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In search of gas

As Lebanon creeps towards producing natural gas, Japan begins looking for new energy sources

by Seiichi Otsuka

Since the suspension of nuclear facilities after the 2011 nuclear disaster in Fukushima, Japan has been seeking to diversify its energy sources. Among a variety of resources, the country has substantially increased its import of natural gas, particularly from the Middle East. After Fukushima, the import of liquefied natural gas (LNG) almost doubled in terms of value as a result of an increase in volume combined with a depreciation in the value of the yen. And as Lebanon is mounting its efforts to develop offshore and onshore natural gas and oil, the interests of the two countries are converging.

Shaking ground, quaking economy

The Great East Japan Earthquake and resulting massive tsunami on March 11, 2011 caused serious damage to the Fukushima nuclear power plant. The damaged nuclear reactors went out of control immediately. As a result of this accident, residents surrounding the plant were forced to evacuate and approximately 140,000 people still cannot return to their homes.

Taking into account the lessons learned from this disaster, the independent Nuclear Regulation Authority (NRA) was established, and new regulatory requirements — among the most stringent in the world — went into effect. The NRA examined Japan’s 48 existing nuclear power plants to ensure conformity with the new standards from technical and scientific viewpoints. Since then, all of the country’s nuclear facilities have been out of operation, though 17 are under screening by the NRA for possible restart.

The result of the shutdowns was dramatic: as of 2012, Japan’s energy self-sufficiency rate had declined to 6 percent. As alternatives to nuclear energy, imports of oil and natural gas have increased, resulting in an upsurge in Japan’s dependency on fossil fuels from 60 percent before the earthquake to 90 percent afterwards. In 2013, 83 percent of oil imports and 30 percent of LNG imports came from the Middle East.

In 2011, Japan’s trade balance turned to a deficit for the first time in 31 years, and expanded further in 2013. The increased imports of fossil fuels have thus caused problems not only in the field of energy, but also at the macroeconomic level.

Charting a future

Japan has controlled total energy consumption by exerting various energy saving efforts, such as promoting energy efficient lifestyles, introducing energy saving industrial devices and shifting major industry away from energy hungry sectors and towards the service sector since the 1973 oil crisis. As a result, final energy consumption in 2013 was only 1.3 times higher than in 1973. But energy conservation by itself is not enough.

Faced with the challenging conditions of energy supply, Japan adopted the Strategic Energy Plan in April 2014, outlining the immediate response to the energy crisis due to the sudden stoppage of nuclear power, and also mid to long term policy options toward diversification of energy sources. This strategic report highlights nuclear power as an important power source — but only if it’s safe.

When reevaluating the significance of nuclear power, it is very important to identify the characteristics of the respective supply chains of individual energy sources to realize the structure where stable supply, low cost and environmental acceptability can be achieved in proper balance. Particularly in terms of electricity supply, which plays a central role in the secondary energy structure, Japan must optimize each energy source based on its character.

First, Japan as a country should position geothermal power, ordinary hydropower, nuclear energy and coal as base load power sources, which can be operated stably and at low costs. In this context, there is no option without nuclear power. Second, natural gas should be placed as an immediate power source, which can respond quickly and flexibly to the situation of electricity demand. Third, we can consider oil and pumped storage hydropower as peaking power sources. They come at a higher cost, but can respond to extra electricity demand.

LNG now accounts for more than 40 percent of Japan’s energy generation and has high efficiency as a heat source, so its use is increasing. Furthermore, natural gas involves relatively low geopolitical risk compared to oil and emits the least greenhouse gas among fossil fuels. In the near future, fuel prices will be determined through competitive pricing due to the shale revolution. It is anticipated that a shift to natural gas will swiftly proceed in various sectors.

Lebanon, a possible future exporter of LNG, could be a close partner for Japan. Cooperation in energy may strengthen bilateral relations between the two countries, and if it does, we can expect the synergy to spill over into other important areas.

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Seiichi Otsuka

Seiichi Otsuka is the Japanese ambassador to Lebanon

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