2019 – Understanding the current energy situation in Japan (Part 1)
(in provisional translation)

(English ver.) 2019-11-01

2019 – Understanding the current energy situation in Japan (Part 1)

Japan’s energy self-efficiency ratio and dependence on imports

Energy such as electricity, gas and petrol, being indispensable for human life, is supporting our society. Japan, as a country that lacks resources such as oil and LNG (liquefied natural gas), needs various measures to secure a stable supply of energy.

The energy self-efficiency ratio of Japan in 2017 was 9.6%, which is a low level when compared with other OECD countries. It has been increasing since 2014 when it was 6.4%, the lowest ever. However, a low energy self-efficiency ratio results in dependence on other countries for resources. This makes a country susceptible to the effects of international situations, causing difficulties in securing energy in a stable manner.

Comparison of Primary Energy Self-Sufficiency Ratios of Major Countries (2017)
This graph shows the comparison of primary energy self-sufficiency ratios of major countries. Norway is ranked first with 792.6%, Australia is second with 306.0% and Canada is third with 173.9%, while Japan is ranked 34th with 9.6%.

Source: 2017 estimates in IEA “World Energy Balances 2018”. For Japan only, the FY 2017 actual figures from “Comprehensive Energy Statistics of Japan”.
*The ranks in the table are those of the 35 OECD member countries in 2017.

Enlarged View

Japan energy self-sufficiency ratio
This graph shows Japan’s energy self-sufficiency ratio by year from 2010 to 2017. It was 20.3% in 2010. It continued to decline until 2014 when it hit 6.4%, the lowest ever. Since then, it started to rise gradually to reach 9.6% in 2017.

Source: FY 2017 actual figures from “Comprehensive Energy Statistics of Japan”

Enlarged View

Japan, in particular, is largely dependent on fossil fuels such as oil, coal and LNG (liquefied natural gas). In the year preceding the Great East Japan Earthquake, Japan was dependent on fossil fuels for 81.2% of the total primary energy supply. Dependence rose to 87.4% in 2017 as a result of increased utilization of thermal power generation to make up for the shortage of electricity caused by the shutdown of nuclear power plants.

Japan depends on imports from abroad for most of its demand for fossil fuels. Ratios of dependence on imports for fossil fuels in 2018 were 99.7% for oil, 97.5% for LNG (liquefied natural gas) and 99.3% for coal.

Trends in Composition of Primary Energy Supply of Japan
These three pie graphs show Japan’s structure of primary energy supply to domestic demand in each fiscal year. Japan was dependent on fossil fuels for 94.0% in fiscal 1973, 81.2% in fiscal 2010 and 87.4% in fiscal 2017.

Source: Comprehensive Energy Statistics
*Figures in percentage may not add up to 100% due to rounding.
*Renewables exclude hydro and include unutilized energy

Enlarged View

Japan’s dependency on imports from overseas for fossil fuels
This table shows dependence on imports from abroad for oil, LNG (liquefied natural gas) and coal.

Another issue is from where Japan imports resources. About 88% of crude oil is imported from the Middle East where political instability persists. Recently, a ship loaded with cargo for Japan traveling through the Strait of Hormuz was attacked. As the Middle East is one of the world’s most important suppliers of energy, securing navigational safety in the region is critical to the Japanese and international energy markets.

Regarding coal, dependence on Australia is high. On the other hand, LNG (liquefied natural gas) is being procured from well-diversified areas such as Australia, Asia, Russia and the Middle East.

Sources of Japanese fossil fuel imports (2018)
These pie graphs show the sources of Japan’s imports of each fossil fuel in 2018. Regarding Oil, Saudi Arabia held a share of 38.6%, then the UAE 25.4% and Qatar 7.9%. Regarding LNG (liquefied natural gas), Australia held a share of 34.6%, then Malaysia 13.6%. As for coal, Australia held a dominant share of 71.5%, then Indonesia 11.8%.

Source: Trade Statistics

Enlarged View

Changes in electricity rates

Electricity rates increased multiple times since the Great East Japan Earthquake. This was attributable to increased utilization of thermal power to alleviate the effects caused by the shutdown of nuclear power plants. It was also due to fuel prices rising until 2014. Electricity rates had increased by around 16% for homes and around 21% for industries in FY2017 compared with rates before the Great East Japan Earthquake.

Changes in average electricity rates
These line graphs show changes in average electricity rates for homes and industries by year.

Source: Created based on monthly reports of generated and received electric power, and financial materials of each electric power company

Enlarged View

Electricity rates are influenced largely by power sources (methods of generation). Thermal power, using fossil fuels such as oil and LNG (liquefied natural Gas) mostly imported from abroad with high energy costs, is vulnerable to changes in international energy prices. Dependence of power sources on fossil fuels was as high as 80.9% in 2017.

Changes in the Japan composition of power sources (supply)
This column chart shows the changes in the composition of power sources of Japan from fiscal 2010 to 2017. In fiscal 2017, coal held a 32.7% share, LNG (liquefied natural gas) 39.5% and oil 8.7%, total dependence on fossil fuels being 80.9%.

Source: Agency for Natural Resources and Energy “Comprehensive energy statistics”

Enlarged View

Another factor impacting electricity rates in recent years is renewable energy. The feed-in tariff scheme (FIT) was introduced in 2012 whereby electricity generated by renewables was to be purchased at a fixed rate. Thanks to the FIT scheme, the installed capacity of renewable energy has increased rapidly. While it is important for renewables to expand for the future, the purchase costs have reached 3.6 trillion yen, part of which are collected by means of a “surcharge” that is paid by electricity users. The surcharge has been rising year by year, which is one of the reasons for the increase in electricity rates.

