Japan leans toward zero nuclear stance, caution remains

Wed Aug 29, 2012 4:30am EDT

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By Linda Sieg

TOKYO, Aug 29 (Reuters) - Japan's government, wary of public opinion ahead of an election, is leaning toward setting a target to eliminate atomic power by 2030 - a major policy shift for an economy that had planned to boost the role of nuclear energy before the Fukushima crisis.

Prime Minister Yoshihiko Noda is expected to call a snap election within months and with his Democratic Party's (DPJ) ratings sagging, pressure is mounting to respond to a growing grass-roots anti-nuclear movement and surveys showing that most voters want to abandon atomic energy eventually.

Such a decision would fly in the face of objections from big business lobbies, which say an aggressive programme to exit nuclear power will boost electricity rates and force companies to move production - and jobs - overseas.

"I think the zero by 2030 scenario is becoming mainstream (in the government)," said DPJ lawmaker Satoshi Arai, a former minister and a member of a panel thrashing out the party's stance ahead of the election for parliament's lower house.

"I think it is (because of) the election," he told Reuters in an interview on Wednesday.

In contrast to polls of ordinary voters, a Reuters survey of big Japanese firms showed that while one in five backed the zero option, the rest of respondents supported a continued role for nuclear energy.

But some economists say a policy shift would spell opportunities for growth, both for companies now positioning themselves to profit from the change and the economy overall.

"A sustained focus on energy technology improvement should be very positive for certain sectors or producers but also very positive for users, who need increased incentives to use energy more efficiently," said Robert Feldman, chief economist at Morgan Stanley MUFG Securities in Tokyo.

Feldman rejected suggestions that an abrupt policy change would prompt firms to move overseas "because it takes a static view of technology. Why would technology stop in its tracks?"

The earthquake and tsunami that crippled the Fukushima power plant and caused a series of meltdowns prompted cancellation of a 2010 plan to raise the share of nuclear power in electricity production to more than 50 percent by 2030 from nearly 30 percent.

All 50 of Japan's reactors were halted within months of the accident, with two since reconnected to the grid. Policymakers are now considering three options for the future of the sector.

PARTY DIVIDED

Most experts had expected Noda to opt for a scenario that would put nuclear power's share at around 15 percent of electricity production by 2030. But growing anti-nuclear protests combined with strong support for the zero option at public hearings and in opinion polls has forced the government to rethink, experts and politicians said.

"A majority of people are eager to get rid of nuclear power - that is our conclusion after we discussed a variety of public opinions submitted to the government this time," Economics Minister Motohisa Furukawa told reporters on Tuesday.

Besides the zero and 15 percent options, a third scenario would put nuclear power's share at 20-25 percent by 2030.

The earthquake and tsunami devastated Tokyo Electric Power Co's Fukushima Daiichi nuclear plant north of Tokyo and forced about 160,000 people to flee their homes, many of whom may never return. The disaster undermined public confidence in nuclear power, promoted for decades as safe, clean and cheap.

Noda's decision to approve the restart of the two reactors galvanised the anti-nuclear movement.

But Noda's party is split and the prime minister seems reluctant to wean Japan from nuclear power too soon. "There are many people who say different things and no one can say whether the government will choose zero or 15 percent at this point," said a source with knowledge of the debate.

Some experts still expect the government to pick the 15 percent scenario, the logical outcome if reactors are shut after 40 years as required "in principle" by law, and no new reactors are built. It could, however, add that Japan will aim to exit atomic energy longer term, a stance the main opposition Liberal Democratic Party may also adopt in its own campaign platform.

"While the Noda Administration ... (is) openly talking about a zero nuclear policy, we believe this is simply not doable. A 15 percent nuclear policy will likely be adopted after all the protests and arguments," said a report by energy consultants FACTS Global Energy.

Demand for liquefied natural gas in Japan, the world's biggest consumer of the fuel, will rise further to run power stations as renewable sources such as solar and wind power would not fill the gap fast enough, the report said.

Arai, who favours the 15 percent solution, echoed the concerns. "If we move faster, technological and system development and huge changes in society will be needed," he said. "I don't think that is possible in 15-20 years." (Additional reporting by Kentaro Hamada and Aaron Sheldrick in Tokyo; Editing by Ron Popeski)

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