Japan Updates, and draft EAEF Scenarios

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Japan Updates, and draft EAEF Scenarios

• Kae Takase (Governance Design Lab.)
• Tatsujiro Suzuki (CRIEPI)

EAEF Workshop, Beijing China, May. 12-14, 2004
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Outline

• Updates
• Updates of latest statistics
• Feature of new government outlook
• NGO outlook
• EAEF Japan Scenarios
• BAU, National Alternative, and Regional
  Alternative
• Concept of scenarios
• Results
• Discussion topics

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Topics in Energy Policies

• Energy policy basic law is now leading Japan to
  more nuclear-friendly country.
• Nuclear fuel cycle is at the crossroad (stop
  before active test?)
• RPS law is interrupting fine diffusion of
  renewable energy
• Turn back in deregulation.
• Compliance of Kyoto Protocol (2008-2012) is
  difficult.

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Updates (1)
Economy, Energy, and CO2 emission
19701

• Economy is recovering with price decrease.
• Energy consumption decreased in 2001, but
  recovered to 2000 level in 2002.
• CO2 emission in 2002 is 10.7 higher than 1990
  level.

19701
Price GDP deflator GDP in real terms
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Updates (2)
Energy consumption by sector

• Industry is still the largest consuming sector of
  energy in Japan.

1010kcal
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Updates (2-2)
Energy consumption by sector (19701)

• Passenger transportation is the most growing
  sector since 1970.
• Household and commercial sector is also growing
  rapidly.
• Freight transportation and industry sector is not
  growing fast. Freight consumption is steady
  recently.

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Updates (3)
Energy consumption by source (final energy)

• Oil share is almost 60 of total final energy
  consumption.
• Electricity share is 22. (higher than U.S.,
  Korea, China and Europe, but lower than H.K.,
  Taiwan, Canada.)

Gas does not include LPG. LPG is included in
oil.
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Updates (3-2)
Energy consumption by source (final energy)

• Electricity is growing, but gas share is growing
  more rapidly.
• Coal consumption is at the same level since 80s.
• Oil consumption is not growing neither.

Gas does not include LPG. LPG is included in oil.
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New government outlook

• Intermediate outlook will be published on May
  17th.
• Outlook will be calculated up to 2030.
• Economic growth assumption and energy demand by
  sector is published in Feb.

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Economic Growth
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Final Energy Consumption
Government outlook
mil. kl of crude oil equivalent
Peak2022 (448)
2.0/year
0.2/year
Source METI (2004.2)
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Final Energy Consumption
Comparison with other outlook

• Government outlook shows highest growth in energy
  consumption.
• IEEJ shows lower energy consumption for reference
  case.

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Ratio of Electrification in FD
Government outlook
IEEJ outlook27
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Final Demand by Sector
Government outlook
mil. kl of crude oil equivalent
Industry
Ind. HH Com. Pas. Fre.
Industry (exc. feedstock)
Commercial
Passenger
Household
Freight
F.Y.
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Comment by Government

• Energy demand will not grow as it did in 1990s
  even in high economic growth case.
• Governments assumption of economic growth is
  much higher than that of IEEJ and NGO.
• Calculated energy demand differs 10 by different
  economic assumption. Electricity demand differs
  20.

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Comparison with IEEJ and NGO

• Government assumption of economic growth is much
  higher than that of IEEJ and NGO.
• Calculated energy demand by government is higher
  than that of IEEJ and NGO. IEEJ shows lowest
  energy demand.

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Alert by NGO
Current Balance (trillion yen, 95 price)
Finantial Balance (trillion yen, 95 price)

• Financial deficit grows, and current balance will
  change to a deficit in 2020.
• Unemployment rate will be 12 (4.7 in 2010)
• CO2 Emission will be 5-11 in 2010, and
  continues to grow.
• Situation can be better with governments
  emphasis on Green industries. (It can increase
  competitiveness in international market.)

