Prioritize stable supply over climate change.
The following is from an article by Noriko Endo, a specially-appointed professor at Keio University, published in today’s Sankei Shimbun’s Sound Argument, titled “Prioritize stable supply over climate change.
It is a must-read not only for Japanese citizens but also for people worldwide.
This article is excellent proof of how foolish and pseudo-moralists those who have been sympathetic to climate change, SDGs, etc., advocated by the Chinese-controlled UN are.
This article proves that they were the very people who China manipulated.
They had caused enormous damage to Japan even when they shut down the nuclear power plant immediately after March 11, 2011, and even now.
The emphasis in the text other than the headline is mine.
Invasion of Ukraine and Energy
On the night of February 24, when Russia invaded Ukraine, information that European traders had purchased Indonesian coal rushed to the resource market.
Europe has led the world in decarbonization with zero carbon dioxide emissions by the end of this century.
However, during this year-end and New Year holidays, when the reality of the Russian rampage became more realistic, it also revealed that they had bought about 50% more coal, mainly from Russia. Immediately after the invasion, they joined the battle for Indonesian and Australian coal, which Japan has been buying primarily to Indonesia and Australia.
The spot price of coal has doubled since the beginning of the year, reaching $425 per ton at one point in early March; two years ago, it was around $50.
In the case of natural gas, the developments in Europe are also having an impact on the global supply-demand structure.
It had procured about 45% of imports from Russia through pipelines. Still, in January and February of this year, it had already switched about 40% of these imports to liquefied natural gas (LNG) imports.
A plan has been formulated to secure a new LNG supply source equivalent to the annual import volume of South Korea, the third-largest demanding country after China and Japan, by the end of this year.
At the end of February, Germany also announced that it would build its first two LNG terminals.
In response to these developments, the Asian LNG spot market price hit a record high of over $59 per million British thermal units at the beginning of March.
In the same period last year, the price was only about $6 per million British thermal units.
Japan’s Lack of Buying Power is a Crisis
The share of LNG-fired power generation in Japan’s total power generation has increased to nearly 40% in recent years due to increasing pressure to withdraw from coal-fired power generation and the reluctance to restart nuclear power generation.
The past five years have been saved by resource prices rarely seen in history.
In addition, while more than 70% of natural gas procured in Europe is traded on a spot basis, in Japan, the price impact has been relatively small because most contracts are long-term, ranging from 5 to 20 years.
However, due to the progress of electricity deregulation in Japan, the ratio of contracted volume on wholesale power exchanges has risen to nearly 40% of total demand. As a result, major power companies and new power companies have begun to procure electricity from the market, “from FY 2019 onward, long-term contract conclusion has been avoided,” according to a major trading company.
Since last year, China is believed to have concluded long-term contracts with the U.S. and Russia for more than 20 million tons of LNG, equivalent to a quarter of Japan’s annual imports, and significant power and gas companies are increasingly concerned that Japan is losing out.
On the supply side, on the other hand, natural gas prices are likely to remain high as U.S. operators, which have joined the new suppliers in the shale gas revolution, are holding off on full-scale production increases until prices reach what investors consider profitable.
Geopolitically, it is firmly believed that China will replace Europe in absorbing Russian natural gas, including Sakhalin II, from which British Shell has decided to withdraw, and Russia and China will become even closer.
LNG, which is transported by dedicated vessels and thus has flexibility in destination, will increase its strategic value.
It will no longer be nonsense for Australia, Japan’s largest importer, to deliver LNG far away as Europe.
Respond to the call to restart nuclear power plants.
Naturally, the current surge in coal and LNG prices will significantly impact people’s lives through higher electricity rates.
Japan, which relies on imports for almost all fossil fuels, can be self-sufficient in renewable and nuclear power.
However, as high-performance storage batteries have not yet been commercialized, solar and wind power will require thermal power to back up fluctuating output.
Although nuclear power uses imported uranium as fuel, it is positioned as a quasi-domestic power source because of its high generating efficiency. It is currently the only independent power source.
However, the Nuclear Regulation Authority of Japan (NRAJ) is taking time to review nuclear power plants for compliance with the new regulatory standards, and only five reactors are currently in operation.
In fiscal 2008, these reactors accounted for less than 4% of total power generation.
However, there are other reactors for which safety measures have been completed.
Specifically, Kansai Electric Power Company’s Mihama No. 3, Takahama Nos. 1 and 2.
However, because the backup facilities for counter-terrorism measures have not been completed, the restart of Mihama will be delayed until October of this year at the earliest, and Takahama until next summer, which will be too late to meet the peak demand in summer and winter.
The anti-terrorism facilities required by the new regulatory standards are more than 100 meters away from the reactor buildings.
The anti-terrorism facility required by the new regulatory standards and the reactor building is more than 100 meters apart. In case of emergency, the necessary water and electricity are already movable and can be secured in duplicate, so they are in operation. So, there are few obstacles to the construction work.
A request for the extrajudicial restart of the plant may be worth considering.
Regarding thermal power, it is crucial to reconsider coal-fired thermal energy, which has been policy-induced to be idle and withdrawn from investment and financing by financial institutions because of its emphasis on climate change countermeasures as a backup power source for gas-fired thermal power.
Japan’s highly efficient coal-fired power plants will meet part of the robust demand in the battle for natural gas, especially in Asia.
The key to energy policy is the “3Es (stability, economy, and environment) plus S (safety),” and the invasion of Ukraine is forcing Europe and Japan to realize that stable supply should be a priority.