation Authority (NRA)>
• Sep.19, 2012 : Established NRA
• Nov.2, 2012 ～ : Investigation of Fracture Zone ( at Ohi , Tsuruga ,and Tohoku-Higaashidori NPP )
• Jul.18,2013 : Deadline of the enforcement of new Nuclear Regulation
(for Commercial power reactors)
8

Ministry   of   Economy,
Trade   and   Industry
Agency   for   Natural
Resources   and   Energy
9

Ministry   of   Economy,
Trade   and   Industry
Agency   for   Natural
Resources   and   Energy
10

Current status of restoration from nuclear accident and next steps
Ministry   of   Economy,
Trade   and   Industry
Agency   for   Natural
Resources   and   Energy
To reduce risks,
(i) removal of the fuel from the spent fuel pool and
(ii) removal of the fuel debris will be carried out at the earliest possible time. According to the condition of each unit, work processes will be accelerated and multiple plans will be formulated.
● Mid-and-Long Term Roadmap towards the Decommissioning of Fukushima Daiichi NPP Units 1-4
December, 2011 Within 2 Years Within 10 Years After 30-40 Years
Step 1, 2 Phase 1 Phase 2 Phase 3
<Achieved stable conditions>
-Condition equivalent to cold shutdown
-Significant suppression of emissions
Period to the start of fuel removal from the spent fuel pool (Within 2 years)
Period to the start of fuel debris removal
(Within 10 years)
Period to the end of decommissioning (after
30-40 years)
Actions towards systematic staff training and allocation, motivation improvement, and securing of workers’ safety will be continuously implemented.
11

Countermeasures for the contaminated ground water leakage at TEPCO’s
Fukushima Daiichi Nuclear Power Station
Ministry
Trade
of and
Att. 3
Agency   for   Natural
Resources   and   Energy
‡
Contaminated ground water was detected in the area between the turbine buildings and plant port of the
Fukushima Daiichi NPS.
‡
Fundamental countermeasures will be taken in several phases in addition to the immediate countermeasures.
Three principles for contaminated water countermeasures
1. Securing the source of the contamination
2. Isolating ground water from the contamination source
3. Preventing leakage of the contaminated water
Current situation of the ground water
TEPCO estimates that the whole area of units 1 to 4 has approx. 1000 m 3 of ground water flow every day and 400 m 3 of this flows into the basement of the facility buildings. And some part of the other water is considered to be contaminated by the water in the trench and flows into the port through the soil.
Overview of the countermeasures
Sea-side impermeable walls
Sea side
No.1
holes t
Soil improvemen
Drain from the trench
Facing (paving the surface)
No.2
holes
No.3
holes
Mountain Side
Pumping out the ground water by subdrain
Unit
１〜４
About 500m
Pumping out the ground water for bypass
Ground water observation hole
Sub-drain
Ground water bypass
About 200m
Installation of landside impermeable walls adopting the frozen soil method
12

Change in Power Formation and Fuel Costs after Quake Disaster
○ The nuclear power ratio in domestic electricity production has dramatically decreased due to long ‐ term shutoff of each Nuclear Power Plant (NPP) for periodical inspection after the quake disaster. (Oh ‐ I No. 3 and 4 resumed in July, 2012.)
○ On the other hand, the thermal power generation ratio has increased up to 90%, especially LNG thermal which is about 50%.
○ And with the shutoff of NPP, replacement fuel costs from thermal generation are estimated to increase
3.1 trillion Yen from FY2010 to FY2012. In FY2013, it is estimated that fuel costs will increase 3.8 trillion
Yen over FY2010 based on the assumption that $1 = ¥100 and the exchange rate and nuclear power plant operation will be the same as in FY2012.
○ Trend   of   PWR   Formation   for   Power   Suppliers   (general   electricity   utility   ○ Fuel   Cost   Increase   from   Nuclear   Power   Shutoff and   wholesale   electricity   utility)   after   Quake   Disaster
9% 11% 8%
28%
16%
73%
10%
5%
5%
81% 90%
13%
17%
12%
1%
12%
1%
87% 87%
16% 13%
7%
3%
6%
2%
90% 92%
16% 18%
63%
7%
8%
32%
Power
Category
Nuclear
Fuel   Cost
(FY2012)
¥1/KWh
Cost   Impact   Amount
Estimation   in
FY2012
‐ 0.3
Trillion   ¥
Estimation   in
FY2013
( ※ )
‐ 0.3
Trillion   ¥
5%
5%
Coal ¥4/KWh +   0.1
Trillion   ¥ +   0.1
Trillion   ¥
41%
42%
47%
50%
46% 48% 48%
LNG ¥11/KWh +   1.4
Trillion   ¥ +   1.6
Trillion   ¥
38%
28%
32%
Oil ¥16/KWh +   1.9
Trillion   ¥ +   2.4
Trillion   ¥
Total － +   3.1
Trillion   ¥ +   3.8
Trillion   ¥
20%
16%
10%
25% 26%
25%
5%
20% 27% 26%
1% 1%
26%
3% 2%
11 年 4 月 ７月 １０月 12 年 1 月 ４月
LNG 火力発電比率
水力発電等
Ratio
23%
７月 １０月 13 年 1 月 10 年度
‘13
FY10
※ For FY2013, estimation was made on fuel cost used for FY2012 estimate based on the assumption of nuclear power operation being the same as FY2012, and by correcting exchange rate in accordance with recent rate, $1 = ¥100.
13

