Burning Japanese: a reluctant coal renaissance

The story of coal fired electricity in the 21st century is a tale of two cities: decline in the developed world and growth in the developing. Environment vs poverty. Climate risk vs poverty alleviation and development.

Coal is in sustained decline in developed economies as climate risk overwhelms any cost benefit coal once enjoyed. Meanwhile coal fired power has enjoyed strong growth in developing economies where the priority has been to supply cheap electricity to drag millions out of poverty and drive economic growth. Climate change is a luxury good that can be dealt with later.

In the US coal fired electricity has declined by 51 per cent since 2008, replaced by cheap gas and renewables, while EU coal use has fallen by 20 per cent since 2012. Once 2010 China’s demand for coal has increased by 10 per cent but is flattening.

The big outlier is Japan. The Japanese economy has been a big energy importer since it industrialised early in the 20th century and has been a big customer for Australian coal and gas.

Japan has been an active participant in global climate change negotiations and successive governments have supported global efforts to reduce emissions this century.

Japan’s ability to back its rhetoric and contribute to global emissions reductions were dealt a heavy blow in 2011 with the Fukushima nuclear disaster, which resulted in the closure of all 54 zero-emissions nuclear reactors over the next year, resulting in big increases in coal and gas fired electricity to fill the gap.

Japan: Electricity generation by fuel type (source IEA)

Since then Japanese utilities have been trying to get the nuclear reactors switched back on in the face of a Japanese public who had lost all confidence in the technology.  Nuclear generation has inched up over the past four years to around 6 per cent of total generation, while solar PV has grown to produce another 6 per cent. But fossil fuels currently supply around 80 per cent of Japanese electricity.

The problem faced by Japanese energy utilities is similar to that faced in Australia, but without the access to world class wind resources and abundant space for solar panels. Japan’s oldest coal fired power stations are more than 50 years old, and need to be replaced.

Like Australia, electricity demand in Japan has begun to decline in real and per capita terms since 2010, a combination of improved efficiency measures (accelerated by tight supply conditions post-Fukushima) and sustained population decline.

As a result Japan is building 15 new coal fired power stations or adding units to existing stations with a total new capacity of nearly 9GW. These ultra-super critical plants will have a slightly reduced emissions profile (around 760 kg CO2e/MWh) compared to older coal fired generators, but are still a major source of emissions.

Japan will continue to gradually expand its solar generation, but with poor wind resources, no space and continued political antipathy towards nuclear power, it has limited zero-emissions options to keep the lights on.

This is why Japan has been such an early mover in pioneering hydrogen as a clean energy vector. Given its simply can’t find enough domestic energy to supply its highly industrialised economy, Japan is looking to import clean energy and is hoping hydrogen can deliver.