The March 2011 nuclear accident in Japan epitomizes the promises and perils of an energy source that once provided a measure of autonomy for import-reliant countries. As an energy-thirsty economy with few indigenous resources, Japan must find ways to make more extensive use of alternative and renewable sources, such as solar and wind. As Hideaki Tanaka, senior executive director of the Japan Energy Association notes, “Consumer and public sentiment toward nuclear is negative, while there are high hopes for renewable energy.”

An island nation poor in natural resources, Japan historically has been heavily reliant on imported energy sources. In contrast to the U.S. and China, which produce more than 70% of their energy needs, Japan must import more than 80%. The country’s overreliance on foreign sources was revealed in 1973, when an oil embargo by petroleum-exporting countries caused a dramatic increase in fuel prices. Japan’s dependence on foreign sources forced the nation to reassess its energy policy. Unlike the industrialized countries in Europe that are similarly dependent on foreign energy, geographically isolated Japan has “chosen to invest heavily in nuclear power,” says Kuga Iwata, director of the secretariat at the Japanese Wind Power Association.

Another major influence on Japan’s nuclear strategy has been its commitment to the Kyoto Protocol. As a signatory and a vocal proponent on the world stage for curbing greenhouse gases, Japan has committed itself to a 6% carbon dioxide (CO2) reduction from 1990 levels over the five-year period of 2008 to 2012. Moreover, the low cost of producing nuclear energy — when compared to alternative “green” sources such as wind and solar — has been an important factor in its adoption.

Japan’s focus on becoming an energy self-sufficient nation, its commitment to the environment and its economic considerations for affordable energy contributed to its prioritization of nuclear energy. In 2009, 29% of Japan’s electricity was produced by nuclear power, while 61% was produced by a combination of different combustible fuel sources such as coal, oil and liquefied natural gas (LNG). Hydropower and renewable energy accounted for 8% and 1%, respectively. Until recently, the Japanese government aimed to increase the percentage of nuclear power in Japan’s energy portfolio to 50% by 2030. However, the March 2011 earthquake and tsunami have forced Japan to reevaluate its nuclear program, as evidenced in former Prime Minister Naoto Kan’s statement: “If there are risks of accidents that could make half the land mass of our country uninhabitable, we cannot afford to take such risks, even if we are only going to be playing with those risks once a century.”

Earthquake, Tsunami, Nuclear Crisis

On March 11, 2011, a 9.0-magnitude earthquake caused a tsunami that devastated the Tohoku coastline in northeastern Japan and left 25,000 people injured, missing or dead. The tsunami caused meltdowns at three reactors at the Fukushima Daiichi nuclear power plant — an incident that served as a huge wake-up call to the dangers of nuclear energy for Japan and many other nations. Within two months, Germany announced it would shut down all of its nuclear power plants by 2022, Italy abandoned plans to build new nuclear power plants and Switzerland decided it will likely retire existing reactors when they reach the end of their normal life cycles.

In Japan, 10 nuclear reactors (including the seven at the Fukushima plant) were shut down, resulting in a 20% reduction in total electricity generation capacity. Consequently, a host of energy-saving measures were encouraged across the eastern part of Japan’s main island so that summer demand would not outstrip the reduced supply. Many offices maintained an indoor temperature of 82° Fahrenheit, and some manufacturers operated on Saturdays and Sundays to avoid potential weekday blackouts. This admirable forbearance among the Japanese people — called setsuden (energy conservation) — in the months following the quake minimized the disruption from the immediate energy shortfall. As effective as these measures were, however, they were widely acknowledged to be only short-term responses to a long-term problem. According to Tanaka, “Setsuden measures, such as turning off lights or reducing air conditioner usage, is a short-term solution which relies on consumers’ perseverance and tolerance. On the other hand, sho-ene [another term for energy conservation] is a long-term solution and involves investments in energy reduction technologies, such as switching lights from incandescent to LEDs.”

In the aftermath of the nuclear disaster, heavy criticism was leveled at Tokyo Electric Power Company (TEPCO), the operator of the Fukushima Daichii nuclear power plant. The sluggish response by the Japanese government, currently led by the Democratic Party of Japan (DPJ), was also severely criticized. The accident exposed the coziness of the decades-long relationship between TEPCO and the government, and the mistrust felt by the Japanese public has only grown since.

The continuous reports of radioactive contamination in dozens of foods (ranging from beef to rice, the national staple) have further highlighted the far-reaching consequences of the accident and have underscored the authorities’ lack of effective countermeasures. A heightened fear of radioactive pollution has fueled antinuclear sentiment that has been increasingly vocalized since the disaster. In his inauguration speech on September 2, 2011, Prime Minister Yoshihiko Noda responded by expressing his support for gradually phasing out nuclear energy over the long term: “In the future, we will become a society that does not rely on nuclear energy.”

