August 17, 2017 6:32 am JST

Obstacles grow for coal power in Japan

Economic and environmental concerns clash in setting nation's energy course

Although coal is cheap and stable, it emits a large amount of carbon dioxide.

TOKYO -- Headwinds continue to build against coal-burning in Japan as the Environment Ministry has urged an unprecedented second halt on the construction of a coal-fired plant planned by Chubu Electric, citing an onerous burden on the climate.

Hitting targets

The utility's plan called for disposing of oil-powered generators No. 2, 3 and 4 at the Taketoyo thermal power plant in Aichi Prefecture and replacing them with a coal-powered No. 5 generator. The old generators are already more than 80% dismantled, and construction of the No. 5 is scheduled to start May 2018. On Aug. 1, then-Environment Minister Koichi Yamamoto submitted a recommendation to Economy, Trade and Industry Minister Hiroshige Seko, who ultimately has the final approval, urging him to review Chubu Electric's proposal.

The No. 5 generator would produce 1.07 million kilowatts of energy, equivalent to a nuclear power reactor. The Environment Ministry already once objected to Chubu Electric's proposal in 2015, forcing the company to come up with plans to mix wood pellets with the coal. The utility argues this method would reduce the carbon dioxide emissions by 900,000 tons per year, but the ministry determined that too was insufficient. 

"I want utilities to think about how they can reduce carbon dioxide emissions and how they can meet the country's goals when adding new coal-fired generators," said current Environment Minister Masaharu Nakagawa, who replaced Yamamoto during the cabinet reshuffle earlier this month.

Behind the ministry's hard-line stance is Japan's target of reducing greenhouse gas emissions 80% by 2050. That goal will be unattainable if the roughly 40 proposals for coal-powered generators come to pass. The ministry wants companies to dismantle old, high-emission generators when adding new ones and is calling on Chubu Electric to phase out or suspend operation of other aging generators besides No. 2, 3 and 4.    

The Paris Agreement on climate change and other environmental policies are beginning to hold sway. The government has started debate on carbon pricing plans, which makes it difficult for power generators to predict the profitability of their projects. Tonen General Sekiyu, now JXTG Holdings, abandoned in March plans for a coal-fired plant it was building with Kansai Electric Power in Chiba Prefecture.

Outside the Tokyo Gas general shareholders meeting in June, civic groups held protests against the construction of a coal-fired plant being built with Kyushu Electric Power. Tokyo Gas has acknowledged that local opinion is not something it can overlook. 

Here to stay

Japan gets the majority of its energy from fossil fuels, with liquefied natural gas accounting for 41% and coal 32%. Although coal emits twice as much carbon dioxide as LNG and 30% more than oil per energy produced, it was 10% cheaper than LNG and 60% more affordable than oil as of 2015. The government still plans for coal to make up 26% of Japan's energy mix in fiscal 2030. 

Despite significant greenhouse gas emissions, coal is viewed by the Economy Ministry as a cheap and stable energy source that is relatively safe from geopolitical risk. The ministry considers coal an essential base load energy source along with nuclear and hydro power.

The ministry began deliberations on revising its basic energy plan last Wednesday and will open a roundtable discussion exploring long-term plans at the end of this month. As European and other countries transition away from coal, many experts are likely to voice strong opposition to its expanded use in Japan.

(Nikkei)

Chubu Electric Power Co., Inc.

Japan

Market(Ticker): TKS(9502)
Sector:
Industry:
Utilities
Electric Utilities
Market cap(USD): 9,709.31M
Shares: 758M

JXTG Holdings, Inc.

Japan

Market(Ticker): TKS(5020)
Sector:
Industry:
Energy Minerals
Oil Refining/Marketing
Market cap(USD): 17,696.73M
Shares: 3,426.91M

The Kansai Electric Power Co., Inc.

Japan

Market(Ticker): TKS(9503)
Sector:
Industry:
Utilities
Electric Utilities
Market cap(USD): 13,132.40M
Shares: 938.73M

Tokyo Gas Co., Ltd.

Japan

Market(Ticker): TKS(9531)
Sector:
Industry:
Utilities
Gas Distributors
Market cap(USD): 11,609.62M
Shares: 2,290.36M

Kyushu Electric Power Co., Inc.

Japan

Market(Ticker): TKS(9508)
Sector:
Industry:
Utilities
Electric Utilities
Market cap(USD): 5,273.67M
Shares: 474.18M

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