Challenges for Energy Policy in Japan after the Great ... · Power demand at14:00 （TEPCO's service area） 16% average down than 2010 Target 15％ cut Maximum Demand in 2010：

Challenges for Energy Policy in Japan after the Great Earthquake

The Institute of Energy Economics, Japan

Yukari Yamashita,

Board Member, Director

The Energy Data and Modelling Center

Saving Electricity in a Hurry WS

Beijing

23 February , 2012

Outline

１．Short term challenges of energy policy after Great East Japan Earthquake and Fukushima Nuclear Incident

- Temporary shortage of fossil fuel and resolution - Shortage of electricity supply and the effort of electricity saving (summer 2011) - Power generation mix and fossil fuel consumption

２．Mid-long term challenges of energy policy in Japan bought about by Fukushima Accident

- review and restructure Basic Energy Plan

３．Next Step for Japan - Policy Reforms

All Rights reserved IEEJ 2

１．Short term challenges of energy policy

in Japan after Great East Japan

earthquake and Fukushima Nuclear

Incident

3 All Rights reserved IEEJ

Fuel Shortage after March 11 and Resolution

【Oil】 Localized shortage of petroleum products supply

- Shut down of crude oil processing facilities （1400kB/D, 31% of Japan Total）

- Damage to transport routes, storage facilities, gas stations

Supply strengthen and shortage dissolution

- Temporary reduction of compulsory oil stock piling quota

（70days→67days→45days）

- Recovery of crude oil processing facilities, improvement in operating ratio

- Restrain export, Increase import, grant aid from China(20kt oil)…

- Recovery of Transport routes and Supply systems

【Gas】 Town gas supply stopped in devastated areas

- Town gas supply for 460,000 users stopped

- Shut down of LNG receiving terminal

Recovery of Town gas supply

- Additional LNG procurement, additional supply from producers: UAE, Qatar, Russia…

- Recovery of gas supply systems（99% at the end of April）

Meanwhile, demand of LNG and oil for power generation rose, due to shut down of nuclear and coal-fired thermal power plants


0

1 0 0 0

2 0 0 0

3 0 0 0

4 0 0 0

5 0 0 0

6 0 0 0

7 0 0 0

2011/3/1

2011/3/8

2011/3/15

2011/3/22

2011/3/29

2011/4/5

2011/4/12

2011/4/19

2011/4/26

2011/5/3

2011/5/10

2011/5/17

2011/5/24

2011/5/31

2011/6/7

2011/6/14

2011/6/21

2011/6/28

2011/7/5

2011/7/12

2011/7/19

2011/7/26

2011/8/2

2011/8/9

2011/8/16

2011/8/23

2011/8/30

2 0 1 0

2 0 1 1

5380万

5100万

万kW

→大震災以降 →需要対策開始

◆Power demand at14:00 （TEPCO's service area）

16% average

down than

2010

Target 15％ cut

Maximum Demand in

2010： 60,000MW

Prospect of Supply

Capability：

53,800MW

Necessary reduction

ratio of Demand：

10.3％ 19% down

during

July-August

Maximum

Demand in 2010

60,000MW

Source）Made by IEEJ with Tokyo Electric Power Company (TEPCO) briefing paper data

Shortage of power supply after March 11

Planned Blackouts

5

53,800MW

51,000MW

From March 11 From Elec. Saving

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104kW

Summer Electricity Saving Effort by Sector

Achievements by different sectors:

Households: almost achieved the target, partly because of less hot summer

Small customers: higher than target, potential for power saving like to reduce lamp

Large customers: higher than target, effect of restriction of electricity use by law （300 law violator within 19,000 Large customers）

kWh July-August

Households

（lighting） ▲12.4%

Small

customers ▲17.1%

Large

customers ▲11.4%

Total ▲14.0%

◆Electricity volume compared

to 2010（TEPCO）

Source）TEPCO. National Policy Unit. Partly estimated by IEEJ

※1: Comparison between 2010/7/23 and 2011/8/18

※2: Comparison between elected days, in which the temperature is comparable.9:00-20:00

kW TEPCO※1 National Policy

Unit※2

Households ▲6％ ▲11％

Small customers ▲19％ ▲19％

Large

customers ▲29％ ▲27％

Total ▲18％ ▲19％

◆Power demand compared to 2010 (TEPCO's service area)


Power Supply Recovery & Thermal Power Increase

【Government’s actions】 Various deregulations

－Exemption of Environmental Impact Assessment Act for thermal power

plant expansion

－Approve the delay of periodic inspection of thermal power plants

Promotion of private and distributed electric power generation

－Encourage private generators to sell electricity, support for installation and fuel cost

【Electricity companies’ actions】 Restore damaged thermal power plants

Restart long-idled thermal power plants

Install new emergency power generator (gas turbine etc.)

