The Journal The Authority on Global Business in Japan

In Japan’s port city of Kobe, a pair of 150-meter-high white chimneys tower over the bay. Located alongside a residential area, just 15 minutes by car from the city center, the chimneys belong to a giant 1.4-gigawatt coal-fired power plant that is about to loom even larger over residents’ lives.

Brushing aside protests from environmentalists and locals, plant owner Kobe Steel, Ltd. started construction in October 2018 on a huge expansion project that will double the size—and the emissions—of the Kobe Power Plant, which is one of the largest independent power producers in Japan. More than 14 million tons of carbon dioxide and other pollutants—an amount greater than all the CO2 emissions produced by the city’s 1.5 million inhabitants—are expected to be belched into the air each year from the enlarged plant’s chimneys by 2022.

STANDING GROUND
Residents are fighting back with lawsuits, the first of which was filed in September 2018. “My son and I have had asthma since we moved here more than 20 years ago,” said Hideko Kondo, who lives in a fume-filled block of flats just 400 meters from the power plant. “Some neighbors have moved away after hearing about the expansion plans.”

Kondo and 39 other residents are seeking an injunction against Kobe Steel to halt construction and operation of the new plant, citing the “infringement of the right to live sustainably with clean air in a healthy and peaceful environment.” It is only the second lawsuit in Japan to target carbon dioxide emissions. Kobe Steel declined to comment for this article.

The Kobe project is one of more than 30 new power stations being planned or built by Japan that burn coal—the dirtiest and most polluting fossil fuel and one which is being phased out by some 30 governments around the world.

“Coal goes directly against the global trend because it is the worst fuel, based on its volume of carbon dioxide emission,” said Takeshi Shimamura, a professor at Kobe University who supports the residents’ group.

UNEVEN GOALS
Japan is the only Group of Seven country still planning new coal-fired power stations. Its continued love affair with the black, sooty fuel sits ill with the green rhetoric of Prime Minister Shinzo Abe’s government and with the country’s status as host of the meetings that resulted in the landmark 1997 Kyoto Protocol, which committed about 200 nations to cutting greenhouse gas emissions.

“We must save both the green of the earth and the blue of its oceans,” Abe wrote in an op-ed for the Financial Times in September that bore the headline “Join Japan and act now to save our planet.”

In the piece, Abe wrote: “All countries must engage with the same level of urgency. We must simultaneously boost economic growth and reduce the use of fossil fuels.”

Kimiko Hirata, international director of the Kiko Network, a non-governmental organization (NGO) devoted to environment issues, said that while Abe’s words were welcome, his actions tell a different story.

“I was shocked by his expression ‘join Japan,’ given that the prime minister has not shown leadership in environmental policies domestically, and that Japan is severely criticized by experts overseas for not putting enough effort toward reducing CO2 emission,” Hirata told the Nikkei Asian Review.

GLOBAL IMPACT
Japan’s pro-coal power policies are not just a domestic issue. Through its banks and international development agencies, Japan is funding a wave of huge coal-fired power plants from Vietnam to Indonesia. Over the past three years, the Japan Bank for International Cooperation has announced plans to provide up to $5.2 billion in financing for six coal-related projects.

Environmentalists worry that the extra CO2 generated by these new coal plants in Asia could wipe out any reductions made by other regions, jeopardizing progress toward meeting global targets set by the United Nations. According to the International Energy Agency (IEA), Asia accounted for two-thirds of the 1.4-percent global growth in energy-related CO2 emissions in 2017, owing to rising fossil fuel demand.

Under the Kyoto Protocol, Japan pledged to cut greenhouse gas emissions by six percent between 2008 and 2012, but levels began rising around 2011. This is due, in part, to the Fukushima accident, in which three nuclear reactors melted down after being badly damaged by a tsunami on March 11, 2011.

Halting the country’s nuclear reactors has led to an increased reliance on fossil fuels, which rose to 84 percent of Japan’s energy mix in 2016—up from 65 percent in 2010. Greenhouse emissions increased by about seven percent between 2010 and 2012, according to data from the Ministry of Economy, Trade and Industry (METI).

