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 July 2021, METI announced the draft 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 draft Plan consists of the 2030 energy mix targeting 2050 carbon neutral which pillars are:

• Renewable energy (36 – 38% in 2030):
  Maximum integration to become the major power source in 2050 with maximum effort
• Nuclear power (20 – 22% in 2030):
  Lower dependency on nuclear power generation to the extent possible and restart of nuclear power plants and continuous improvement of safety
• Thermal generation (41%):
  Transition of the current thermal generation to carbon free power source by hydrogen and ammonia with Carbon Capture and Storage (CCS) and carbon recycle for resilient generation to balance the demand and supply

The draft plan without a phase-out scheme for coal and without replacements directions of the nuclear fleets makes the current draft plan unrealistic to achieve the target of emission reduction 46% from 2013 as a base year.
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 tax 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.