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EAEF Scenarios

• Reference
• Activity Level, Unit consumption, share of each
  energy source IEEJ
• Renewable energy ISEP study
• National Alternative
• Reference energy conservation (WWF) more
  renewables (ISEP) elec. generation composition
  by sources (WWF)
• Regional Alternative
• Oil pipeline, Natural Gas pipeline, Electricity
  import
• For nuclear and renewables conservation
  cooperation (only affect to the cost)

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National Alternative

• Energy conservation
• Arranged Tsuchiya study for WWF for 100
  installation.
• 50 in 2010, 100 in 2030
• Renewable energy
• WWF PowerSwitch scenario, ISEP study
• Less coal and nuclear in electricity generation
• WWF PowerSwitch scenario

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Regional Alternative

• 1. Oil pipeline
• from Eastern Siberia to the Pacific port of
  Nahodka, starts in 2010
• 1 million bpd, at a cost of 5 billion (1/2
  China, 1/2 Japan)
• 0.47 per barrel of oil received (30 years
  lifetime, 5 discount rate ? annual payment 6.5,
  95 capacity factor)
• 2. Gas pipeline
• from Sakhalin Island south to Northern Japan,
  starts in 2018
• Capacity and cost unknown (All of Japanese cost
  and ½ of Russian cost paid by Japan) (Price
  estimate by Russian engineer exists)
• 3. Sharing of Oil Refining Capacity
• Japan rental fee revenue, China smaller cost of
  refining
• It is a matter of Chinas decision

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Regional Alternative

• 4. Electricity Interconnections
• Sakhalin CNG power to Hokkaido, 2GW in 2020, 4GW
  (total) in 2022
• project cost 9 to 10 billion USD (6 billion USD
  in transmission line etc.)
• ½ of total cost paid by Japan (5 cents/kWh)
• Maximum capacity factor will be 65
• 5. Cooperation in Nuclear Research and Nuclear
  Waste Agreements
• 6. Cooperation in Energy Efficiency and Renewable
  Energy Financing and Technology Development

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Final demand by sector

• Final energy demand grow at 0.3/year in
  reference case.
• Due to energy conservation, demand in alternative
  scenarios decrease at 0.03/year.

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Primary Energy Requirement
Unit 1012kcal

• Ref0.2/year
• Alt-0.7/year
• Pipeline oil gas introduced in regional
  alternative scenario.

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Electricity Generation

• No electricity import (-gtneed to be fixed)
• More gas and renewables, less coal nuclear in
  alternative scenarios.

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Household
Government has changed the statistics in 2002,
but IEEJ and most research institutes use
previous statistics calculated by IEEJ.

• Government outlook shows higher increase.

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Energy Share Household
Reference case

• Shares of electricity and gas will increase.
• Oil and LPG share decrease.

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Energy Conservation Household

• LCD TV, LCD PC, double efficiency refrigerator,
  diminish stand-by electricity loss
• replace boilers to supply hot water to ones with
  latent heat recovery system
• passive solar (heat, hot water)
• efficient gas table
• change incandescent lamp to fluorescent lamp
• installation of dishwasher

50 in 2020, 100 in 2030
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Energy Conservation Household

• 2010 4 of total FD conserved.
• 2030 9 of total FD conserved.
• Biggest conservation in gas (boiler replacement
  and passive solar use in heating and hot water
  supply).

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Commercial
Change in statistics was very big in commercial
sector.

• IEEJ outlook show higher increase.

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Energy Share Commercial
Reference case

• Shares of electricity and gas will increase.
• Oil and LPG share decrease.

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Energy conservation Commercial

• Change to amorphous transformer, street lighting
  without an electrode, LED traffic lights, LED
  lights, LCD PC
• higher insulation rate in rental offices
• cut off stand-by electricity loss of electricity
  appliances
• cut off electricity use of vending machine by 54
• replace oil pressure elevators to the ones
  without mechanical room
• energy management system in buildings
• replace boilers to supply hot water to ones with
  latent heat recovery system

50 in 2020, 100 in 2030
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Energy Conservation Commercial

• 2010 4 of total FD conserved.
• 2030 18 of total FD conserved.
• Biggest conservation in electricity (replacement
  to LED, etc).

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Transportation

• Government assumes growing energy consumption in
  transportation sector, but IEEJ assumes decrease
  since 2010.

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Energy Share Transportation

• There are possibilities to use CNG, and more
  electricity, but these are not included in this
  version.

