TOKYO (Reuters) - Can Japan afford to go nuclear-power-free? The country’s atomic power industry and many big business clients say “No,” arguing the step would boost electricity bills and pollution and hasten the hollowing out of Japanese manufacturing.
But the Fukushima nuclear disaster is galvanizing a coalition of safety-conscious voters and future-minded companies who increasingly believe that Japan cannot afford to stick with the status quo if it wants to be globally competitive.
“Japan has a span of about a year to assert itself as a clear leader in clean energy, storage batteries, solar cells. They can compete, but they are no longer the only guys in the global game,” said Jesper Koll, director of equities research at JP Morgan in Tokyo.
“This is where government policy helps -- it can create a domestic market that is captive and rich and creates jobs and puts Japan on the map as a global leader.”
To be sure, short-term economic pain is in store if utilities, faced with deep public mistrust after the world’s worst radiation accident in 25 years, are unable to restart reactors taken off-line for checks.
“We will have real pain for the next one to two years due to the holes opened up by the lack of nuclear energy,” said Martin Schulz, an economist at Fujitsu Research Institute. “But the pain is there because of what was done in the past. The moment you focus on future opportunities, it’s not so painful anymore.”
Even nuclear power proponents acknowledge that their dream of supplying more than 50 percent of electricity from atomic energy by 2030, up from about 30 percent before Fukushima, has been dimmed by the radiation disaster.
More than 70 percent of voters in a Kyodo news agency survey published on Sunday supported Prime Minister Naoto Kan’s call last month for a future free of dependence on nuclear power.
The vision has sent shivers through the nexus of political, business and bureaucratic interests dubbed Japan’s “nuclear village,” which has responded with dire warnings.
“If we completely abandon nuclear power generation ... I think most industries would lose competitiveness and go out of Japan,” Masakazu Toyoda, chairman of the quasi-government Institute of Energy Economics, told Reuters.
“But 50 percent might be too much. Twenty-five or 30 percent might be digestible.”
Kan has promised a blank-slate review of the 2010 national energy plan and vowed to promote renewable sources such as wind and power with a law that would require utilities to buy electricity from a wide range of sources through generous feed-in-tariffs -- subsidies paid by end-users.
That law, originally conceived as a way to promote renewables as a replacement for fossil fuels rather than nuclear power, looks likely to pass in a week or two. Proponents see the legislation as a welcome step toward moving away from reliance on centralized nuclear power production to a model of dispersed electricity producers linked by a high-tech “Smart Grid.”
But with the unpopular premier under pressure to keep a promise to resign and the “nuclear village‘s” tentacles deep in both ruling and opposition camps, experts say the outlook for bolder measures may depend more on private sector and local government initiatives than the corridors of power in Tokyo.
Mobile phone carrier Softbank’s charismatic president, Masayoshi Son, has become Japan’s most prominent corporate apostle of alternative energy. This month, he launched a clean energy group with 35 of Japan’s 47 prefectures keen to get involved in renewable energy projects.
“The vested interests dominate a lot of the political process, but we are seeing a challenge from the local government level,” said Rikkyo University professor Andrew DeWit, adding that Son was also attracting interest from a range of companies and non-profits.
Hiroshi Mikitani, president of online retailer Rakuten Inc, has defected from Japan’s biggest business lobby, the pro-nuclear Keidanren, out of pique with its opposition to opening the power industry to competition.
Electronics and IT firms are eager to help upgrade Japan’s power network to a “Smart Grid” needed to handle an influx of electricity from decentralized, fluctuating power sources such as solar and wind farms and construction firms are eyeing profits from designing and building “Smart Cities.”
Reactor maker Toshiba Corp, for one, has said it would increase its focus on renewables and smart grids and in May announced it would buy Swiss smart-meter maker Landis+Gyr.
“The companies are way ahead of the government,” said an electronics industry analyst who declined to be identified. “But it would help to have a coherent policy to support what they are doing.”
Still, formidable barriers to drastic policy changes remain, including a murky political outlook that makes it hard to predict who will be running the country a month from now.
Japan’s massive public debt, already twice the size of its $5 trillion economy, means finding government funds to invest in new technologies and upgrading the power grid will be tough.
“The current strategy to rely on nuclear to replace fossil fuels is a non-starter. Nuclear power is much more expensive than people believed given decommissioning costs, long-term uranium costs and (waste disposal) costs,” said Robert Feldman, chief economist at Morgan Stanley MUFG in Tokyo.
“But we can’t just snap our fingers and have great energy technology ... We have to orient with a 50-year horizon.”
Editing by Tomasz Janowski and Alex Richardson