Increase power transfer among interconnected regions

Increase in gas and oil fired power Nuclear plant: incident-affected, stop, delay of re-operation

Coal fired plants stop due to disaster, Coal demand decrease in 2011

Increase in gas, oil fired power of electricity companies and private generators


Possible Electricity shortage

◆Outlook for the Operation of Nuclear Power Plants in Japan

(worst-case scenario)

8

◎ In the worst-case scenario, supposing long delays in starting up nuclear power plants after scheduled outages, the gradual loss of generation capacity will make it difficult for the utilities to cope with peak electricity demand in the summer 2012, seriously affecting industrial activity, etc.

GW

Fiscal 2010 Fiscal 2011 Fiscal 2012

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Possible impact on generation cost and CO2 emission. ◆ Assuming that the presently shut-down reactors, as well as the reactors which will soon enter scheduled outages, will not resume operation . . .

(1) The supply and demand for electricity will be very tight in the summer of 2012, possibly affecting employment.

•The gross generation capacity of electric utilities in Japan will be at least 7.2% lower than the peak electricity demand. If the utilities are to maintain at least a 5% reserve capacity ratio, it will be necessary to reduce electricity consumption by as much as 12.2%.

(2) Major increase of fuel cost

* If the reduction in output is to be compensated by thermal power plants, the fuel costs including coal, LNG and petroleum, will increase from the 2010 level by 3.3 trillion yen. If this is directly charged to power consumers, the electricity price will increase by 3.6 yen/kWh. For an average household, the electricity bill will rise by 1,024 yen (18%) per month, and the rate for industrial consumers by 35%.

(3) Major increase of energy-derived CO2 emissions

* The increased use of fossil fuel will cause the CO2 emissions in 2012 to rise to 1.21 billion tons, up 14.1% from the 1990 level. 9


Electricity supply

capacity is 7.2% short of

maximum demand

Summer

2010

Winter

2010

Summer

2011

Winter

2011

Summer

2012

Winter

2012

Non-nuclear capacity

Summer maximum demand (actual FY2010 data)

Nuclear capacity

Winter maximum demand (actual FY2010 data)


Power shortage is not over

◆Comparison of Japan’s total power generation capacity and peak demand

(No-restart of nuclear scenario )

・In case of no-restart of nuclear power plant, Japan may fall into electricity supply

shortage in 2011 Winter and 2012 Summer。

・ If reserve capacity(5%) is taken into consideration, 3.1% electricity saving is required in

2011 Winter, and 12.4% in 2012 Summer.

10 Source: Actual data and estimates from IEEJ, excluding Okinawa Electric Power Co.

(GW)

0

500

1000

1500

2009

2010

2011

2009

2010

2011

2009

2010

2011

2009

2010

2011

2009

2010

2011

2009

2010

2011

2009

2010

2011

2009

2010

2011

2009

2010

2011

January February March April May June July August September

10000ton or 10000kL

LNG（10000ton）

Crude Oil（10000ｋL）

Fuel Oil（10000ｋL）

Coal（10000ton）

0

200

400

600

800

1000

2009

2010

2011

2009

2010

2011

2009

2010

2011

2009

2010

2011

2009

2010

2011

2009

2010

2011

2009

2010

2011

2009

2010

2011

2009

2010

2011

January February March April May June July August September

108ｋWh

others

Nuclear

Thermal

Hydro

Impact on Fossil Fuel for Power Generation

Power Generation

Fossil Fuel for Thermal Power

Source）Monthly Report on Electric Power Statistics

Note：Total of Electric Utilities

Consumption during April-September in 2011

Compared to 2010

LNG Power Generation 4.26M ton(20%) up

Total Import 5 M ton(14%) up

Oil Power Generation 1.57M kL(27%) up

Net Import 0.46M kL(0.5%) up All Rights reserved IEEJ

Impact on demand/supply balance of oil and gas

◆ Impact on worldwide demand/supply of oil and gas

Reducing factors

◇ Reduction of demand due to slowing down of economic growth, general decline in industrial activity

Growth factors (expected to have a larger impact)

◇ Additional operations of oil- and gas-fired thermal power plants by TEPCO and Tohoku Electric

◇ Additional demand by other electric power companies

〇 Possibility of delay in restarting units after periodic inspection

〇 Increase of in-house power generation

◇ The increment for fiscal 2011 is given as a ratio of increase from fiscal 2010.

50-210 thousand B/D of oil and 11-15 million tons of LNG.

◇The increase for fiscal 2012 could be 5mil B/D of oil and 20 mil tons of LNG

Supply of both oil and LNG seems to be assured as a whole.

◇ Extra supply is available on international markets.

