The power sector decarbonization is a realistic choice for Japan but there are several challenges and/or risks to be addressed.
Using a diversified mix of low-carbon technologies, including renewable energy sources, CCS and nuclear energy, Japan can reach or even exceed the CO2 reduction target of 80 per cent by 2050.
Even an increase of renewables up to approximately 60 per cent, the scope for decarbonization will decrease to around 60 per cent without nuclear energy and CCS. And without nuclear energy, fossil fuel consumption may remain at a similar level as before the Fukushima incident. Simulation results indicate that reducing carbon emissions will be particularly difficult in the period to 2030. To achieve the 2030 targets, fossil fuel based power production would have to be largely based on natural gas.
Decarbonization: affordable choice, major investment challenge
Since the Fukushima incident in March 2011 Japan's imports of fossil fuels have increased significantly, in particular LNG and oil products. Record-high prices are being paid on Asian LNG markets which has led to major increase in electricity generation costs. Discussions raise the question if Japan can switch off its nuclear fleet, and what the impact is of a major shift towards renewable energy sources on future electricity prices.
Simulations show that The average costs of electricity in 2050 remains at a similar level as today. However, the necessary transition creates additional challenges. The transition to capital intensive low-carbon technologies require major investments into generation as well as transmission & distribution networks. The combined impact of increasing electricity prices and financing these investments put a significant burden on public as well as private budgets.