Originally Published 2011-08-12 00:00:00 Published on Aug 12, 2011
The recent decision by the government of Naoto Kan to denuclearise Japan by 2050, regardless of its naivete, has certain traits that could help in overhauling the political economy of Japan's energy sector.
Japan: Deconstructing the denuclearisation policy
The recent decision by the government of Naoto Kan to denuclearise Japan by 2050, regardless of its naiveté, has certain traits that could help in overhauling the political economy of Japan’s energy sector. On one hand the costs in terms of time and money to decommission a nuclear reactor and the logistics of dealing with a strong nuclear lobby makes denuclearisation too unrealistic a policy option. However, on the other, splitting nuclear monopolies into generation and distribution companies addresses the core of the problem by challenging the monopoly of the nuclear group and breaking the unholy nexus between bureaucrats and private nuclear power companies.

There are two major nuances to this policy. The first nuance is that denuclearisation indeed is an unrealistic option and seems to have been announced under tremendous public pressure. The intensity of public response against nuclear power after the tsunami is very high, and has cost Kan his position. There are other ways out to reduce dependence on the nuclear sector without entirely disbanding it. This aspect of the denuclearisation policy, however, needs to be looked into by disengaging the politics associated with it.

About 30 per cent of Japan’s electricity requirements today are being met by nuclear energy, and this figure was set to reach 53 per cent by 2030. Currently 38 of Japan’s 54 reactors are shut due to apprehensions among local officials who keep it shut for maintenance and safety checks. If electricity is not generated from these idle reactors, Japan is expected to face a prolonged power shortage from winter onwards as the gap between energy demand and supply has been increasing constantly. Interestingly, instead of moving ahead with generating nuclear power, the Democratic Party of Japan (DPJ) has called for an "energy saving policy of endurance" to the people of Japan by using as little electricity as possible. The government has come up with "smart meters" that will offer usage data on a real time basis, to conserve electricity at the household level. While the effectiveness of this power conservation scheme is yet to be assessed, it is clear that the energy sector of Japan has been pushed to the wall after the tsunami.

Adding on to this is the fact that the government of PM Kan has overestimated the capacity of electricity generation by alternative sources. A study by the National Policy Unit of Japan found out that the amount of "hidden energy" in Japan is significantly smaller than the expectations of PM Kan. Also, according to government estimates, the cost of generating power from other sources of energy is expected to increase by more than three trillion Yen for the Tokyo Electric Power Co. (TEPCO) due to high fuel prices, which will compel electricity companies to raise their prices. If this cost bubble is transferred into the power rates for the Japanese household, the monthly electricity bills will increase by an average of 1,300 Yen per household. Furthermore, a denuclearised Japan that hopes to meet 20 per cent of its energy requirements from renewable energy will add 1.66 trillion Yen a year to its power bill for the Japan Iron and Steel Federation. According to the Institute of Energy Economics of Japan, further blocking of nuclear reactors will result in a 3.6 per cent or 20.2 trillion Yen dip in the real GDP of Japan for the year 2012 itself. This could increase unemployment figures to as high as 1,97,000 people.

Despite its decision to denuclearise Japan, the government of Japan admits that the process of decommissioning, even of an undamaged reactor, will take decades and will be done in three phases. The first phase will be five to ten years from now, then by 2020 and the last by 2050. Also, from a technical perspective, the most pressing concern at Fukushima alone is how to dispose the huge quantity of water that got contaminated due to leak of radioactive material. Disposal of this water itself will take years, even before one can start thinking of decommissioning these reactors. All these issues show that the denuclearisation policy is not exactly a viable option. However, as the following paragraphs will indicate, it does have some very interesting answers to the structural problems of the energy sector of Japan.

The second nuance of the policy stems in the decision to break the monopoly of the nuclear suppliers group by separating generation and distribution processes, as this is the key to any possible reform in the energy sector of Japan. Despite its populist overtones, this reflects that PM Kan is serious to end the "vested interest’s chokehold" on policymaking, as promised earlier. Interestingly, not only did the Fukushima disaster expose the deep structural rot in the Japanese energy politics, it created revolutionary pressures that have initiated a struggle within the political and business classes of Japan that is reflective of the friction between vested interests of few powerful individuals and those of the masses.

Collusion between government officials and the nuclear establishment is fairly well known. On various instances these lobbies have devised mechanisms to overcome public opposition by revamping middle school curricula by bureaucrats with emphasis on the necessity of nuclear power. There have been reports that local mayors and host communities are rewarded for promoting nuclear energy. Not surprisingly, TEPCO employs various retired government regulators. Moreover, the government of Japan allows the Nuclear and Industrial Safety Agency (NISA), which is power regulator, to work in consortium with the Natural Resource and Energy Agency that is a promoter of nuclear energy. Both of these come under the ambit of the Economy, Trade and Industry Ministry of Japan. Ironically, this means that the same organisation is responsible for promoting and regulating nuclear energy.

Adding on to this collusive behavior are issues such as incentives structures for NISA employees. One of the problems faced at the most functional level is that employees working at NISA do not build a big career in the organisation, and are often transferred to other departments within the Ministry. If they provoke a big private nuclear power company by putting too many regulations, they might have a hard time dealing with the same company while in some other department at some other point in time. As a result most NISA employees adopt a "don’t make waves" attitude. The government of PM Kan, in its denuclearisation drive, seriously attempted to snap these nexuses by making NISA an independent body. Though this will not be a cakewalk, such structural changes are highly required at the moment. An indicator of how difficult this separation process might be is the recent criticism of NISA by PM Kan over planting of questions that aim at supporting nuclear energy at public forums by the Agency. He was quoted saying that the NISA was siding with the nuclear power industry instead of acting as a government regulator.

Therefore, the denuclearisation policy, while highly unrealistic on one hand, has certain mechanisms that will help neutralise the nuclear lobby and its impact on the policymaking of Japan, and might well allow the nation to explore other sources of energy and use them to their potential best.

The author is a Research Assistant at the Observer Research Foundation, New Delhi
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