Schedule of the Introduction of the New Nuclear Safety Regulation
Discussion with academics at the Commission of NRA
Ministry   of   Economy,
Trade   and   Industry
Agency   for   Natural
Resources   and   Energy
Review by experts
* Listening to other academics and electric utilities
Compile an outline of New Nuclear Safety Regulation (February 6)
Public Comment
(until February 28)
Hearings from Experts,
Electric utilities
(severe accident countermeasures only)
Draft texts of Nuclear Safety Regulation (April 10, 2013)
Public Comment (until May 10)
Publication ・ Enforcement (July, 2013)
Applications for restart were made in 12 reactors in 6 powerstations (as of Today)
14

Ministry   of   Economy,
Trade   and   Industry
Agency   for   Natural
Resources   and   Energy
¾ There are 50 units of nuclear power plants in Japan.
¾ 48 units (in red) are in stoppage, and 2 units of them (in blue) are now in operation.
1 2 3 4 5 6 7
1 2
1
1
1
2
2
2
3
3 4
1 2 3 4
1
2
1
1 2 3
1 2 3
5 6
1 2 3 4
1 2 3 4
1 2
NPP   in   operation
NPP   in   Stoppage
Under   review   by
NRA
3 4 5
1 2 3
15

Ministry   of   Economy,
Trade   and   Industry
Agency   for   Natural
Resources   and   Energy
16

Ministry   of   Economy,
Trade   and   Industry
Agency   for   Natural
Resources   and   Energy
○ After   the   Great   East   Japan   Earthquake,   Japan’s   LNG   demand   has   increased   by   30% due   to   the   shutdown   of   nuclear   power   plants.
（ 2010fy   70million   tons  →  2012fy   90million   tons ）
○ In   addition,   Japan’s   LNG   import   price,   linked   to   crude   oil   import   price,   has   soared.
○ As   a   result,   the   overall   cost   of   LNG   imports   to   Japan   has   increased   from   3.5
trillion   yen a   year   to   around   6   trillion   yen.
※ 1   trillion   yen   =   $10.7
billion
Natural   Gas   price   trend （ unit:   US   dollar ／ MMBTU ）
$19.1/MMBTU
$15.8/MMBTU
$3.5/MMBTU
2001 2003 2005 2007 2009 2011 2012
17

Ministry   of   Economy,
Trade   and   Industry
Agency   for   Natural
Resources   and   Energy
○ The shut down of nuclear power plants and increasing LNG and crude oil prices have led to a rapid increase in fuel costs. In 2011, Japan recorded its 1st trade deficit in the last 31 years. Lowering the costs is an urgent task.
Increased   fuel   imports   due   to   the   shutdown of   nuclear   power   plants
Increased   LNG   and   crude   oil   prices
Rapid increase in fuel import costs
Increasing   in   trade   deficit,   change   of   current   account   balance   structure,   acceleration   of   the   hollowing   out   of    manufacturing   industry
（ trillion   yen ）
Trade   balance ： ‐ 13.6trillion
yen   （2010→2012)
Increase   in   net   imports   of   fossil   fuels   ：
+6.7
trillion   yen （ 17.4
→ 24.1
）
¾ Crude   oil   ： 2.9
trillion   yen
¾ LNG           ： 2.5
trillion   yen
¾ Petroleum   products   ： 1.1
trillion   yen
¾ Coal           ： 0.2
trillion   yen
Net   reduction   of   exports   in   transportation   equipment
： 0.6
trillion   yen
Other   factors ： 0.7
trillion   yen
Changes   in   trade   balance   and   current   account   balance
Current   account   surplus   in    2012   was
4.7
Trillion   yen
Trade   deficit   in   2012
(6.9
Trillion   yen)   was the   lowest   in   history
Trade   deficit   in   2011 was   2.6
Trillion   yen
18

