No. 12 — March 24, 2000


Weekly Review

--- by Jon Choy

Bowing to public sentiment and the economy's less-than-ebullient prospects, the government is reconsidering its plan for as many as 20 nuclear power plants to be built by FY 2010. The ambitious construction schedule was a keystone of Japan's long-term strategy for reducing its dependence on imported oil and for developing energy self-sufficiency. With the support of Prime Minister Keizo Obuchi, the Ministry of International Trade and Industry has tasked a new advisory body with a review of the nation's energy policy. It hopes to have final recommendations by April 2001. Even a sharp cut in the number of proposed nuclear generating facilities, however, is not likely to placate anti-nuclear activists or citizens concerned about the technology's safety.

Several factors have spurred the reevaluation:

Citizens' views on this sensitive topic increasingly are finding an outlet in local politics. Several towns have voted against the construction of nuclear generators within their boundaries. Voters also have elected anti-nuclear politicians, such as the mayor of Maki, Niigata prefecture. In the latest backlash, the local assembly in Yaku, Kagoshima prefecture gave a thumbs-down to the idea of building a nuclear fuel storage facility on a sparsely inhabited island within its jurisdiction. This outcome is especially noteworthy because no proposal had been officially submitted to town authorities. The vote was aimed at preempting any such action after Tokyo Electric Power Co., Inc. began giving people free tours of its nuclear power plants in Fukushima prefecture.

In their 1998 long-term outlook, MITI's energy policy planners predicted that Japan's overall energy consumption would rise to the equivalent of 400 million kiloliters of crude oil in FY 2010; that worked out to an average annual growth rate of about 1.8 percent. Underlying this forecast was the assumption that gross domestic product would increase 2 percent a year through the target date. To help meet this demand, MITI expected the nation's 10 regional electric utilities to boost their nuclear generating capacity, which then provided about 32 percent of the country's electricity, to between 66,000 and 70,000 megawatts. The country's 51 atomic reactors currently fall short of this goal by one-third to one-quarter, depending on how many are in operation at any particular time. MITI thus saw the need for an additional 16 to 20 nuclear power plants.

The probability of realizing this goal, however, has been shrinking at an accelerating rate. Local resistance to nuclear generators has stiffened. Authorities and utility companies no longer can buy the cooperation of nearby residents — at any price. Chubu Electric Power Co., Inc. officials, for example, recently ended a 37-year effort to win local approval for an atomic plant in Kisei and Nanto, Mie prefecture after the governor suggested that the idea no longer was viable.

Chubu Electric's decision also reflected the ongoing deregulation of the electricity business as well as the forecasts of reduced energy demand. Tokyo slowly is releasing its grip on the power industry. Since 1996, independent power producers have been able to wholesale electricity to utilities. Starting in late March, they also can sell power directly to industrial users. Moreover, the government is allowing utilities more freedom to trade power among themselves. With competition rising and Tokyo pushing for lower rates, utilities are cutting back their capital improvement plans. Costly nuclear projects are at the top of the list for the ax.

In the face of the new political and economic realities, observers say that the number of nuclear reactors planned for FY 2010 completion might be as few as 13. Building even this many could be a stretch since developments on other fronts are adding complications. To answer critics' worries over Japan's large supply of plutonium (reprocessed from spent uranium fuel), government authorities and utility executives have promoted a plan to use a uranium-plutonium oxide mixture in existing reactors. MOX (mixed-oxide) fuel consumes plutonium. Equally attractive, it cannot be used for bomb-making. However, questions about the quality of MOX fuel produced by British Nuclear Fuels Ltd. for Kansai Electric Power Co., Inc. not only have led to a row between Tokyo and London but also have put the MOX fuel experiment in limbo.

At the same time, privately owned Japan Nuclear Fuel Ltd. is having problems with its ambitious new uranium fuel refining plant and has had to accelerate plans to close an older fuel-making facility also in Rokkasho, Aomori prefecture because of mechanical failures. The trouble-plagued unit was opened in 1992 with an expected life span of 10 years. JNFL announced March 11, however, that it would shut down the malfunctioning unit this April, leaving six other production lines in operation. The premature closure will make it impossible for JNFL to reach its goal of producing one-fourth of the country's nuclear fuel needs domestically since an experimental plant designed to replace the older facility is on hold indefinitely because of questions about costs and technology.

Government and utility officials are trying to remain upbeat about the future of nuclear power in Japan. Tokyo has approved legislation that will enable authorities to react more quickly to emergencies like the Tokaimura incident and that will more clearly define legal and financial responsibilities for accidents. MITI continues to stand behind the nuclear industry, arguing that in addition to its contribution to energy independence, this source of electricity generation will play a key role in helping the country meet its ambitious target for reducing emissions of so-called greenhouse gases. Nevertheless, the same officials admit that the recent record of this part of the electric utility industry has set back their efforts.

The views expressed in this report are those of the author
and do not necessarily represent those of the Japan Economic Institute

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