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Japan’s nuclear industry has a doubtful future

Is there a future for nuclear power in Japan?, Japan Times, BY SUMIKO TAKEUCHI, JUL 16, 2019, This is the third in a series of reports on Japan’s energy policy…….

the damage from nuclear accidents can be catastrophic, in addition to the challenges posed by nuclear waste disposal. The Fukushima disaster has led to strong opinions that Japan should denuclearize, and this is still the case.

…. ………The fact is that the economic benefits of nuclear power have been losing their shine. Because of the sharp hike in safety standards imposed by the Nuclear Regulation Authority after the Fukushima disaster, exorbitant safety upgrades nearly equal in cost to building a new reactor are being installed at each site. To get a return on investment, this intensive capital spending will require long-term operation and high utilization rates, but the need to get local consent to operate and to respond to dozens of lawsuits from anti-nuclear residents is making stable operations difficult. Reactor operations are also capped at 60 years. Nuclear power could potentially be a source of cheap electricity, depending on the utilization rate and other conditions, but there’s also a possibility it won’t. ……

The impact of the Fukushima disaster, however, was enough to completely overshadow the benefits. The majority of the public is still against nuclear power. In light of persistent public opinion, Japan’s nuclear power business has been surrounded by three big uncertainties.

The first is political uncertainty. The administration of Prime Minister Shinzo Abe, despite its long-term stability, has not provided enough support to the nuclear power business. In addition, the government has entrusted the utilities with the job of gaining local consent.

The safety agreements that stipulate the rules of the industry, such as disclosure of information to the host governments, are not legally binding. But running reactors would be next to impossible without local consent based on such agreements. Whenever there’s an election, the utilities are thrown into confusion, and if a new leader is elected, they will initiate communication from scratch.

The second is policy uncertainty. Japan has fully liberalized the retail power sector. In a liberalized market, reactors for which returns on investment have fully recovered could have high cost competitiveness, but there will likely be no companies that will take up the challenge of building new ones.

Since nuclear plants require huge capital, curbing fundraising costs to a low level would have a big impact on competitiveness, but cheap fundraising is something that cannot be expected in a liberalized market. …….

The third is regulatory uncertainty. It has become quite common for reactor safety reviews to take multiple years because of inadequate communication between utilities and regulators. The U.S. has a presidential executive order that stipulates regulation shall not be undertaken unless the potential benefits to society from regulation outweigh the potential costs of dealing with the regulation.

Though Japan has no such principles, appropriate oversight on regulatory activities is being called for to check whether the public is suffering from any disadvantages from unforeseeable regulatory activities. In the meantime, the finishing blow is the plethora of lawsuits that have been filed demanding the halt of nuclear power plants……..

When utilities are placed in such an uncertain environment, it is a foregone conclusion that the nuclear power business will become unsustainable and there will be no future for it in Japan…..

July 18, 2019 - Posted by | Japan, politics

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