Japanese government officials justify their reliance on coal by citing cost, security of supply concerns, and the need for a diverse energy mix. Coal power plants are “necessary” because “the resource is cheap and more economical with scale,” Shogo Tanaka, director of the Energy Strategy Office at METI, told the Nikkei Asian Review.

One alternative is to increase the use of liquefied natural gas (LNG), which emits less carbon and noxious exhaust. But, Tanaka said, this is not desirable because LNG prices may rise due to higher demand from China and India.

Floating solar panel farm at Yamakura Dam in Chiba Prefecture

GREEN GOALS
In 2015, Japan set a goal of reducing the amount of electricity generated from coal to 26 percent by 2030, down from 32 percent in 2016. To achieve this, renewables such as solar and wind power would supply 22–24 percent of the country’s electricity, compared with 15 percent in 2016.

But even this relatively unambitious green-energy target depends on restarting most of Japan’s 18 nuclear power plants, which have been halted since the Fukushima disaster. Many experts question whether the restart program is realistic, given the technical, cost, and safety hurdles involved.

Environmental NGO Greenpeace Japan said METI’s plan “lacks ambition and urgency” because “its coal ratio is far too high, and the ratio for nuclear power is wholly unrealistic.” Greenpeace noted that Japan’s target for renewable energy is low compared to many nations in the European Union (EU), whose individual targets exceed 50 percent by 2030. The EU as a whole recently announced a goal of increasing the share of renewables to 32 percent by 2030 from the previous target of 27 percent.

Japan would need about 30 operating reactors by 2030 to achieve its goal of generating 22 percent of its power from nuclear, but only nine are currently working. If nuclear power generation fails to reach the target, “it is not certain if renewable energy can make up for it,” Tanaka said.

As a result, experts say coal’s share of Japan’s energy mix may actually rise over the next decade. According to one unpublished study by an international group and seen by the Nikkei Asian Review, coal’s share of Japanese power would increase to 46 percent by 2030 if pure market forces prevail. Should nuclear only account for half of the planned capacity, coal’s share would be even greater, at 56 percent.

COAL CUTS
Japan is unusual among developed countries for still planning new coal plants. Since the 2015 Paris Agreement, an international commitment to keep the global rise in temperatures below two degrees Celsius from preindustrial levels, opposition to the use of coal has become the norm in many advanced economies.

French President Emmanuel Macron pledged to eliminate coal-fired power by 2021, a step the United Kingdom has said it will take by 2025. While Germany is a coal producer and relies on coal power for about 40 percent of its energy—largely because it phased out nuclear power after the Fukushima disaster—it is still aiming to increase the contribution of renewables to 65 percent of its energy mix by 2030.

In such company, Japan is increasingly seen as a laggard. At the 2017 United Nations Climate Change Conference in Bonn, Germany, Japan was one of the recipients of the Fossil of the Day award, given to the country judged to have done the most to block progress during the negotiations by the Climate Action Network, a network of environmental NGOs.

Criticism has come from inside the country, too, with Foreign Minister Taro Kono calling Japan’s energy policy “lamentable” last January. “For too long, Japan has turned a blind eye to global trends, such as the dramatic decrease in the price of renewables and the inevitable shift to decarbonization in the face of climate change,” Kono said.

GRIDLOCK
To be fair, Japan faces some formidable obstacles in pursuing clean, sustainable power, not least from its geography—a largely mountainous interior with the population heavily concentrated along relatively small and narrow coastal strips of flat land.

METI’s Tanaka said these factors make renewable energy more costly in Japan than in other countries. Solar generation, for example, is twice as expensive per kilowatt hour in Japan as it is in Europe, because of the limited amount of suitable land and the cost of constructing solar farms.

Japan also lacks a national electricity grid. The nation’s power supply is generally divided into 10 service areas, each with its own transmission network. This means there is limited capability, for example, to send solar energy produced in the south of the country to the north. There are plans to build a few connections between the networks, but one line would cost more than ¥100 billion and take five–10 years to complete.

