Sunday, 26 June 2011

Japan's energy crisis, A matter of trust

Nuclear fears—and their economic impact—spread far from Fukushima

THE Kansai region of western Japan has an economy as big as the Netherlands, is home to two electronics giants, Panasonic and Sharp, and has in its biggest city, Osaka, a fun-loving rival to Tokyo. When Japan was hit by the March 11th natural and nuclear disasters, Kansai thought it would do its bit for Japan by revving its economic engines. To its chagrin, however, it has found itself in a similar pickle to Tokyo.

Kansai drew no nuclear power from the stricken Fukushima Dai-ichi nuclear-power plant. But its regional monopoly, Kansai Electric Power (KEPCO), has asked clients to cut energy consumption by 15% at peak times between July and September. Citizens risk a sweat-soaked summer without air-conditioning. Tokyoites are bracing for something similar. Unlike theirs, however, Kansai’s leaders are in open revolt.

The issue is trust, which has been wearing thin in Japan ever since the nuclear accident. The Union of Kansai Governments, a group headed by the seven prefectural governors, believes that energy savings of 5-10% are enough. The most outspoken governor, 41-year-old Toru Hashimoto of Osaka, reckons only households need to make cuts. Pointedly wearing a polo shirt, he met KEPCO’s well-groomed president on June 21st and demanded that the utility publish daily assessments of the supply and demand of energy, rather than seeking an across-the-board cut. If a shortfall became imminent, people should switch off their air-conditioners and wear shirts like his, he says.

He appears to suspect that KEPCO is exaggerating the risk of power shortages to put pressure on local leaders to restart suspended nuclear plants. This is a national problem. At present 35 of Japan’s 54 nuclear reactors are shut, mostly for routine safety inspections. Yet since March 11th local governments have refused to reopen them until there are credible safety assessments. It is conceivable that by next March all 54 could be out of action, since there are fresh inspections every 13 months (see map). That would in effect strip Japan of about 24% of its pre-March 11th power-generation capacity.

Kansai relies more on nuclear power than does anywhere else in the country. All of it is generated outside Kansai, in Fukui prefecture. On June 23rd a leading seismologist described one of Fukui’s reactors, Tsuraga-1, as particularly dangerous because it is old and close to a fault line. However, business lobbies say it could be ruinous if the reactors do not reopen. The Kansai Institute for Social and Economic Research says a mere 5% drop in energy consumption this summer would wipe out the region’s expected GDP growth of 0.5% in this fiscal year. In the country at large, the Japan Centre for Economic Research estimates that, without nuclear power, GDP in 2012 would be 1.6% lower than it would otherwise be.

Such forecasts might just be lobbying tactics. The Kansai Institute admits its biggest donor is KEPCO. Its affiliate, the Kansai Economic Federation, is chaired by the boss of KEPCO. The Japan Centre for Economic Research is heavily financed by a federation of electricity utilities, all but one of which use nuclear power.

Mr Hashimoto is openly anti-nuclear, which means he too has an axe to grind. At times he seems recklessly sanguine about the economic impact of abandoning nuclear power. He says that if Osaka can get through this summer without nuclear energy, it could do without it for good.

The problem is that the trust deficit extends to the national government, whose reputation as a nuclear regulator has been battered by Fukushima. Banri Kaieda, the economy minister whose office has responsibility for nuclear oversight, declares that most of the reactors are safe to reopen, but he has not revealed the grounds for making that judgment. Mr Hashimoto says this is back-to-front reasoning: the government should spell out the risks, not the safety assurances, and then let the public decide. So sour is the prevailing mood that this really might put a nail in the nuclear coffin.