Head of the Gastech Consortium, a group of Japanese energy companies, and former Executive Director of the International Energy Agency (IEA)

Nobuo Tanaka

Head of the Gastech Consortium, a group of Japanese energy companies, and former Executive Director of the International Energy Agency (IEA)

“The next natural gas revolution will be one of the biggest topics for this year’s conference. The first revolution saw shale gas become cheaper than other energy sources such as coal, nuclear or renewables in North America. 

The next revolution, according to the IEA, will see liquefied natural gas (LNG) overtake pipelines as the main way to deliver gas by 2040.

The rise of LNG will help increase gas use in the power sector and, because it’s a cleaner energy source than oil or coal, gas will become much more significant for the global energy market than it is now. 

However, the major source of Asia’s energy in 2040 is still likely to be oil. So how the oil market develops is a major concern.

Low oil prices mean there is less investment in countries with high production costs, so importing countries of Asia will have to depend much more on the typically lower-cost Middle East producers in the future. This is a challenge for the energy security of Asia.

If oil supply becomes unstable and prices more volatile, for example, perhaps the importing countries of Asia should move from oil and coal to cleaner-burning gas.

Another energy security challenge is whether we can maintain our nuclear power generation capacity over the long term.”

Yuki Sadamitsu

Director of Oil & Gas at Japan’s Ministry of Economy, Trade and Industry

“It’s vital that Japan has diversified energy sources, and gas plays an indispensable role in helping us achieve this.

About two-thirds of Japan’s gas is used for power production and it generates around 40% of our electricity.

Gas has several strengths compared with other energy sources. In addition to lower carbon dioxide (CO2) emissions, it offers stability of supply because we can source it from a diverse range of countries with relatively low geopolitical risks. 

Japan relies on the Middle East, for instance, for more than 80% of its crude oil but only about 30% of its gas.

Renewables are an important energy source, but there are cost and intermittency issues. Japan also has limited amounts of land favourable to wind or solar power.  There is also a role for nuclear in achieving an affordable low-emissions energy mix.

We plan to promote the use of natural gas for transport. We think we should have more natural gas-fuelled vehicles, especially trucks. 

It’s better for the environment with less CO2, sulphur and nitrogen emissions. So it’s better for our air.

For heavy-duty vehicles, LNG also makes economic sense. That’s why we would like to see LNG trucks on our roads.

The government has a pilot project to increase the number of LNG-fuelled trucks, but it’s at a very early stage.”

Deputy General Manager Fuel Business, TEPCO Fuel & Power

Hirofumi Nishimura

Deputy General Manager Fuel Business, TEPCO Fuel & Power

“During Japan’s rapid economic growth after the mid-1950s there was a lot of concern about air pollution. That’s one of the reasons why LNG became so attractive – because it emits minimal sulphur dioxide and other particles.

TEPCO started using LNG in 1969 and was the first company in the world to import LNG for power generation.

LNG’s role also grew because the government wanted to reduce dependence on oil, especially after the 1970s oil crisis.

When nuclear power generation was suspended following the great earthquake and tsunami in 2011, Japan received a lot of help from energy companies in terms of additional LNG supplies.

Many changes are happening in the Japanese energy market today.  Full deregulation of power and gas markets has just started and competition between power and gas companies will increase over the next few years.

The demand outlook for these companies is increasingly uncertain, partly because of more competition but also because of growth in the use of renewable energy.

Nuclear and coal-fired power plants used to meet demand around the clock, known as baseload. But both types of plant face challenges in the years ahead.

Oil-fired power plants are being used less and less to help meet peak power demand, due to cost. So gas-fired power plants will be needed to meet some baseload and peak demand.

The extent of the role of gas in the future will largely depend on the role nuclear can play in Japan’s energy mix over the next few years.

That is still very uncertain. When nuclear power comes back, LNG consumption will fall.

I expect LNG will continue playing a very big role. But the LNG industry needs to be more economically competitive and offer more supply flexibility.”

Towards a cleaner future

Shibuya Crossing at Night

Japan has the world’s third-largest economy and a population of around 127 million. It has limited energy resources of its own and has long been a major importer of fuel.

Reliance on imported energy has driven Japanese companies to develop ever more efficient technologies, including electronic goods and motor vehicles, and many are global leaders in energy efficiency.

Nuclear power was an important contributor to energy supply from the 1970s until a big earthquake and tsunami led to the Fukushima nuclear accident in March 2011. The subsequent shutdown of nuclear reactors across the country led to an increase in fuel imports, and a rise in greenhouse gas emissions.

Japan was the world’s fifth-biggest emitter of CO2 in 2013. As part of the United Nations Paris Agreement on combating climate change, the government has set a target of reducing its greenhouse gas emissions by 26% from 2013 to 2030.

Faced with the challenge of curbing emissions while ensuring economic growth, the government is targeting a power generation mix for 2030 of 27% LNG, 26% coal, 22-24% renewables, 20-22% nuclear and 3% oil.

Sources: World Bank, IEA, Japan government, UN

Hiroshi Sasamata

Author of a new report by consultants ATKearney on Japan’s power generation prospects

“Japan’s current target for its power generation mix in 2030 looks pretty sensible. But the biggest issue is how much of its electricity will actually come from nuclear power.

The government target of a 20-22% share for nuclear by 2030 is much lower than the 30% share it used to provide. But even this target is optimistic. There are several hurdles that nuclear power plants need to overcome to meet that market share.

They first need to be restarted and then operators will need to get regulatory approval to extend their operating lives.  

If Japan can overcome those obstacles we can generate more power without CO2 emissions.

If we are unable to produce enough electricity from nuclear, Japan will need to increase the role of relatively expensive large renewable energy systems and gas-fired power, in order to burn less coal, if it is to achieve its carbon emissions goals.

Wider use of distributed low-carbon power generation systems, such as roof-top solar energy backed by batteries, may become cost-competitive in the longer term.

In such a scenario, gas could play an increasing role because gas-fired power can effectively balance out variable renewable energy supplies.”

Executive Officer, Tokyo Gas

Kentaro Kimoto

Senior Executive Officer, Tokyo Gas

“Introducing new technologies and creating new uses for gas are important parts of our business. We have already installed around 70,000 residential fuel-cell units that turn mains gas into hydrogen and then generate electricity from the hydrogen.

Smart energy networks can also help improve efficiency by utilising renewable energies more effectively.

Natural gas could play an increasingly important role in enhancing the growth of renewable energy. Given the instability of renewable energy, gas-fired generation can provide increased flexibility to the electricity system together with renewables.

With the full liberalisation of electricity and gas markets, competition in the Japanese energy market will rise and energy demand will become harder to predict.

However, by maintaining its competitiveness against other fuels, natural gas is likely to play an important role, and demand for it could increase in the future. 

Gastech gives people in the natural gas industry the opportunity to discuss such issues and we expect fruitful discussions during the event.”

Interviews by Daniel Fineren

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