◇ Can use various procurement channels.

◇ However, there are some restraints on supply/demand (especially LNG).

◇ Regarding LNG, another concern is a lack in transportation capacity.

12 All Rights Reserved IEEJ


2. Mid-long term challenges of energy

policy in Japan brought about by

Fukushima Accident

0

100

200

300

400

500

1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2009

石油換算百万トン

一次石油危機

二次石油危機

■ 新エネ他□ 水力

■ 原子力

■ 天然ガス

■ 石炭

■ 石油

17％

27％48％

75％

4％

17％

43％

3％

22％

18％

12％

490 Mtoe

358 Mtoe

64 Mtoe

Japan’s Energy Mix

Japan has promoted energy diversity since the oil crises.

But the dependency on both fossil fuel and import energy is still high.

Total Primary Energy Supply

75% 43%

83％

Almost all are

imported.

95％

Fossil

Fuels

Fossils

+

Uranium

Mtoe

1st oil

crisis

2nd oil

crisis

Oil

Coal

Natural

Gas

Nuclear

Hydro


Renewables

14

17%

6%

79%

10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2009

一次石油危機

原子力含む

原子力含まず

Insufficient energy security

17%

6%

Treat Nuclear as

’Semi-domestic

production ‘

Low energy self-sufficiency

If excluding nuclear, energy self-sufficiency will be only 6%, and it will rise to 17% when

taking nuclear as ‘semi-domestic production’.


First Oil

Crisis Include Nuclear

Exclude Nuclear

0

100

200

300

1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2009


一次石油危機

二次石油危機

■ 貨物

■ 旅客

■ 業務

■ 家庭

■ 製造業

■ 非製造業

運輸

民生

産業

41 Mtoe

329 Mtoe

265 Mtoe

6%

18%

53%

19%

9%

8%

61%

9%

8%

5%

12%

16%

44%

16%

9%

3% 0

100

200

300

1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2009


一次石油危機

二次石油危機

□ その他

■ 電力

■ 都市ガス

■ 石炭

■ 石油

22％

68％

53％

14％

13％

53％

10％

10％

25％

Trends: Increase in Transport & Building Sectors Electrification of demand

Final Energy Demand

•Final energy use by industry sector has been stable since oil crises while transport and building sectors has been increasing its energy use. •Oil demand decreased after the oil crises, but then started to increase again while electricity demand has been increasing steadily.

61% 44%

53%

25%

68%

Source: Suehiro, Energy Demand and Supply Structure of Japan

Oil

Industry

Building

Transport

28%

25%

16 All Rights Reserved IEEJ

First Oil

Crisis 2nd Oil

Crisis

MTOE MTOE

First Oil

Crisis

2nd Oil

Crisis

Electricity

0

200

400

600

800

1000

1200

19

65

19

70

19

75

19

80

19

85

19

90

19

95

20

00

20

05

20

10

20

15

20

20

20

25

20

30

20

35

20

40

20

45

20

50

百万トン-C O 2

【福田ビジョン】2050年

60～80％減（2005年比）

【経産省】2020年：15％減2030年：25％減（2005年比）

【京都目達】2008-2012年1.6～2.8％増（1990年比）

【鳩山目標】2020年：25%減（1990年比）

【基本計画　事務局案】2030年：30％減（1990年比）

【温暖化対策基本法案】2050年：80%減（1990年比）

CO2 Emission Reduction Targets of Japan

(Aso Target )


METI

2020: 15% down

2030: 25% down

(base year 2005)

Hatoyama Target

2020: 25% down

(base year 1990)

Kyoto Protocol Target

Achievement

2008-2012: 1.6-2.8% up

(base year 1990)

Fukuda Vision

2050:

60-80% down

(base year 2005)

Basic Plan Secretariat

2030: 30% down

(base year 1990)

Basic Law for Prevention of

Global Warming

2050: 80% down

(base year 1990)

Million ton CO2

Targets of Japan’s Energy Strategy

The main target is to secure the energy supply and mitigate GHGs. The two

targets can be met at the same time by promoting energy conservation and

using low carbon energies.

Energy Security Global Warming

Energy Conservation

Nuclear and

Renewable Energy

Self-sufficiency

Reduce

Import Energy

Reduce

Fossil Fuel

Energy Diversity Low Carbon Energy

Reduce Oil Dependence

and ME Dependence

SolutionAll Rights reserved IEEJ

Energy Import

18

Basic Act on Energy Policy and Basic Energy Plan

○ Energy security

○ Environmental protection

○ Efficient supply

○ Energy-based economic growth

○ Reform of the energy industrial structure

（enacted in June 2002） Basic Act on Energy Policy

（Formulation October 2003,

Revision: March 2007

June 2010）

Basic Energy Plan

The government must formulate a basic plan on energy supply and

demand in order to promote measures on energy supply and demand

on a long-term, comprehensive and systematic basis.

