August 11, 2011

Japan’s clean energy bill may falter on lawmaker’s ties to utilities

Prime Minister Naoto Kan’s plan to shift Japan toward renewable energy following the Fukushima nuclear accident faces resistance from politicians compromised by close ties to utility companies, an opposition lawmaker said.

Kan has pledged to reduce reliance on nuclear power after an earthquake and tsunami in March wrecked Tokyo Electric Power Co.’s Fukushima Dai-Ichi nuclear station, causing radiation leaks into the air, sea and soil.

The push on renewable energy -- including a bill in parliament to subsidize electricity from wind, solar and geothermal sources -- will meet resistance because politicians don’t want to anger utilities, Taro Kono, a lawmaker for the opposition Liberal Democratic Party who supports phasing out nuclear power, told reporters yesterday.

“We know the LDP has received a huge amount of money from the power companies, and the Democratic Party of Japan gets support from the power company labor unions,” said Kono, who plans to run for his party’s presidency next year. “How we break that vicious circle is a test we have to pass.”

Kan used a ceremony to mark 66 years since the U.S. atomic bombing of Hiroshima on Aug. 6 to outline his plan to cut usage of nuclear power, which provided about 30 percent of the country’s electricity before the crisis.

His effort to win backing for renewable energy has been hampered by calls for him to step down over the handling of the response to the March 11 earthquake and tsunami, which left more than 20,000 people dead or missing and destroyed more than 100,000 buildings.

Public vs. Politicians

Kan has indicated we will step down, though with conditions. One of them is passing a bill to provide feed-in tariffs, or subsidies, for renewable energy producers.

While Kan’s popularity has waned, public support for abandoning nuclear power is growing. A total of 68 percent of respondents to an Asahi newspaper poll published Aug. 8 said they want Kan’s successor to continue his policy of phasing out atomic energy.

Still, public opinion may not be enough to sway politicians, said Kono, one of the few anti-nuclear politicians in a party that created the country’s atomic industry during almost an uninterrupted half-century of rule to 2009.

“Some LDP members probably think that people will forget in five years, and we’ll be able to build a nuclear power plant again,” he said. “I don’t think that’s going to happen.”

The parliament vote on feed-in tariffs, expected by Aug. 26, will provide the first indication of Japan’s post-Fukushima energy policy.
Follow Germany

While the legislation contains no indication of the price for electricity from renewable sources, the Ministry of Economy, Trade and Industry has indicated a target of up to 20 yen (26 U.S. cents) per kilowatt hour for as long as 20 years, according to a report last month by Bloomberg New Energy Finance. That compares with the grid electricity price of 13.77 yen per kilowatt hour for commercial users, according to data from Japan’s Agency for Natural Resources and Energy.

A feed-in tariff proposed in 2000 was blocked by the LDP, Tokyo Electric Power Co. and METI, the ministry in charge of promoting nuclear power, Kono said yesterday. A similar policy covering home installations of solar panels was introduced by the current government in 2009.

“We should have done it in 2000 just like Germany, where it changed their renewable energy industry so much,” Kono said. “Our renewable energy has been completely flat at 1 percent of total supply.”
Industry Divided

Critics of the renewable energy drive include Keidanren, Japan’s largest business lobby that includes power utilities. Hiroshi Mikitani, president of Japan’s biggest online retailer Rakuten Inc. (4755), quit the group in June in protest over its support for the energy status quo.

Softbank Corp. (9984) Chief Executive Officer Masayoshi Son plans to invest about 80 billion yen ($1 billion) to build 10 solar farms if he gets access to transmission networks and agreement from the 10 regional utilities to buy his electricity, a move that would end the companies’ monopoly over power distribution.

“I’m not optimistic, but it’s time for the LDP to leave the power companies and join the public in promoting an alternative to the current energy policy,” Kono said.


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