Energy

Japan’s electrical utility industry used to be run by ten regional Electrical Power Companies (EPCOs). While liberalisation of the electricity markets was initiated in the 1990s, real change was only triggered through reforms introduced by the Ministry of Economy, Trade and Industry (METI) following the 2011 Great East Japan Earthquake, which revealed weaknesses in the existing system.

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 6th 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 6th 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 7th 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.

Key issues and recommendations

Upcoming committee meeting schedule

Please contact the EBC ([email protected]) to confirm the meeting location prior to attending

2024
DATETIMELOCATION
February 7 (Wednesday)13:30~hybrid
May 8 (Wednesday)13:30~hybrid
September 25 (Wednesday)13:30~hybrid
December 11 (Wednesday)13:30~hybrid