LIGHT BREEZE
Wind power, which has rapidly caught on in Europe, comprises just 1.7 percent of Japan’s planned total renewable energy supply. The government says that viable locations for offshore wind farms in Japan tend to be far from areas where there is demand for electricity, and construction costs are high because of how far the wind turbines must be built from the shore. Opposition from the powerful fishing lobby is another problem.

With an uncertain outlook for renewables, some Japanese power companies prefer to work on minimizing the environ­mental damage from burning coal. Coal-fired power plant operator Electric Power Development Co., Ltd., better known as J-Power, is investing in carbon capture and storage technology, which collects and buries carbon dioxide to keep it out of the atmosphere.

According to a 2014 estimate by the Ministry of the Environment, it would cost ¥10,500 ($93) to capture and sequester one ton of greenhouse gas emissions. This is likely cheaper than reducing emissions via renewable energy sources, a ministry official said.

J-Power has plans to build three new coal-fired plants, one of which will replace an old facility. In 2018, the company also set up a joint venture with Sumitomo Forestry Co., Ltd. to manufacture and sell wood pellets, creating a source of biomass fuel to mix with coal in J-Power’s thermal plants. “It is important that Japan has diverse sources of energy,” a J-Power corporate planning executive said.

Experts such as Hiroshi Segawa, a professor of energy and environment at The University of Tokyo, are unimpressed by such arguments. “There is a complete lack of sustainability and of a national strategy to realize the planned energy mix in the long term,” Segawa said. “The dependence on coal-fired plants might increase further, going in the opposite direction to the global trend.”

Segawa believes several factors have been hindering Japan’s shift toward renewables. “The government is probably giving priority to heavy industry companies who manufacture nuclear plants,” he said.

That view is echoed by executives at Japan Renewable Energy Corporation (JRE), a solar, wind, and biomass power operator backed by the Goldman Sachs Group, Inc. The company has only limited access to the power trans­mission network, making it harder to pursue new renewable projects.

“Major power companies are still securing power grids to prepare for re-operation of nuclear plants at some future time,” said JRE Executive Officer Koki Yoshino. The result, he said, is that power plant projects for JRE and other solar and wind power generators have stalled.

A study by Kyoto University Professor Yoh Yasuda found that only 19.4 percent of power grids are actually used nationwide, while the rest are empty.

“We would prefer regulations on the use of existing networks to open the market for the renewable energy industry,” said Yoshino.

CUT AND BUILD
While the government is sticking with coal, some Japanese companies—including Konica Minolta, Inc., Mitsubishi Electric Corporation, and Sony Corporation—are pledging to reduce emissions. And some of Japan’s power providers are also planning to shift away from coal.

Tokyo Electric Power Co. Holdings, Inc. (TEPCO) President Tomoaki Kobayakawa said in 2018 that the company, which owns the crippled Fukushima Daiichi nuclear plant, aims to increase the size of its renewable business over the long term to a level equivalent to that of its thermal power subsidiary JERA, which stands for Japan’s Energy for a New Era. TEPCO has several renewable energy projects, including a planned offshore wind farm in Chiba, east of Tokyo, where the company is conducting a ground survey to determine the viability of the project.

Yet, a number of Japanese companies are still pushing coal overseas—particularly in the fast-developing economies of Southeast Asia. The IEA predicts that the amount of power generated using coal will grow through 2022 in India and Southeast Asia, fueled by billions of dollars of funding and technical support from Japan and China. J-Power is among those involved, building a two-gigawatt coal-fired plant in Indonesia as part of a joint venture with local energy player
PT Adaro Energy Tbk.

Back in Kobe, residents are gearing up for a long fight against the coal power plant. Some have filed a second lawsuit, this time against the Japanese government for letting Kobe Steel construct the plant after an impact assessment “which lacks environmental consideration.”

Kondo, like other residents, says she has no plans to back down. “As long as this violence continues, I want to raise my voice to stop it,” she said.

Workers at the Isogo coal-powered facility in Yokohama

The dependence on coal-fired plants might increase further, going in the opposite direction to the global trend.