Impact on Japan, Inc., and Beyond

Prior to the nuclear crisis, Japan’s main governing party, the DPJ, was facing a number of serious problems related to the country’s economy. With a rapidly aging society, an export-hindering strong yen and the highest public debt per capita of any major economy, the embattled party is now tasked with the most expensive clean-up and reconstruction efforts in the nation’s post-war history — an estimated JPY25 trillion (US$325 billion). How deftly the DPJ handles these measures will play a major role in determining Japan’s economic growth prospects.

Japan is now expected to undertake significant changes with respect to its energy program. Some corporations view the nuclear crisis as an opportunity for strategic expansion. For example, General Electric Energy Japan is focusing on meeting the increased demand from small businesses for individual power generators. Furthermore, a new energy bill was passed recently for feed-in tariffs (FITs), mandating that by mid-2012, power companies purchase all renewable energy at an above-market price set by the Japanese government.

Still, such measures do little to mitigate business leaders’ concerns about Japan’s global competitiveness. In an interview with Asahi Shimbun, Hiromasa Yonekura, chairman of Keidanren, an influential consortium of Japan’s large businesses, shared his criticism of the government’s handling of the recent nuclear accident, warning that “[t]he Japanese economy will collapse if we deal with the accident the wrong way.”

Electricity producers have indicated that price hikes will be necessary, as TEPCO aims to file with the trade ministry for a 10% rate increase in spring 2012. Combined with a soaring yen (reaching a record high of JPY75.9 against the U.S. dollar in late August 2011), rising costs are prompting speculation that more Japanese manufacturers will soon relocate production facilities abroad — a move that would greatly affect the domestic economy.

Japan and Renewable Energy

As of late August 2011, only 15 of Japan’s 54 nuclear reactors are in use. The rest are offline either for safety concerns or for mandatory inspections required every 13 months. Restarting the reactors requires approval from the prefectural governments. However, in the public backlash against nuclear power, local politicians have not been able to make a firm decision, adding to the nation’s growing energy concerns. According to Masaaki Kameda, general manager of the Japan Photovoltaic Energy Association, “Japan is divided on the issue of nuclear; for example, the incumbent Aomori governor supports nuclear but most of the public is against it.”

Japan’s growing interest in renewable energy to replace nuclear energy can be illustrated by an August 2011 Asahi Shimbun poll of 2,000 adults. When asked to choose among various sources, 85% of the respondents preferred renewable sources, such as wind, solar and geothermal. Yet renewable energy currently generates only 1% of Japan’s electricity, of which 0.3% and 0.4%, respectively, comprise solar and wind power.

Widespread adoption of renewable energy has not taken place in Japan for three main reasons: its high cost, the electric companies’ monopoly and an unaligned regional power infrastructure. The cost of generating electricity sourced from renewable energies is estimated to range between 37 and 46 yen (US$0.48-0.60) per kilowatt, in contrast to 5 to 6 yen (US$0.06-0.08) for nuclear energy (not including clean-up and waste-disposal costs). With renewable energy costing six to seven times more than nuclear energy, the broader adoption of renewables historically has been highly dependent on government programs and subsidies. In the wake of the crisis, the Japanese government has set up a committee to recalculate the cost of nuclear energy (factoring in the costs of reparations and plant decommissioning), with the aim of dispelling the myth that nuclear power is a “cheap energy source” and increasing the prevalence of renewable energy. Yoshihisa Murasawa, a professor at the University of Tokyo, estimates that the true cost of generating nuclear energy — factoring in the costs of natural disasters, nuclear waste disposal and the prevention of terrorist attacks — is actually similar to that of solar.

In addition to the cost, the Japanese power companies’ existing structure is an impediment. Japan’s electricity is generated by 10 regional power companies, each of which has a monopoly on power generation and distribution. Iwata argues that dividing the power companies’ generation and distribution rights will lead to more competition. He is not alone among energy experts. Makoto Iida, a professor at Tokyo University, notes that this situation is exacerbated by the Renewable Portfolio Standard (RPS), a 2003 law mandating that 1.3% of Japan’s electricity must come from renewable sources. “The objective is so small that the power companies have already achieved it and have no further incentive to purchase more.”

Another issue is that Japan has two different standards for electrical cycles. Eastern Japan runs on 50 Hz and western Japan operates on 60 Hz, and there are two separate power grids. This set-up dates back to the Meiji period, when the eastern section imported generators from Germany’s AEG that ran on one standard, while the western section utilized generators from the U.S.’s General Electric Company, which used the other standard. Although there are three plants that can transfer electricity between the two grids, the process is both expensive and limited, resulting at times in bottlenecks of unexpected shortages. This situation is complicated further when renewable energy comes into play: The supply of renewable energy is naturally uneven (e.g., solar energy cannot be harnessed at night). As Iwata states, “Japan’s power grid is small, unlike that of the United States, so it cannot easily support additional fluctuating sources of power.”

