Analysis of Japan's energy and environment strategy after the Fukushima nuclear plant accident

Abstract

This paper examines economic analyses of the “Options for Energy and the Environment” proposed by the Japanese government. The main focuses of the analyses are the power generation mix in 2030, and particularly electricity supply shares of nuclear power. The options proposed by the government assume drastic energy efficiency improvements, increase in renewable energy, and deep CO2 emission reductions. Considerable energy savings are assumed by the government even in the baseline scenario, and these are inconsistent with historical growth trends for GDP and power demand. We modify the energy savings baseline scenario for consistency with the historical trends and historical electricity savings after the nuclear power accident. In order to provide a wider array of options, particularly those with fewer negative impacts on GDP, this paper proposes alternative options under a revised baseline. In the alternative options, we assume lower shares of renewable energy in electricity supply and lower carbon price. The economic impacts for the alternative options are much smaller than those assumed by the government. The economic analyses provided in this paper will help future policy making for energy and environment in Japan.