Ministry   of   Economy,
Trade   and   Industry
Agency   for   Natural
Resources   and   Energy
„
¾ US,   Russia,   Mozambique
¾ Japanese   companies   in   the   upstream   (Australia)
„
¾ Stringent   assessment   on   raising   electricity   tariff,   focusing   on   fuel   cost   cut
¾ Electricity   market   reform:   direction   and   roadmap   released   in   February
¾ Nuclear   re ‐ start:   new   safety   standard   by   NRA   in   July   2013
„
¾ 1   trillion   yen   loan   guarantee   program   for   cheaper   LNG   projects
¾ 2 nd LNG   Producer   /   Consumer   Conference   @Tokyo,   fall   2013
¾ India ‐ Japan   Joint   study,   Korea ‐ Japan   Gas   dialogue
19

Ministry   of   Economy,
Trade   and   Industry
Agency   for   Natural
Resources   and   Energy
○ By   supporting   upstream   development   projects   by   Japanese   firms,   we   believe   new   projects   will   rise   in   countries   such   as   Russia,   Mozambique,etc.
which   will   encourage   competition   among   oil   countries/suppliers   leading   to   more   competitive   and   stable   supply.
○ Also,   in   order   to   secure   competitive   and   stable   energy,   we   encourage   end ‐ users   such   as    electric   power   companies   and   gas   companies   to   participate   in   upstream   development.
LNG   Projects   by   Japanese   Firms
Vladivostok   LNG   Project   (Russia)
・ Under review by Gazprom and JFG (Itochu,
Marubeni, JAPEX, INPEX)
・ Production scheduled to start in 2018,
Max 15 M tons/ yr
Far East LNG Project
・ Under study by Rosneft and Exxon
・ Production scheduled to start in 2018, 5M tons/yr
・ Use of gas from Sakhalin is under consideration
（ USA ）
・ Freeport LNG Project
・ Cove   Point    LNG Project
・ Cameron LNG   project
・ Total   LNG   expected   to   be   claimed   by   Japanese   firms:
15   M   Tons/   yr
Rovuma   Offshore   Gas   Field Area1 Project
(Mozambique)
・ Under   review   by   Mitsui   Co.
Ltd.(Japan)   and
Anadarko   Petroleum   (USA)
・ Production   expected   to   start   after   2018.
・ Substantial   portion   of   10   M   Tons/   yr is   expected   to   be   exported   to   Japan.
Ichthys LNG   Project   (Australia)
・ Operated   by    INPEX.
First   large   project   to   be   led   by   a
Japanese   firm.
・ Production   expected   to   start   after   end   of   2016
・ 6   M   Tons/   yr to   be   exported   to   Japan
20

Ministry   of   Economy,
Trade   and   Industry
Agency   for   Natural
Resources   and   Energy
21

Ministry   of   Economy,
Trade   and   Industry
Agency   for   Natural
Resources   and   Energy
„ The contribution of renewable energy (excluding hydro power) to the total power generation in Japan has covered around
1%.
„ Since the launch of the Residential Surplus Electricity Purchasing Scheme for Photovoltaic Power in November 2009 and the Feed-in Tariff Scheme in July 2012, Japan's use of renewable energy, led by solar power, has steadily increased.
„ Renewable energy accounted for 1.6% in FY2012.
(100 million kWh)
180
18,000,000,000
Japan’s use of renewable energy in percentage
2.0%
(Percentage to the total power generation)
16,000,000,000
14,000,000,000
120
0.4%
1.6%
1.5%
0.2%
1.4%
12,000,000,000
100
10,000,000,000
80
8,000,000,000
60
6,000,000,000
40
4,000,000,000
2,000,000,000
0
0.1% 0.1%
0.0%
0.1%
0.8%
0.9%
0.3% 0.3%
0.0%
0.0% 0.7%
0.3%
0.3%
0.6%
0.3%
0.2%
0.3% 0.3%
0.2%
0.2%
0.1%
0.2% 0.2% 0.3%
0.1%
0.1%
1.1%
1.2%
0.3%
0.3%
0.4%
0.3% 0.3% 0.3% 0.3%
0.4%
0.5%
0.4% 0.5%
0.3%
0.5%
0.5%
1.0%
0.5%
Geothermal
Total(excluding   hydro)
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
RPS Scheme
0.0%
(FY)
Residential Surplus Electricity Purchasing Scheme
Feed-in Tariff Scheme
＊ Created by the Agency for Natural Resources and Energy using Electric Power Statistics, RPS data, buyback under the Feed-in Tariff Scheme, etc.
22