Alternative Solutions

Japan stimulated solar panel uptake by subsidizing the cost of home installations until 2005, when the government program was discontinued. In 2009, Japan was third in solar power generation with 483 megawatts (MW) generated — after Germany (3,845 MW) and Italy (723 MW). That same year, Japan reintroduced the subsidies for solar panel installations and began a FIT program for power companies, which entailed purchasing surplus electricity generated by households at a higher-than-market price of JPY42 per kWh (US$0.55) as of April 2011. This price is offset by a monthly surcharge of up to JPY100 (US$1.30), paid by customers without solar panels.

Solar energy has been popular in Japan, especially with the government subsidy. Kameda has observed that applications for solar panel subsidies in May and June 2011 were up 30% over the same period the previous year. The many merits of solar power include no CO2 emissions, matching peak output and peak consumption periods, and no transmission loss (i.e., energy is not wasted between generation and consumption).

Despite these advantages, many issues remain. The growth of solar energy is highly dependent on government support to reduce costs. Even with the government subsidy for installation and the FIT, says Kameda, it still takes the average household 10 years to recoup its installation expenses. In addition, solar energy’s greatest shortcoming is its uneven output. Fluctuating output from PV cells can disrupt the power grid’s supply and cause problems with its quality. Currently, there is no affordable storage battery large enough to store surplus energy on the grid for later release.

Wind power is another steadily growing renewable source in Japan. It is appealing due to its zero emissions and energy-generation cost of JPY10-14 per kWh (US$0.13-$0.18), which is lower than that of solar. However, in 2010, Japan ranked twelfth in the world in terms of wind-power capacity. Unlike Germany, the U.S., and Canada, Japan has not yet introduced incentives, such as subsidies or FITs, specific to wind power. In addition, as Iwata has noted, “Japan has limited land [and] people are dispersed all over the country. This reduces the amount of usable land for wind farms.” Wind power is also unpredictable as an energy source. Moreover, reports of adverse health effects, such as insomnia, headaches and irritability stemming from infrasound (low-frequency sound), are a concern. Bird strikes — birds dying after colliding with wind turbines — is a point of criticism from conservationists. Iida also notes that the “power companies’ process of selecting wind farm suppliers is problematic, since it is mostly based on a lottery. Wind power adoption is stunted because there are many organizations and companies that are not selected and, thus, turned away.”

Given the country’s mountainous landscape, Japan has little choice but to look offshore, where winds are more plentiful. However, the country’s seabed descends quickly, which “creates a technically and economically challenging situation for wind farm development,” according to Tanaka. Yet some potential exists: TEPCO is currently conducting an experimental offshore fixed wind farm off the coast of Chiba prefecture.

A Complicated Future

Considering the multiple obstacles facing the two most widespread renewable energy technologies in Japan — wind and solar — it is clear that it would be nearly impossible for the country to abandon nuclear power. “Abandoning nuclear energy is probably not possible,” suggests Satoru Kushida, deputy head of the Secretariat at the Japan Coal Energy Center. “Rather, what is most likely is that existing nuclear plants will continue to operate and that no new ones will be built. Of course, as Japanese, we have high hopes for renewable energy, but we still need a base, steady energy supply.” Indeed, recent opinion polls conducted by Tokyo Shimbun in June 2011 show that, while an overwhelming 82% supports Japan’s move away from nuclear energy, most respondents recognize the need for it and favor a gradual phasing-out of nuclear power instead.

Some may wonder why, unlike Germany, Switzerland and Italy, Japan has not decided to discontinue its nuclear program. Iwata says it is important to consider society, manufacturing and lifestyle as factors in Japan. “Renewable energy’s unsteady supply is probably fine for an agrarian society, but as a manufacturing society, we need to ensure a stable electricity supply.” Indeed, in his same inauguration speech, Prime Minister Yoshihiko Noda declared that “we will decommission reactors at the end of their life spans … but it is also impossible to immediately reduce our dependence to zero.”

The general view among industry insiders is that the short-term response is most likely to be an increased emphasis on CO2-polluting resources, such as LNG and coal. Since March 2011, formerly idle oil and gas generators have been restarted, confirming industry predictions that Japan may face an approximately 20% increase in coal-fired generation. Michiaki Harada, general manager of the Japan Coal Energy Center, says that “in the near term, coal plants will be in full operation to prevent blackouts.” The Japanese government now faces the difficult task of meeting its Kyoto Protocol target by 2012, while simultaneously rebuilding the affected areas and improving the country’s economic situation.

Going forward, Japan will need to reconcile its industry needs with popular sentiment. “Thinking about the ‘best mix’ of energy resources is crucial,” notes Kameda. “We need to diversify our energy sources to mitigate the impact of crises and issues in other countries, while keeping CO2 emissions in mind.” Iida emphasizes the importance of a paradigm shift among consumers, stating that “consumer lifestyles need to change so that energy consumption does not increase even in the face of high renewable energy adoption.”

The natural and nuclear disasters of March 2011 have compelled Japan to reexamine its energy matrix. This new debate could pave the way for a greater adoption of renewable energy there. It is time for alternative energy to be more than just an alternative.

This article was written by David Cheong, Miwa Gardner-Page and Stephanie Hagio, members of the Lauder Class of 2013.