As other countries are rapidly shifting away from using coal for power generation, Japan continues to heavily rely on this fossil fuel. That said, pressure from abroad and other factors have contributed to changes in the Japanese government’s stance towards coal.

This article explores the history of coal in Japan as well as the government’s policy towards the use of coal to generate electricity. Finally, it looks at some of the recent developments regarding this fossil fuel in Japan.

Once Upon a Time, Japan Was a Large Coal Producer

Considering that in recent years Japan has been struggling with a low, sub-10% energy self-sufficiency ratio, it might come as a surprise that in the past, Japan used to have a thriving coal mining industry.

The industry peaked in the 1940s and 1950s. About 56 million tons of the resource were mined in the country in FY1940, and in 1952, Japan reached the peak in the number of coal mines in operation, at 1,047. In the mid-1950s, coal accounted for more than 45% of Japan’s primary energy supply.

Over the following decades, however, the increased availability of cheap imported coal has caused a decline in domestic production. While there were instances, such as with the J-Power owned Takehara coal power plant which started operation in 1967, where the government required certain plants to exclusively use locally-produced coal, that was not enough to save the domestic coal mining industry.

With that, today, there are less than ten coal mines in the country, and they produce only about a million tons of coal a year.

It is interesting to note here, though, that the tunnels that Japan’s high-speed trains continue to traverse to this day were partially made possible by the Japanese coal mining industry and the digging technologies it had developed.

Coal as an Important Part of Japan’s Energy Supply

While Japanese coal mines have all but disappeared, the country still heavily relies on coal for its energy supply. In fact, it relies on coal more today than it did a decade ago. That is because the 2011 Fukushima Daiichi nuclear disaster resulted in all of Japan’s nuclear power plants being shut down–and because the majority of them have not resumed operation to this date.

In FY2010, before the disaster, 22.7% of Japan’s primary energy supply was contributed by coal. By FY2017, that had increased to 25.1%. Of the coal used in Japan, over 99% is imported from overseas, primarily from Australia. As far as electricity generation is concerned, coal-fired power plants contributed 27% of the total electricity produced in the country in FY2010. In FY2018, that share had increased to 32%.

With the power generation situation stabilized after the 2011 shock, the Japanese government has started putting effort back into lowering its emissions and introducing a cleaner energy mix.

To do so, in 2016, the government revised the Act on the Rational Use of Energy first enacted in 1979. In its 5th Basic Energy Plan, published in 2018, the government also stated its aim to reduce the percentage of electricity generated using coal to 26% by FY2030. At the same time, though, it noted that coal is an important resource both in terms of cost as well as stable supply.

Finally, in July 2020, the Ministry of Economy, Trade and Industry announced that it will aim to phase out “low-efficiency” coal power plants that emit large volumes of carbon dioxide by FY2030.

Japan’s Stance Toward Coal Not Shifting Fast Enough

As you can see above, there is no doubt that Japan has a plan to reduce its reliance on coal and, in turn, generate power in a cleaner way than it does today. However, the country has come under pressure–both from domestic organizations and the international community–to do more, and to do it faster.

Considering the trends in other developed countries, this is not surprising. For example, France plans to phase out all of its coal power plants by 2022. The United Kingdom and Italy plan to do so by 2025. Germany, where coal made up almost 40% of power generation in 2018, has committed to phase out all of its coal power plants by 2038.

Japan, on the other hand, has only presented plans to phase out “low-efficiency” coal power plants, keeping the option of building new “high-efficiency” ones open.

In addition to Japan’s reliance on coal in its power generation mix, the country–mainly its banks–has also come under fire for its support and financing of overseas coal power plant construction projects.

That pressure has led the three Japanese “megabanks,” Mitsubishi UFJ, Mizuho, and Sumitomo Mitsui, to stop lending money for the development of new coal power plants starting this year.

Similarly, the President of the Japan Bank for International Cooperation (JBIC) stated in April 2020 that the bank will “no longer accept loan applications for coal power generation projects.” That, however, does not prevent it from considering financing the $2.2 billion Vietnam Vung Ang 2 Thermal Power Company project for which it received an application prior to making the statement.

In response to JBIC’s April 2020 statement, some non-governmental organizations have made comments that JBIC only shifted the policy because it had no future such projects that they would need to consider. A July 2020 statement made by the President of JBIC explaining that the private sector will no longer apply for such loans because Japanese manufacturers of ultra-supercritical (USC) coal power plants will not be cost competitive with their overseas counterparts confirms the suspicion of the NGOs to some extent.

An Uncertain Future

While it could be argued that the 2011 Fukushima nuclear disaster is largely responsible for Japan’s continued reliance on coal, that would be too narrow a view of the topic. As can be seen above, the country has had a long-lasting relationship with this fossil fuel, starting with its coal mining industry which peaked in the 1950s and continuing to this date with the country helping finance coal power plant construction projects around the world.

That said, in part due to the pressure from both domestic and international groups, the tide has slowly started to turn. Japanese banks have, with some exceptions, committed to stop financing coal power plants and the government has committed to phasing out “low-efficiency” coal power plants, albeit potentially replacing them with “high-efficiency” coal power plants.

With both of these commitments having loopholes, it will be interesting to watch how the situation develops over the next five to ten years and beyond. We will certainly keep you updated here on the blog.

In the meantime, make sure to check out this month’s issue of our J-Enerlytics Power Market Monitor, in which we dive deeper into the plan to phase out “low-efficiency” coal power plants in Japan.