Japan’s Fifth Strategic Energy Plan calls for 22-24% of the country’s energy mix to be attributed to renewable sources by 2030, indeed an ambitious goal for a traditionally coal-heavy country.
According to a news release from research firm Wood MacKenzie, over $100 billion of investment in wind and solar power plants is expected to push the renewables share to 27% of Japan’s generation mix by 2030. This will see the current target exceeded, causing a big jump from the 19% renewable contribution seen in 2019.
This is good news in a time where Japan seems to be struggling to realise their renewable energy dreams.à‚
Enter the dragon… Coal.
Japan is considered the top coal-powered nation among the most developed economies, with nearly 12GW under development domestically. Coal currently supplies approximately a third of Japan’s power.
While plans about renewables being added to the energy mix are made, we see reluctance from public finance institutions that are continuing to fund coal-powered projects outside the island nation’s borders, such as in Indonesia.
The most significant variable holding Japan back from its renewable goals is cost. Coal is simply the cheapest baseload generation option and will continue to be the cheapest option beyond 2030.
Having said that, the country has made and is currently making significant strides in its energy transition.
And the good news is, the cost of renewables seems to be decreasing. According to Wood MacKenzie, it is expected that Japan’s wind and solar generation costs are expected to fall by over 30%. This will significantly improve the competitiveness of renewables.
Exponential growth in offshore wind is also expected, with the Global Wind Energy Council recently forecasting an installation of 10GW by 2030.
We also note that Japan is one of the first countries globally to announce its hydrogen strategy. Besides their pioneering plans for the Olympic flame, a recent Joint Statement of Cooperation on Hydrogen and Fuel Cells was signed with Australia, to demonstrate commitment to cooperating on the deployment of hydrogen and development of a supply chain.
The intentions seem to be there, the plans are in place, it will all come down to execution.
Execution will indeed be key for Japan to live up to Paris Agreement expectations, especially as the international community applies more pressure to achieve compliance.
At the IEA Global Clean Energy Transitions Summit which took place in July 2020, Japan’s Minister of Economy, Trade and Industry, Hiroshi Kajiyama, made it clear that Japan is committed to tightening rules for investment in coal-fired power and that a ‘behaviour’ change is needed towards decarbonisation.
It will be interesting to see how government achieves the fine balance between energy security and lowering emissions, especially as coal plants are decommissioned and nuclear becomes less popular.
I’ll continue to keep an eye out for big changes coming from this small nation, possibly taking the lead in Asia’s shift away from emissions heavy power to a cleaner, greener future.