【Fundamental Principles 】

① Securing of a stable supply

② Environmental suitability

③ Utilization of market mechanisms


【Basic Energy Plan】 Energy Mix

-Raise Energy Independence Ratio （Self-sufficiency + Self-development

rate） from 38%(2007) to 70% (2030)

-Reduce CO2 Emission by 30% vs. 1990 level

592

517

13% Cut

（13%)

（24%)

（17%)

（16%)

（3%)

（27%)

Half of import fossils(60% of energy demand) will be self-developed: 30%

Self- sufficiency: 40%

2007 actual 2030 goal

Oil

Natural Gas

Coal

Nuclear

Renewables

Million kL - crude oil equivalent


Treat Nuclear as

’Semi-domestic

production ‘

20

21

0

50

100

150

200

250

300

350

FY2007 FY2030

GW

Oil,etc.

LNG

Coal

Renew-

ables,

etc.

Nuclear

0

200

400

600

800

1000

1200

FY2007 FY2030 (FY2030 ?)

TWh

Oil,etc.

LNG

Coal

Renew-

ables,

etc.

Nuclear

3.The mid-long term challenges

: Possible Revision of Best Energy Mix

Generating Capacity Electricity Generation

40%

20%

10%

20%

10%

20%

50%

10%

10%

Saving ?

Renew-

ables ?

Fossil

fuel ?

26%

9%

Nuclear?

Possible Change of Best Energy Mix Note: points of current plan

① raise self-sufficiency of energy supply : 38 -> 70 ② reduce emissions by 30% in 2030 compared to 1990 level

Current Basic Energy Plan (approved in 2010)


On-Going Discussion • Basic Energy Plan (by summer 2012)

（ Basic Issues Committee, Advisory Committee for Natural Resources and Energy, METI）

Discussion on energy mix and different options in preparation for new Basic Energy Plan by summer.

• Innovative Energy/Environment Strategy (by Summer 2012) （Energy-Environment Meeting, National Policy Unit, Cabinet Secretariat）

(27th July 2011: Preliminary Report ⇒ Summer 2012: Final Report）

6 priority areas (energy efficiency, renewable energy, resource/fuel, nuclear, electricity system, energy-environment industry)

• Action Plan for Energy Regulation and Regulatory System Reform 26 items for reform including those to streamline electric power system reform, renewable energy

promotion and strengthening energy efficiency improvement.

• Report on Cost, etc. Verification Committee (January 2012) （Energy-Environment Meeting, National Policy Unit, Cabinet Secretariat） Re-estimation and verification of different types of power generation

• New Framework for Nuclear Energy Policy （under discussion at Atomic Energy Commission）

• Action Plan for Stabilization of Energy Demand & Supply （ Electricity Demand & Supply Meeting, Energy-Environment Meeting, National Policy Unit (1 Nov.) ) Action plan on stable energy demand-supply balance for the coming 3 years. Action plan to avoid blackout in the summer 2012 while avoiding issuance of regulation (Article

27 of Electricity Utility Act). – List of actions such as tariff reform (time of use), introduction of additional renewable energy and energy

efficient systems (demand cut and strengthening supply) which must be done by GOJ, utilities, industries and households.

• Energy Efficiency and Conservation Subcommittee （under public comment process) (Advisory Committee for Natural Resources and Energy, METI） Basic concept towards revision of the Energy Conservation Act including peak load cut, strengthening building

material energy efficiency standards, etc.

• Global Environment Sub-Committee, Central Environment Council (by Summer 2012) Discussion and drafting of different options for global environment policies. 22


Way Forward for JAPAN Big challenge! (Leadership, robust integrated policies, consensus…)

Finding new Energy Mix and designing new Basic Energy Plan

New task for Energy Conservation Act!

Reduction of electricity peak demand to be incruded.

Consumer behavior remains the key!

Installation of smart meters for all the households in TEPCO area – Survey shows that industrial sector would not endure the severe power

saving efforts again (Keidanren survey (Nov. 2011)).

– Estimation based on consumer survey also indicates that household end-users may cease to save electricity by 2015 (Energy Conservation Committee (January 2012)

Regulatory rules are revisited! – Tariff restructure is discussed,

– Regulation regarding national parks to be relaxed to enable installation of geothermal power plants

New infrastructure required! – Grid connection, additional bulk introduction of renewable power,

distributed heat and power, etc. are being revisited and considered. 23

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Thank you for your attention!

Documents

Challenges for Energy Policy in Japan after the Great ... · Power demand at14:00 （TEPCO's service area） 16% average down than 2010 Target 15％ cut Maximum Demand in 2010：