Japan has a mature nuclear industry and prior to the earthquake and tsunami that wrought much devastation in March 2011, 30% of the nation’s electricity needs were met from nuclear power generation capacity. In the aftermath of the disaster, all of Japan’s nuclear plants were taken off-line for safety checks. Whilst some capacity continued to be used in the months following the calamity, these plants were taken off-line for routine maintenance and have not been brought back on-line because of (perceived) public opposition. Japan’s need for electrical power, of course, remains as great as ever and the shortfall due to the loss of nuclear capacity has to be met from conventional, fossil-fuel based sources. Japan has no significant fossil fuel reserves of its own to speak of and so these needs must be met from importing the fuels required – and they are priced in US Dollars.
As a consequence of the need to import fossil fuels, Japan has just published a record monthly deficit of almost 2.8 trillion Yen ($27.3 billion) for January, up by 71% on the December figure. The most recent figure is the 19th in a series of monthly trade deficits. The Dollar has risen by approximately one fifth against the Yen over the period since Japanese PM Shinzo Abe came to power. Japan consumes a staggering 37% of global liquefied natural gas supplies – meaning that Japan pays a 20% premium over any increase in the cost of the raw material because of unfavourable Dollar/Yen exchange rates.
Japan’s exports become more competitive as the Yen falls in value, making them cheaper in importing markets, but the fact is that export growth has not matched higher import costs, leading to the trade deficit. An obvious solution to this dilemma is to reduce dependence on fuel imports by restarting nuclear power reactors, but in the face of significant public unease over nuclear power, this may yet be “a bridge too far” for Mr Abe. The case is underlined by the fact that tectonically stable Germany decided to abort its fledgling nuclear renaissance in the wake of the Fukushima accident and intends to discontinue its existing nuclear capacity. So much for nuclear power being the “only” viable alternative generation source that does not contribute to global warming – oh, sorry: climate change!