Changes in installed capacity resulting from renewable energy and other factors (Excluding large scale hydroelectric power)
This column chart shows the changes in installed capacities of five types of renewable energy from fiscal 2010 to 2017. The average annual growth rate until 2012 was 9%. The Feed-in Tariff scheme (FIT) was introduced in 2012. From 2012 to 2017, they grew at an average annual rate of 22%.

Source: Created by Agency for Natural Resources and Energy based on JPEA solar batteries shipment statistics, NEDO wind power capacity/generation statistics, survey for potential water power, current status and trends of geothermal power generation, certified results of the RPS system/FIT.

Enlarged View

Trends in Surcharge after Introducing the FIT
This column chart shows the trends in surcharge and FIT costs after introducing the FIT scheme. In fiscal 2012, the surcharge was 130 billion yen and the FIT cost 250 billion yen. In fiscal 2019, the surcharge reached 2.4 trillion yen and the FIT cost 3.6 trillion yen.

*Average model: Model with monthly electricity usage of 260kWh as posted on the websites of the Tokyo EPC and the Kansai EPC

Enlarged View

Greenhouse gas (GHG) emissions

In order to cope with global warming, reducing greenhouse gas (GHG) emissions is an urgent issue. As fossil fuels such as oil, coal and LNG (liquefied natural gas) emit a large amount of greenhouse gases, an increase in power sources using fossil fuels would result in more greenhouse gas emissions.

Since the Great East Japan Earthquake, greenhouse gas emissions in Japan had increased until FY 2013 when the largest-ever amount of 1.4 billion tons was emitted. Then, greenhouse gas emissions took a downward turn. The amount emitted in 2017 was less than that in 2010, the year before the Earthquake.

Changes in Japanʼs greenhouse gas emissions
This column chart shows changes in Japan’s greenhouse gas emissions from fiscal 2010 to fiscal 2017. The emissions from electric power in fiscal 2017 were 3.7 million tons more than those in fiscal 2010. However, total emissions in 2017 were less than those in fiscal 2010.

Source: Comprehensive energy statistics, environmental action plans (FEPC), and calculation results of the amount of greenhouse gas emissions in Japan (Ministry of the Environment).

Enlarged View

However, we cannot be relieved of strenuous efforts to achieve our target pursuant to the Paris Agreement. Japan’s target is to reduce greenhouse gas emissions by 26% in 2030 in comparison to the 2013 level. It is a relatively high target amongst major countries.

Japan 2030 target: 26% reduction from FY 2013 level
This table shows reduction targets of Japan, the US, the EU, China and Korea for comparison. The reduction target of Japan for 2030 is 26.0% from the 2013 level while the US aims at 18-21% and the EU 24%.

Source: Comparison of pledges from major countries (targets for reduction of greenhouse gas emissions (Ministry of Economy, Trade and Industry created)

Enlarged View

On the other hand, global energy-oriented greenhouse gas emissions in 2016 were 32.1 billion tons of CO2. In terms of CO2 emissions from 1990 to 2016 by country, emissions in the EU are declining, they are growing in emerging nations such as China, India and Africa.

In terms of shares of greenhouse gas emissions in 2018, China held a 26.6% share which is the largest, India 6.7% the fourth, while Japan’s share was as low as 2.7%. Therefore, it is also important to make efforts to reduce CO2 emissions in emerging nations.

Changes in greenhouse gas emissions from global energy sources(1990-2016)
This line chart shows changes in greenhouse gas emissions from global energy sources from 1990 to 2016. China, which was in the third place in 1990, ranked first in 2016, the US second, 28 EU countries third, India fourth.

Source: CO₂ Emissions from Fuel Combustion 2018 Highlights (IEA) Top 10 countries and regions in terms of greenhouse gas emissions from energy sources, figures in parentheses are 2016 emissions (million tons)
* Greenhouse gas emissions from non-energy sources are not included.

Enlarged View

Share of greenhouse gas emissions produced by each country (2018)
This pie graph shows the share of greenhouse gas emissions by country in 2018. China ranked first with a share of 26.6%, the US second with 12.9% and 28 EU countries third with 9.0% and India fourth with 6.7%.

Unit: Converted to million tons CO2
2015 greenhouse gas emissions (2018 edition)

Enlarged View

Energy policy toward 2030

The basic principle of Japan’s energy policy for the future, known as 3E+S, has been established to cope with various challenges. Keeping in mind that Safety always comes first, the principle is to simultaneously achieve Energy Security, Economic Efficiency and Environment.

This illustration shows Japan’s basic energy policies known as “3E + S”. While safety always comes first, “Energy Security”, “Economic Efficiency” and “Environment” are to be pursued.

Source: Agency for Natural Resources and Energy

Enlarged View

Based on the above principle, the ideal energy supply and demand structure for 2030 has been presented. It is essential to create a multi-layer energy supply structure whereby each energy source delivers maximum strength and compliments the weaknesses of the others. The structure is also called “energy mix” implying the necessity to combine various energy and power sources.

These two column charts show the structure of primary energy supply and the composition of power sources in fiscal 2017 (actual) and in fiscal 2030 (target). The imbalance seen both in primary energy supply and in power sources in 2017 shall be rectified in 2030 with almost the same share held by each major source of energy.

Source: Agency for Natural Resources and Energy

Enlarged View

Policies to realize the ideal energy mix toward 2030 will be discussed in Part 2 of this issue.

Division in charge

Research and Public Relations Office, Policy Planning and Coordination Division

The original Japanese text of this article; Click here