Power Line
The Federation of Electric Power Companies of Japan Vol.21
July 2003

Developing a Basic Energy Plan

SINCE APRIL 2003, the Basic Plan Subcommittee of the Advisory Committee for Natural Resources and Energy to the Minister of Economy, Trade and Industry has been holding meetings to discuss a Basic Energy Plan. The Plan will be made in accordance with the Basic Law on Energy Policy Making. Because such a comprehensive and long-term-based energy law had not existed in Japan, the Diet passed the law in June 2002, anticipating confirmation of energy policy principles under advancing deregulation. The Basic Plan has to be designed for consistent implementation of appropriate policies according to three basic principles of the Basic Law:
1) Securing a Stable Supply,
2) Harmonization with the Environment and
3) Greater Use of Market Forces which should be coordinated with the first two principles. The Basic Plan is intended to provide guidance for the future direction of overall energy supply and demand. Once the Economy, Trade and Industry Minister has received a report from the Advisory Committee and listened to the views of the heads of the relevant administrative agencies, a draft Basic Plan for approximately the next ten years will be prepared, endorsed by the Cabinet, and reported to the Diet. In order to smoothly implement the plan, the government will take necessary measures such as budget allocation every fiscal year.

Tokyo Electric Power Company, Kashiwazaki-Kariwa Nuclear Power Station

Especially in terms of supply issues, it is expected that the plan will include measures to promote the use of nuclear energy as well as renewable energy and natural gas. Since the plan will most probably aim to reduce dependence on oil as well as emissions of carbon dioxide (CO2), FEPC believes that the Basic Plan should confirm that nuclear energy contributes to a stable supply of electricity and helps to meet environmental standards. Nuclear energy is the focus of Japan's energy policy; the need for nuclear power generation and the nuclear fuel cycle remains unchanged. The Japanese energy supply system is vulnerable because of its dependence on imported sources of energy, evidenced by the fact that energy supply self-sufficiency — including nuclear energy — is as low as 20 percent. Nuclear energy helps to replace crude oil imports by as much as 30 percent, and in terms of environmental gains, the use of nuclear power has reduced the country's CO2 emissions by about 20 percent.

As deregulation of electric utilities proceeds, uncertainty arises about the future of stable energy demand and long-term cost recovery. In particular, back-end operations of nuclear businesses, such as reprocessing of spent fuel and disposal of radioactive wastes, take a significant amount of time, and uncertainty in policy planning remains. We believe the private sector will find these operations to be challenging.
This situation contrasts with other countries where public institutions perform certain roles, such as managing overall operations. For the private sector to progress with nuclear power generation and the nuclear fuel cycle, we think public and private roles should be reviewed and operational risks to private companies should be taken into consideration. The government is requested by the Diet to consider the question of specific systems and measures, including economic ones, to take necessary steps by the end of 2004.