This report examines Japan's plans to expand coal both domestically and in Southeast Asia against global trends of accelerated renewable electricity capacity. It finds this strategy is misaligned with the strategic interests of Japan's technology-based industries.
The research finds 53% of the Nikkei top 100 companies (representing almost 140 trillion yen of market value and employing over 3.5 million) have business models that would prefer proliferation of renewable electricity generation, both in Japan and globally, compared to 6% for coal power-related markets.
It concludes that while Japan has surrendered an early lead in solar PV technology, it still retains core R&D and manufacturing competences in Li Ion storage, components and key materials from which to succeed in the still evolving renewables markets. This success will likely depend on it pivoting away from its coal based power generation plans with far more focus on solar and wind.
Bloomberg New Energy Finance (BNEF) projects “renewable energy sources are set to represent almost three quarters of the $10.2 trillion the world will invest in new power generating technology until 2040, thanks to rapidly falling costs for solar and wind power, and a growing role for batteries, including electric vehicle batteries, in balancing supply and demand.” This will be accompanied by the global phase out of coal power, both the IEA and BNEF predict.
Japan's energy policies appear to be driven primarily by organizations that favor the development of large-coal power generation by the existing regional power companies over rapid scaling up of solar and wind power in a more liberalized electricity generation market place. Policy is driven by the "power triangle" consisting of the Japan Business Federation, or Keidanren (representing industry), the Ministry of Economy, Trade and Industry (METI) and the Cabinet Office currently headed by Prime Minister Shinzo Abe.
An analysis of the representation within the METI-Keidanren-Cabinet triangle of power shows the predominance of influence by a few companies from the power, energy intensive and fossil fuel sectors. Industry representation from technology, automotive, telecommunications and homebuilding/construction is weak. The influence of other stakeholders such as trade unions, NGOs, local government, media, civil society group, other government ministries and overseas interests within the energy policy making process is marginal.
As a result, Japan is unique among G7 nations in that it is adding to its domestic coal power generation capacity (46 coal plants, or 21GW in the pipeline) counter to the global coal phase out trend. In parallel with this, its public finance assistance of power projects overseas is primarily directed at coal-generated electricity with a pipeline of 30GW of coal projects planned, mainly in Southeast Asia.