Japan shifting away from fossil fuels

22nd July 2021 By: Esmarie Iannucci - Creamer Media Senior Deputy Editor: Australasia

PERTH (miningweekly.com) – Australia’s supply of liquefied natural gas (LNG) and coal into Japan could face pressure as the Asian major introduced a draft Strategic Energy Plan, which sees non-fossil fuel power supply sources growing from 24% in 2019/20, to roughly 60% by 2030/31.

Analyst S&P Global noted that the draft Strategic Energy Plan would see LNG’s share of the energy mix in Japan drop from its current 37%, to 20%, while coal’s share would drop from 32% to 19%, and oil would drop from 7% to 2%.

“The latest Strategic Energy Plan outlines Japan's intention to take a series of supply and demand policy measures, as well as supporting technological innovation, to accelerate its move to curb greenhouse-gas (GHG) emissions, while keeping its tight grip to ensure stable energy supply during the transition period.

“The 2030/31 outlook for renewable energy supply is being described as one path to achieve Japan's ambitious 46% GHG reduction target with careful policy handling at a time when the country is already aware of the difficulty in securing suitable locations for renewables,” S&P Global noted.

“Despite uncertainty over the actual outcome for the 2030/31 energy mix, the latest outlook would inevitably lead Japanese companies to review their fossil fuels strategy because of the country's clear direction toward decarbonization.”

Japan accounted for 21% of global LNG imports during 2020, according to the Office of the Chief Economist, with LNG trade between Australia and Japan valued at A$15-billion in that same year.

Japan currently accounts for 2% of global thermal coal consumption, and the country is the fourth largest importer of thermal coal annually, with Australian thermal coal exports to Japan worth an estimated A$6.9-billion in 2020.

S&P Global noted that Japan favoured hydrogen as a new resource and was speeding up its deployment under the new Strategic Energy Plan from a series of measures both on the supply and demand sides, and was considering enhancing State-owned Japan Oil, Gas and Metals National Corp's capability to provide technological and financial support for hydrogen, ammonia and carbon capture and storage (CCS) projects.

“As part of considering policy measures for the ambitious energy supply and outlook, Japan is taking account of the strength and timing of measures to avoid disrupting the country's stable energy supply by imposing restrictions on curbing fossil fuel-fired power sources prior to the introduction of sufficient non-fossil fuel power sources.”

Japan is involved in a number of hydrogen efforts in Australia, including the Hydrogen Energy Supply Chain (HESC) pilot projects in Victoria, which is developing a complete hydrogen supply chain, creating hydrogen gas via the gasification of Latrobe Valley coal, transport to the Port of Hastings for liquefaction, and shipment to Japan.

The Queensland government, through the government-owned CS Energy, has also struck a partnership agreement with Japan’s IHI Corporation to pursue a green hydrogen initiative, which will see the two companies assess the feasibility of establishing a renewable hydrogen demonstration plant next to CS Energy’s Kogan Creek power station on Queensland’s Western Downs.

The federal government is investing more than than A$1-billion to support Australia’s clean hydrogen industry, including A$275.5-million in the 2021/22 Budget to support the development of regional hydrogen hubs.

The government has also entered into partnerships with Germany, Singapore and Japan to accelerate the development of low emissions technologies, including hydrogen, that will drive investment and job creation in Australia. 

An Australian hydrogen industry could generate more than 8 000 jobs, many in regional Australia, and deliver over A$11-billion a year in gross domestic product by 2050, the government has previously estimated.