Economic and Energy Outlook of Japan for FY2015: What about benefit of oil price plunge for stagnating Japanese economy after VAT increase?

摘要

Although two units from the Sendai Nuclear Power Station were approved in September 2014 as conforming to the new regulation standards, developments toward restart takes time in general. They are assumed to be in operation by the end of FY2014 and they will be the first ones since the Great East Japan Earthquake in 2011. In the "Nuclear Mid-level Case," the assumptions are that three review teams will be provided in FY2015, and they reflect the assessment of the observed developments, the necessity for large-scale construction, and the order of the applications, etc. Based on those assumptions, a total of nine units will restart by the end of FY2015, operating on average for six months in the Case. Even if nine nuclear power plants restart, the electricity generated by nuclear power for FY2015 is still less than one sixth of its FY2010 level, raising the average power generation cost by about JPY3,000/MWh compared to FY2010. Relative to FY2010, total spending on fossil fuel imports increases by JPY 1.9 trillion, of which the LNG additional imports of 14.5 Mt will account for JPY 1.6 trillion. Under this Case, the energy-related carbon dioxide (CO_2) emissions increase by 45 Mt-CO_2 whilst the self-sufficiency rate decreases by 8.0% point. If the assessment period turns out to be longer than the one assumed in the Nuclear Mid-level Case, only the two units already approved would restart by the end of FY2015, generating electricity on average for one month during FY2015 [Low-level Case]. If the Authorities can further increase their staff and if the procedures become more efficient, 20 plants could restart and operate on average for seven months during FY2015 [High-level Case]. The "Hypothetical Case" assumes that 32 of the relatively new plants do generate electricity with a capacity factor of 80% throughout the entire year. The extent to which nuclear power plants can restart and operate has huge impacts on the Japanese economy, with serious implications regarding the environment and energy security. For example, the power generation cost under the Low-level Case is JPY2,200/MWh more expensive than under the Hypothetical Case, requiring an additional spending on fossil fuel imports of JPY2.0 trillion. The Hypothetical Case accelerates GDP by 0.3% while decreasing CO_2 emissions by 117.8 Mt, or 9.8% of the emissions in FY2005, and improving the self-sufficiency rate by 9.9 percentage point. The difference in LNG import volume between the two cases would reach 20.6 Mt meaning Japan would import less LNG in the Hypothetical Case than the country did just before the Earthquake. The resulting significant decrease in Japan's LNG imports, combined with the anticipated LNG exports from the United States, beginning in 2016, and others would contribute to a more balanced supply-demand of the international LNG markets in the future.