Australian fossil fuel exporters have received a massive blow from one of their biggest customers, with Japan proposing a revised national energy strategy that massively ramps up investment in wind and solar and significantly reducing the role coal and gas will play in its energy system.
The proposed revisions to Japan’s ‘basic energy strategy’, published by the ministry for economy, trade and industry on Wednesday, would see Japan accelerate its transition away from coal and gas, and its shift towards renewables and hydrogen.
Under the revised basic energy strategy – which is reviewed by the Japanese government every three years – Japan would more than double the current market share of renewables by 2030, growing from around 18 per cent renewables recorded in 2019 to between 36 and 38 per cent by 2030.
At the same time, Japan will dramatically cut the amount of power supplied by coal and gas generators over the same period. Coal, which currently provides around one-third of Japan’s electricity, would fall to just 19 per cent market share by 2030, while gas will make a similar fall from its current market share of 37 per cent to just 20 per cent over the same period.
The Japanese government is likely to leave its target for nuclear power production at between 20 and 22 per cent – which will still require a significant increase from nuclear’ s current share of the Japanese electricity market. In the early 2000s, nuclear power has supplied around a quarter of Japan’s electricity, but this was reduced significantly in the wake of the Fukushima tsunami and nuclear disaster that occurred in 2011.
Much of Japan’s nuclear fleet has remained idle, or operating on significantly reduced output, following the Fukushima meltdown incident – but there has been a strong political push to see Japan kick-start its nuclear industries as part of its decarbonisation efforts.
The revised plan also predicts that Japan’s overall electricity consumption is expected to fall over the next decade through increased investments in energy efficiency measures, amplifying the hit on it demand for fossil fuels – much of which is supplied by Australia.
The new strategy would be an acceleration of Japan’s efforts to decarbonise its electricity system and is designed to help the country achieve its commitment to an economy-wide target of zero net emissions by 2050 and an interim target for a 46 per cent reduction in emissions in the electricity sector by 2030.
Associate professor at the ANU’s Crawford School of Public Policy, Llewelyn Hughes, told RenewEconomy that while it had been expected that Japan would set a target to reduce the proportion of electricity generated using coal – the dramatic cuts relating to the use of gas came as a surprise.
Hughes added that the addition of a specific target for the use of hydrogen and ammonia for electricity generation for the first time was also a significant moment, and was an important opportunity to Australia to learn from what was being achieved by one of its major trading partners.
Under the revised plan, Japan would set a dedicated target for hydrogen and ammonia fuelled generation – albeit of just one per cent of its electricity supply by 2030 – and would represent one of the first national strategies to incorporate a specific target for hydrogen use for electricity supplies.
Japanese companies have already started looking to Australia to develop hydrogen supply chains – including the involvement of Japanese energy giant Iwatani Corporation in a Queensland government-backed plan for a 3,000MW renewable hydrogen facility to be located just outside of Gladstone, and Japanese industrial giant Marubeni Corp signing a deal to invest in as many as 30 Australia solar farms that could be used to supply Japan with hydrogen.
The proposed revisions to the basic energy strategy will still need to be signed off by the Japanese cabinet, but Hughes suggested that based on practice around the earlier reviews, it is unlikely the numbers in the revised strategy undergo any significant changes.
The dramatic cuts to both coal and gas generation targets will have serious ramifications for Australian fossil fuel producers, with Japan ranking as Australia’s largest customer for both coal and gas exports.
The Australian Conservation Foundation said the adoption of a more ambitious Japanese energy strategy would show that the Morrison government needed to refocus its support away from propping up the coal and gas industries and clean energy technologies.
“This revised draft energy plan suggests Japan is moving quickly to replace its fossil fuel energy with renewable energy, including hydrogen and ammonia, which could be made and shipped from here, using Australia’s abundant renewable resources,” ACF campaigner Elizabeth Sullivan said.
“The Australian government has not helped our export industries prepare for the global shift away from polluting fuels, with fossil fuels still receiving the lion’s share of government financing and investment.”
The proposed revisions to the energy plan have been unveiled just days ahead of the opening of the Tokyo Olympics, which itself will be used to showcase Japan’s innovations in hydrogen technologies – including by fuelling the Olympic cauldron with renewable hydrogen for the entirety of the games.