Energy

As the first step to address those weaknesses, the Organization for Cross-regional Coordination of Transmission Operators (OCCTO) was formed in April 2015 and, subsequently, in September that year, an Electricity Market Surveillance Commission (EMSC) was established under METI to monitor and regulate the market. A second step was taken in April 2016, when full retail liberalisation was introduced as part of the Electricity Market Reform planned by METI’s Agency for Natural Resources and Energy (ANRE). The third step, legal unbundling of the transmission and distribution sector from the EPCOs in 2020, with the creation of a baseload power market, capacity market, balancing market and non-fossil value trading market which are expected to result in fair and transparent processes enabling healthy competition.

Following the 1970s oil crisis, Japan set out to reduce its dependency on imports of gas, oil and coal through increased use of nuclear energy, such that by 2010, nuclear energy accounted for 26% of the power generation energy mix. However, after May 2012, all Japan’s nuclear plants were shut down and a programme of safety reviews and upgrades was initiated, which is still ongoing. Between 2015 and 2018, nine reactors restarted. However, the pace of these restarts slowed down (no restart in 2019) and some reactors have or will have to shut down again temporarily because of legal actions and/or delays in completion of newly introduced counterterrorism measures.

In 2021, METI announced the 6^th Strategic Energy Plan which presents the basic direction of Japan’s energy policy, based on fundamental principles, namely, “safety,” “energy security,” “improvement of economic efficiency,” and “environmental suitability”, named 3E+S. The 6^th Plan consists of the 2030 energy mix targeting 2050 carbon neutral with pillars consisting of energy mix of renewable energy, nuclear power and thermal generation.

The 7^th Strategic Energy Plan is scheduled to be released in 2024. The EBC believes that the ties between Europe and Japan in the energy area should be further strengthened to facilitate commercial exchange, achieve consensus on common standards, enable attainment of the CO₂ emissions targets, facilitate access to energy at the lowest possible cost based on Cost Benefit Analysis (CBA) and achieve further energy cost reductions through the promotion of fair and open competition. Carbon pricing as a financial incentive is also something Japan needs to consider to achieve the emission reduction target by settlements between different Ministries.

The EBC is looking forward to be actively involved and to provide the appropriate support.