By Vlado Vivoda, Griffith University
Recent data shows Japan posted a record high trade deficit of ¥6.93tn (A$73.16bn) in 2012. Japan is struggling with rising imports as it tries to replace the energy lost when it shut down of most of its nuclear reactors following the March 11, 2011 Fukushima disaster.
A glance at Japan's energy trade statistics reveals the cost of mineral fuel imports increased from ¥17.4tn in 2010 to ¥21.8tn in 2011 and then to ¥24.1tn in 2012. The increased cost of imported fuels accounted for a lion's share of Japan trade deficits over the past two years. The cost of power has caused some Japanese companies to relocate production overseas and have otherwise made Japanese-produced goods less competitive.
Between May and July 2012, all of Japan's 54 nuclear reactors were offline. Two reactors were restarted in ÅŒi in July to tackle looming electricity shortages in the Kansai region during summer. According to the Institute of Energy Economics, Japan, restarting 26 of the nuclear power stations in 2014 would lower electricity fuel cost by ¥1.8tn.
Before the Fukushima disaster, nuclear power accounted for 25-30% of Japan's electricity supply. For a resource-poor and import dependent country, nuclear power was seen as a cheap option. At the same time it could enhance energy security, as it was considered to be a domestic energy source.
After the Fukushima disaster, Naoto Kan's and Yoshihiko Noda's Democratic Party of Japan (DPJ) governments hinted at nuclear phase-out by 2040. They did not commit to such policy through a new Basic Energy Plan, but they seemed to favour such an option, which was also supported by public opinion.
However, in mid-December 2012, Shinzo Abe's Liberal Democratic Party (LDP) won a landslide victory in Japan's general election, defeating the DPJ. Before the election, Shinzo Abe declared a move away from nuclear power was irresponsible and would damage the already ailing Japanese economy.
Public opinion remains in favour of a nuclear phase-out. But this issue did not affect voting behaviour, which overwhelmingly swung to the pro-nuclear option. Although all parties other than the LDP pledged to do away with nuclear power generation, the election outcome suggests that a large portion of unaffiliated voters who support an end to nuclear power voted for the LDP.
The Japanese public seems to have been frustrated with Kan's and Noda's mishandling of the nuclear meltdown and their inability to revive the economy.
After the election, Shinzo Abe declared Japan's energy policy would be reviewed over the next decade though publication of a new Basic Energy Plan, which is usually published every three years.
Abe's new government will also decide within three years whether to restart 50 reactors that remain idle after the Fukushima disaster. The government will allow restarting nuclear reactors that have been deemed safe by the newly formed independent regulator, the Nuclear Regulation Authority (NRA).
The NRA is not expected to compile new safety standards until after July 2013, which means any decision on resuming operations could likely only be made after the Upper House election in the summer of 2013.
Minister Motegi also stated that once experts' opinions were collected, the new government would take “a major political decision” on whether or not to allow construction of nine reactors now at the planning stage.
Abe's U-turn in nuclear policy comes as no surprise to Japan-watchers. The LDP is widely regarded as a party with close historical links to Japan's powerful “nuclear village”, electric utilities that are vehemently pro-nuclear and other likewise minded industry groups.
Much of Japan's big business remains adamantly opposed to a nuclear phase-out, arguing that this would lead to a further increase in electricity prices and manufacturing costs and would ultimately lead to industries shutting down or moving offshore. They argue that Japan's economy cannot recover without nuclear power.
For Abe, restarting nuclear reactors, and reducing fuel imports costs and consequently the trade deficit, is instrumental in his pursuit of economic resuscitation through Keynesian policies.
While the future prospects for renewable energy have been boosted by the introduction of an improved and generous feed-in-tariff (FIT) in July 2012, many obstacles stand in the path of renewable energy replacing lost nuclear power in the short-to-medium term.
Meanwhile, the public opinion is likely to remain anti-nuclear. It is not surprising given the scale of the Fukushima disaster, and the negligence of TEPCO and the regulators.
But anti-nuclear activists in Japan do not have a strong voice in Tokyo and have very little influence on future energy policy. And the lack of Japanese media attention to the nuclear issue means public opinion is likely to become ambivalent. Both the DPJ and the LDP governments have thus far successfully silenced public debate on the issue.
It is very likely that many of Japan's idle nuclear reactors will be restarted in the second part of 2013 and 2014. While many in Japan may have become personally opposed to nuclear power, they recognise that restarting the reactors deemed safe by the independent regulator under new and improved safety standards is the only choice for Japan.
Vlado Vivoda receives funding from the ARC.