Ulrike Schaede
By Ulrike Schaede
Everybody knows that Japan has an energy crisis. We also know that the yen has greatly depreciated, by some 20 percent in just a few weeks. It’s time to put these two facts together.
Abenomics, the shorthand for the aggressive economic strategies being pursued by Prime Minister Shinzo Abe, is the hot thing in Asia.
What wonders will the weak yen work for Japan’s export machine? Is a recovery just around the corner? Despite its volatility, Japan’s stock market says so, and foreign investors, in particular, like the prospects.
No wonder Japan is running a trade deficit. Yet the export machine can’t fix the economy if energy imports keep rising.
If all of Japan’s nuclear-power plants were running at full capacity, they would provide about 30 percent of electricity, and 11 percent of total energy consumption. With the current shutdowns, nuclear contributes only 2 percent of electricity, with oil and gas filling the gap.
Setting aside the question of greenhouse gases and global warming, the economic question is: Who will pay for the growing costs of energy imports?
Industry, which consumes about 36 percent of energy, is supposed to lead the recovery, and some of Japan’s export leaders are energy guzzlers.
If energy costs rise, the companies that produce the bulk of Japan’s world-class products will either lose out or — to prevent this from happening — move production elsewhere.
Either outcome would surely halt Japan’s domestic recovery.
The politics behind this are surprising. At the national level, the plans of Abe’s Liberal Democratic Party, which has a strong pro-nuclear image, are no secret.
The government recently announced that after new regulation takes effect in July, several power plants could go back online — presumably in time for August’s summer heat wave. Even so, Abe’s popularity is intact.
According to a leading energy think tank in Tokyo, 52 percent of Japanese were in favour of nuclear energy before Fukushima, and 39 percent were still in favour immediately after the disaster. This may have nudged back up, judging from the dwindling participation at the weekly “Sayonara Nuclear” demonstrations. The real challenge is the local governments, which have veto rights.
A recent poll among 135 cities located in nuclear evacuation zones showed that 49 percent of mayors would agree to a restart.
The official (what Japanese call “tatemae”) argument is: Nobody likes to live near such a plant, but there they are, as toxic as ever (though certainly less volatile than when switched on), and we don’t know much about disposing of unused nuclear-power plants. So, we might as well turn them back on.
The real (“honne”) story is that the plant owner/operators — the ten local monopolists that run Japan’s energy system — pay their annual “dues” to the localities, not just in the form of jobs but straight money to communities and incumbent local governments.
The final piece to the puzzle, then, is how local governments and mayors who were vociferously against nuclear just last year can switch sides without losing votes.
Not one part of this story is palatable, whether it is Japan’s glaring dependence on nuclear energy, the slow progress of the search for alternatives, or the inefficiencies of its grid.
Yet whatever the future resolution of those problems, Japan has only one viable course of action: It cannot afford not to turn its nuclear-power plants back on. WP-BLOOMBERG
By Ulrike Schaede
Everybody knows that Japan has an energy crisis. We also know that the yen has greatly depreciated, by some 20 percent in just a few weeks. It’s time to put these two facts together.
Abenomics, the shorthand for the aggressive economic strategies being pursued by Prime Minister Shinzo Abe, is the hot thing in Asia.
What wonders will the weak yen work for Japan’s export machine? Is a recovery just around the corner? Despite its volatility, Japan’s stock market says so, and foreign investors, in particular, like the prospects.
No wonder Japan is running a trade deficit. Yet the export machine can’t fix the economy if energy imports keep rising.
If all of Japan’s nuclear-power plants were running at full capacity, they would provide about 30 percent of electricity, and 11 percent of total energy consumption. With the current shutdowns, nuclear contributes only 2 percent of electricity, with oil and gas filling the gap.
Setting aside the question of greenhouse gases and global warming, the economic question is: Who will pay for the growing costs of energy imports?
Industry, which consumes about 36 percent of energy, is supposed to lead the recovery, and some of Japan’s export leaders are energy guzzlers.
If energy costs rise, the companies that produce the bulk of Japan’s world-class products will either lose out or — to prevent this from happening — move production elsewhere.
Either outcome would surely halt Japan’s domestic recovery.
The politics behind this are surprising. At the national level, the plans of Abe’s Liberal Democratic Party, which has a strong pro-nuclear image, are no secret.
The government recently announced that after new regulation takes effect in July, several power plants could go back online — presumably in time for August’s summer heat wave. Even so, Abe’s popularity is intact.
According to a leading energy think tank in Tokyo, 52 percent of Japanese were in favour of nuclear energy before Fukushima, and 39 percent were still in favour immediately after the disaster. This may have nudged back up, judging from the dwindling participation at the weekly “Sayonara Nuclear” demonstrations. The real challenge is the local governments, which have veto rights.
A recent poll among 135 cities located in nuclear evacuation zones showed that 49 percent of mayors would agree to a restart.
The official (what Japanese call “tatemae”) argument is: Nobody likes to live near such a plant, but there they are, as toxic as ever (though certainly less volatile than when switched on), and we don’t know much about disposing of unused nuclear-power plants. So, we might as well turn them back on.
The real (“honne”) story is that the plant owner/operators — the ten local monopolists that run Japan’s energy system — pay their annual “dues” to the localities, not just in the form of jobs but straight money to communities and incumbent local governments.
The final piece to the puzzle, then, is how local governments and mayors who were vociferously against nuclear just last year can switch sides without losing votes.
Not one part of this story is palatable, whether it is Japan’s glaring dependence on nuclear energy, the slow progress of the search for alternatives, or the inefficiencies of its grid.
Yet whatever the future resolution of those problems, Japan has only one viable course of action: It cannot afford not to turn its nuclear-power plants back on. WP-BLOOMBERG