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Energy Conservation Transportation

• Tax reform for smaller cars
• Share of double efficiency cars (hybrid, fuel
  cell) will be 60 in 2030

50 in 2020, 100 in 2030
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Energy Conservation Transportation

• 2010 15 of total FD conserved.
• 2030 37 of total FD conserved.
• Gasoline and diesel oil use is conserved.

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• IEEJ assumes recovery of economy since 2010, and
  energy consumption also increase.

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Energy Share Industry

• Coal share decrease.
• Electricity and oil share increase.

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Energy Conservation Industry

• Efficient appliances in all sectors
• a control system with an inverter, an amorphous
  transformer, Highly efficient Moter, lights, LED
  Lights,
• regenerative gas-fired burner for industrial
  furnaces
• Efficient process in chemical, paper and pulp,
  and cement industries.

50 in 2020, 100 in 2030
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Energy Conservation Industry

• Largest conservation in coal consumption.
• regenerative gas-fired burner for industrial
  furnaces

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Conclusion

• Japanese government is in a process of making new
  outlook to 2030.
• Intermediate report on May 17th.
• Gov. foresees demand peak will be in 2022
  followed by gradual decrease.
• Draft EAEF Japan scenarios
• Reference (IEEJ case), National Alternative, and
  Regional Alternative

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Topics for discussion

• Cost merit of refinery rental
• Cogeneration potential (efficiency factor)
• Future of nuclear and renewables

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Energy Policy Basic Law
Major Policy Issues

• Energy Policy Basic Law(2002.6.7 approved)
• Promote non-fossil fuel energy use for
  environment
• Energy Policy Basic Plan (2003.10.17 approved by
  Cabinet, reported to the Diet)
• Stable supply Steady promotion of nuclear and
  renewable
• Environment Improve the use of non-fossil
  fuel, such as nuclear, photovoltaic, wind, and
  biomass, improve the use of gas
• Use of market mechanism But government
  should be responsible for stable supply and
  environment.
• New long term outlook is under construction.
• Advisory Committee of Energy will start by the
  end of 2003.
• Final outlook will be determined by March (or
  June) in 2004.

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RPS Law
Major Policy Issues

• RPS law (2002.6 approved, 2003.4 enforced)
• Electric power supplier obliged to supply certain
  percentage of new energy
• Suppliers can supply new energy with their own
  capacity, or buy electricity from IPPs, or buy
  value of CO2-free
• New energy includes waste power (dominant
  energy in Japanese RPS)

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Concealment of cracks by TEPCO
Major Policy Issues

• 2000.9 former employee of GE reported to METI
  the alteration of the internal inspection record
• 2002.8 Nuclear and industrial safety agency
  and TEPCO announced, 13 plant, 29 data
  alteration
• (more alternation revealed)
• 2002.9 TEPCO was ordered to stop Fukushima No.1
  plant.
• 2003.4 TEPCO stopped all 17 plants (now 7
  working, rest would be restarted by 2004.3)
• 2003.4-10 operation rate 53.8 (30 point less
  than last year)
• No blackout in the summertime

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Nuclear Fuel Cycle
Major Policy Issues

• No more need for NFC
• No future for FBR/pluthermal, no more scarcity of
  uranium
• Project cost ? electricity price
• Once started 90-130 billion (1US110 yen)? 1
  cents/kWh
• Stop before active test 40 billion
• 2004.1- Uranium test (contamination starts)
• 2005.2- Active test
• 2006.7- Commercial operation
• Whole cycle (2003.11.3 The Federation of Electric
  Power Companies of Japan(?), 72 years until
  decommission, mainichi news) 200 billion ?2
  cents/kWh(nuclear)
• Problem with used fuel storage for power
  companies
• If the project continues, 5 ton of plutonium per
  year will be produced in Rokkasho

(nuclear)
(Source Japan Initiative,2003.11)
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Deregulation
Major Policy Issues

• Retail liberalization
• 2001.3- large-scale factories and department
  store (30 of demand)
• 2004- middle-scale factories, office building
• 2005- small-scale factories, supermarket (60
  of demand)
• Turn back of market reforms (midterm report for
  further reform, 2003.9)
• Responsible companies for generation-transmission-
  distribution is vital for stable supply, and
  nuclear development