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Japan to become a significant coal importer, and cut back on nuclear power

The coal import market in the Asia-Pacific region now dominates, having reached 700m tons, and surpassing the OECD coal market. The world demand for coke and coal will gradually increase by 2045 mostly due to the rising consumption in Asia, while the environmental concerns will force Europe and America to further reduce it.

“Asia’s share in world coal demand will go up from 69% in 2011 to 76% in 2035” says Yoshihiko Sakanashi, Executive Vice President, J-Power.

According to him, the demand is mostly driven by the coal consumption in China which, despite plans to decrease reliance on coal, remains the key coal importer in the region. Demand from India is on the rise too and its share in coal imports is set to grow (12.6% to 20.1% of coal demand).

The efficient use of coal will be an increasing focus as it becomes the most common fuel in Asia supporting its growth in the next 20 years. This is where Japan, which is an increasingly important coal importer, will contribute to the development of the industry through its expertise in clean technologies.

In 2013 Japan imported about 130m tons of thermal coal with Australia (60-70%) and Indonesia (30%) as top suppliers. The coal demand surge has been triggered by two major factors, explains Yoshihiko Sakanashi.

First, the Fukusima disaster in 2011 undermined the dominance of nuclear power in the country. It is unclear how much of the lost capacity the sector will manage to restore: according to Hiro Mizukami of Hokuriku EPCo, the first nuclear power unit will be restarted this summer, while 18 units from original 54 are due for renewal, and the safety review is still going. The LNG alternative incurs high transportation costs, and renewables still make up a small share in the energy mix with a heavy risk management burden. In these circumstances, coal looks quite competitive, especially given its current low price.

Second, the 3-stage reform of Japan’s electricity market will push for market liberalisation both in wholesale and retail. The resulting opening up of demand will be met by the coal imports supply.

As such, in the coming years, coal will remain an important source of energy for Japan; there will be much focus on development and application of clean environmental technologies in power generation and simultaneously further encouragement for renewables.
This content is provided by Coaltrans Conferences for informational purposes only, and it reflects the market and industry conditions and presenter’s opinions and affiliations available at the time of the presentation.

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