Shifts in Japan's Measures to Increase Renewable Energy Use
Ministry   of   Economy,
Trade   and   Industry
Agency   for   Natural
Resources   and   Energy
„
Japan’s measures to increase the use of renewable energy shifted from (1) financial support through subsidies, (2) aid through placing an obligation on electric power companies to source part of their electricity from renewable sources (the RPS scheme), to (3) the feed-in tariff (FIT) scheme that requires electric power companies to purchase electricity at fixed prices.
Japan
(1) Support through subsidies (1997–)
¾ Enactment of the Act on the Promotion of New Energy Usage (New Energy Act)
9 Provides partial financial aid to private companies implementing new-energy projects and guarantee on loans taken from financial institutions.
9
Provides financial aid to local governments implementing new-energy projects.
(2) Support through placing an obligation (the RPS scheme) (2003–2012)
¾ Launch of the RPS Scheme in 2003
9
Requires electric power companies to source a specified proportion of their electricity from renewable sources ( without fixed prices ).
(3) Support through buyback at fixed prices (to give prospects for recovering investment) (2009–)
¾ Launch of the Residential Surplus Electricity Purchasing Scheme in 2009
9
Requires electric power companies to purchase home-generated solar power of less than 500 kW at the procurement price and for the procurement period set by the government .
¾ Launch of the Feed-in Tariff (FIT) Scheme in 2012
9 Requires electric power companies to purchase electricity produced from renewable sources, including solar, wind, hydro, geothermal and biomass at the procurement price and for the procurement period set by the government .
23

Ministry   of   Economy,
Trade   and   Industry
Agency   for   Natural
Resources   and   Energy
„ Among the total electricity generated in fiscal 2011, renewable energy, etc. accounted for approximately 10.4%; approximately 9% of which is hydraulic power generation.
„ Renewable energy other than hydro is still cost prohibitive.
Natural gas
Composition of annual electricity generated in Japan
Coal
Approx.
24%
Approx.
27%
FY 2010
Petroleum
Approx.
8%
Hydropower
Approx. 9%
Approx. 1%
Renewable energy excluding hydropower
Approx.
31%
Nuclear power
FY 2011
Nuclear power
Hydropower
Approx. 9%
Renewable energy excluding hydropower
Approx. 1.4%
Natural gas
Approx
10.7％
Approx
39.5％
Approx.
14.4%
Petroleum
Approx.
25%
Coal
Note: “Etc.” of “Renewable energy, etc.” includes the recovery of energy derived from waste, refuse derived fuel (RDF) products, heat supply utilizing waste heat, industrial steam recovery, and industrial electricity recovery.
Source: Prepared based on the Agency for Natural Resources and Energy’s “Outline of Electric Power Development in FY 2010”
24

Ministry   of   Economy,
Trade   and   Industry
Agency   for   Natural
Resources   and   Energy
25

• Negative   aspects   of   regional   monopoly   system   were   revealed:
1.
Lack   of   options   for   consumers   to   choose   suppliers,   rate   plans   and   power   sources   ;    Necessity   of   using   demand   response
2.
Necessity   of   using   generation   in   an   ascending   order   of   electricity   rates   (merit   order)
3.
Necessity   of   using   various    power   sources   such   as   renewables   and   co ‐ generation   (CHP);
Lack   of   smooth   connection   of   renewables   to   the   grids
Kansai   EPCO
Chugoku   EPCO
Hokuriku
EPCO
Hokkaido   EPCO
Tohoku   EPCO
4.
Lack   of   system   to   transmit   electricity   beyond   regions
5.
Necessity   of   establishment   of   system   to   transmit   various   type
Kyushu   EPCO of   power   in   a   neutral   and   fair   manner
Okinawa   EPCO
Tokyo   EPCO
(TEPCO)
Chubu   EPCO
Shikoku   EPCO
26

• Based   on   the   report   by   Expert   Committee,   the   Cabinet   decided   to   approve   the   Policy   on   Electricity   System   Reform   on   April   2,   2013.
• The   reform   aims   to   achieve   three   purposes:
(1)   Securing   the   stable   supply   of   electricity
(2)   Suppressing   electricity   rates   to   the   maximum   extent   possible
(3)   Expanding   choices   for   consumers   and   business   opportunities.
• To   achieve   these   purposes,   a   dramatic   reform   will   be   steadily   carried   out   according   to   a   realistic   schedule,   focusing   on   the   following   3   steps:
Step1 :   Establishment   of   the   Organization   for   Nationwide   Coordination   of
Transmission   Operators   (tentative   title)   (at   around   2015);
Step2 :   Full   liberalization   of   entry   to   electricity   retail   business
(at   around   2016);   and
Step3 :   Further   securing   neutrality   of   the   power   transmission/distribution   sector   and   full   liberalization   of   retail   electricity   rates
(at   around   2018   through   2020)
27