February 7, 2023

Quake in Japan Is Causing a Costly Shift to Fossil Fuels

“They asked me how long it would take,” said Masatake Koseki, head of the Yokosuka plant, which is 40 miles south of Tokyo and run by Tokyo Electric. “The facilities are old, so I told them six months. But they said, ‘No, you must ready them by summer to prepare for an energy shortage.’ ”

Now, at summer’s peak, Yokosuka’s two fuel-oil and two gas turbines are cranking out a total of 900,000 kilowatts of electricity a day — and an abundance of fumes.

The generators are helping to replace the 400 million kilowatt-hours of daily electricity production lost this summer because of the shutdown of all but 15 of Japan’s 54 nuclear reactors in the wake of the Fukushima Daiichi disaster. Across the country, dozens of other fossil-fuel plants have been fired up, and Japan is importing billions of dollars worth of liquefied natural gas, coal and oil to keep them running.

Japan, the world’s third-largest user of electricity behind China and the United States, had counted on an expansion of nuclear power to contain energy costs and greenhouse gas emissions. Instead, its nuclear program is in retreat, as the public and government officials urge a sharp reduction in the nation’s reliance on nuclear power and perhaps an end to it altogether.

As its nuclear program implodes, Japan is grappling with a jump in fuel costs, making an economic recovery from the March earthquake and tsunami all the more difficult. Annual fuel expenses could rise by more than 3 trillion yen, or about $39 billion, the government says.

The country, until recently a vocal proponent of measures to curb climate change, is also leaving a bigger carbon footprint. According to government calculations, Japan’s greenhouse gas emissions could rise by as much as 210 million metric tons, or 16 percent, by 2013 from 1990 levels if its nuclear reactors were shut permanently. Under the 1997 Kyoto Protocol, a global agreement on greenhouse gas emissions, Japan promised to reduce its emissions by 6 percent over that period.

“Can nuclear be eliminated?” asked Adam Schatzker, an energy analyst at RBC Capital Markets. “It’s possible, but very costly.”

If necessary, Japan could replace the energy capacity lost in the shutdown of its nuclear fleet by increasing the use of natural gas and coal, Mr. Schatzker said. “But even if fossil fuel facilities can make up for the loss of nuclear, it would likely take time, cost a great deal more money and pollute significantly,” he said.

For resource-poor Japan, it is an energy shift of an unprecedented scale and speed. A generation ago, the oil shock of 1973, which exposed the country’s overdependence on Middle Eastern oil, forced Japanese companies to focus on energy efficiency and prompted the government to invest heavily in nuclear power.

But as it doubled down on nuclear power plants, Japan was slow to develop alternative forms of energy, like solar or wind power, which account for just 1 percent of its electricity supply.

Prime Minister Naoto Kan has called for a gradual move away from nuclear energy, and proposed a goal of generating 20 percent of Japan’s electricity from renewable sources, including hydroelectric plants, by the early 2020s. The Parliament is debating legislation to spur that change.

A nuclear-free future could come much sooner, however. Nervous local governments have blocked the restart of reactors idled for routine inspections. If no reactors can restart, Japan’s entire nuclear fleet, which provided 30 percent of its electricity in 2009, could be closed by spring.

The shutdowns are already causing an energy squeeze. At least three utilities have come close to full capacity during peak demand hours this summer. The government has warned that eastern Japan, including Tokyo, could face an electricity shortage of about 10 percent next summer if no nuclear plants are running.

A 10 percent shortage may not be disastrous. This summer, for example, a major energy-saving drive by households and companies drove down peak electricity demand in July by about 20 percent, to 46.3 million kilowatts, averting blackouts despite the energy shortfall, according to Tokyo Electric, the operator of the stricken Fukushima plant.

Still, “we take this situation very seriously,” Toshio Nishizawa, chief executive of Tokyo Electric, said this month. Only three of the company’s 17 nuclear reactors are running.

A protracted increase in fossil fuel costs is possible to make up for the shortfall, traders say.

Article source: http://feeds.nytimes.com/click.phdo?i=13f58cb5cb5c8462bd8928de4ea5073c

Earthquake and Aftermath Push Japan Into a Recession

The drop off was worse than economists had expected. In a survey of 23 economists, Bloomberg News had projected an average drop of 1.9 percent. It also marked Japan’s second straight quarter of economic contraction, leading the country into its second recession in less than three years.

In the aftermath of the earthquake, the country’s production lines were crippled and it faced a debilitating energy shortage, in part because of the subsequent shutdown at the Fukushima Daiichi nuclear plant. Economists project that Japan’s economy will shrink again in the current quarter, which ends in June, as production continues to falter and weigh on industrial output and exports.

Although demand from reconstruction is expected to lead to a rebound in the nation’s economy, many predict that things will get worse before they get better.

“Japan’s economy is expected to remain weak for the time being,” Kaoru Yosano, Japan’s economics minister, told reporters after the figures were announced on Thursday morning. Supply constraints were easing and reconstruction demand would most likely be felt later this year, Mr. Yosano said. Still, some data suggest that the downturn may be deep but quick. Machinery orders, an indicator of future capital spending, increased unexpectedly in March, while manufacturers said recently that they hoped to return to normal production more quickly than initially forecasted.

“The economy has the strength to bounce back,” he said.

The data, released by the Cabinet Office in Japan, showed that the country’s gross domestic product shrank 0.9 percent in the first quarter compared with the previous three months. That translates to a decline, in annualized terms, of 3.7 percent.

The nuclear crisis at the Fukushima Daiichi plant has compounded the effects of the earthquake and tsunami by knocking out power capacity.

The government has ordered factories, offices and homes across Japan to reduce electricity use by 15 percent this summer.

Earlier this month, the government told another nuclear power plant to shut down until it could bolster its tsunami defenses, adding to concerns about a possible energy shortfall. A number of other nuclear reactors that ceased operating after the quake remain closed. The government is overhauling its policy on nuclear power, which supplies 30 percent of Japan’s electricity.

More than 24,000 people are dead or missing from the March 11 quake and tsunami, which destroyed swaths of Japan’s northeast coast. The government has estimated that damage from the disaster could reach as high as 25 trillion yen, or more than $300 billion.

The disaster hit an economy already weakened by years of deflation and depressed consumer spending, which made it reliant on exports for growth. Japan’s economy shrank for four straight quarters during the global financial crisis.

But Japanese exporters have been forced to cut back production in the disaster’s aftermath and race to repair their supply chains and grapple with the energy shortage. Last week, Toyota Motor, whose operations have been severely disrupted since the quake, said its first quarter profit fell 77 percent from the same period last year.

Japan’s Nikkei 225 stock average has lost more than 7 percent since March 11. Retail sales recorded their biggest drop in over a decade in March as uncertainties from the disaster caused consumers to avoid non-essential spending.

The Japanese economy contracted in the fourth quarter of 2010 as well. Though economists often define a recession as two consecutive quarters of decline in a country’s gross domestic product, Japan appoints a committee of academics to determine when recessions begin and end.

The Japanese parliament has approved a 4 trillion yen ($49 billion) extra budget for reconstruction, and Prime Minister Naoto Kan has promised more spending to help cushion the economic blow.

Japan’s central bank has also injected record amounts of cash into money markets in a bid to kick-start spending in the economy.

Article source: http://www.nytimes.com/2011/05/19/business/global/19yen.html?partner=rss&emc=rss