For years now, Tokyo has been on a “Cool Japan” offensive – using quirky cultural assets to boost its global soft power. Does it now risk being labeled “Coal Japan?”
Events this week in Madrid, host of the COP25 United Nations conference on climate change, suggest so.
Japanese Prime Minister Shinzo Abe had wanted to address the summit. Organizers rejected his request on the grounds of Tokyo’s increasing use of coal-fired plants at home and aggressive promotion of them from Southeast Asia to Africa to Latin America.
To save face, Abe deployed his government’s newest and freshest: Environment Minister Shinjiro Koizumi.
Three months ago, Abe sought to add youth, energy and a splash of star power to his cabinet by tapping the 38-year-old. Charismatic and photogenic, Koizumi descends from political royalty: His dad is dashing former premier Junichiro Koizumi. He’s also one half of Japan’s reigning “It” couple; his recently-wed wife is a wildly popular television personality.
Yet Madrid wasn’t the coming-out party for which Koizumi hoped. There, to an audience including Swedish environmental wunderkind Greta Thunberg, Time magazine’s 2019 Person of the Year, he came up empty.
“I’m afraid I can’t share new developments on our core policy today,” Koizumi spluttered.
The problem, of course, is Japan’s ill-timed coal addiction. It’s using more and more of a fossil fuel that UN circles want to ban from generating electricity.
With most of Japan’s nuclear reactors closed since the 2011 Fukushima disaster, utilities have steadily upped coal-burning capacity. Worse, perhaps, Japan Inc. is aggressively hawking it around the globe.
This isn’t a uniquely Japanese problem. Both China and South Korea face challenges balancing the use of coal, short-term priorities and long-term sustainability. In Madrid, though, this priority earned Japan the satirical “Fossil of the Day” award activists hand out at UN climate events – not the best of optics for Koizumi-san Junior.
Japan risks giving up one of the most lucrative markets of tomorrow: inventing ways for China, India, Indonesia and elsewhere to avoid choking on rapid economic growth. Japan Inc. can churn out all the cars, trucks and ships its wants. Future profits lie in devising new renewable energies to build a more carbon-neutral future.
Back in September, when Abe entrusted Japan’s energy trajectory to Koizumi, the hope was for a new direction. And clearly, it’s still early days.
Still, Koizumi’s powerless punt in Madrid suggests Abe’s government is devoid of new thinking.
Three-way energy mix
More worryingly, Japan’s energy mix at the moment – a trifecta of coal, hydrogen and nuclear power – does not look promising.
Tokyo’s coal obsession has its roots in a giant 2011 earthquake that precipitated the worst nuclear crisis since Chernobyl. It prompted Tokyo to shutter its 54 of its nuclear reactors, which until then supplied about 30% of electricity. By 2017, as some came back online, that share was just 3%.
Tokyo filled the void with old-fashioned coal. Along with supersizing Tokyo’s carbon footprint and tarnishing its “Cool Japan” ambitions, it’s warping economic incentives. The sheer convenience of coal reduces the urgency to use taxes and other incentives to catalyze a renewables boom.
That’s not to say Abe’s government lacks plans.
This week Kawasaki Heavy Industries debuted the globe’s first carrier ship that transports liquefied-hydrogen. It marks a major technological advancement in ferrying the green source around the globe. It’s part of a sizable bet by Tokyo and automakers that hydrogen – not batteries – will create the emission-free future young Japanese crave.
Silicon Valley is all over this nascent market, too. As Abe said in January: “Hydrogen, as both a primary source and more importantly, a carrier of energy, must become cheaper and more easily affordable. My government is aiming to reduce the production cost of hydrogen by at least 90% by the year 2050, to make it cheaper than natural gas.”
What if things don’t pan out?
Advances in ways to capture carbon and store it are far behind Tokyo’s ambitions. It’s also an imported source. In Japan’s case, Australian brown coal will be gasified to generate low-cost hydrogen. It would be shipped to Japan on vessels like Kawasaki’s carriers and then supplied to a nationwide network of filling stations.
Sounds good so far? The problem is, not only does the necessary infrastructure not exist, the viability of the power source is far from proven.
Billions of dollars of investment would have to go into a power system that might be semi-operational by 2030. Here, it may be telling that Toyota Motor, an early hydrogen enthusiast, is rapidly scaling up investment in battery innovation.
Then there’s nuclear, the industry that decades ago captured Abe’s Liberal Democratic Party.
Nuclear ground zero
The LDP has ruled Japan with only two brief interruptions since 1955. In that time, it helped build a “nuclear village” – a cabal of pro-reactor investors, lawmakers and academics that is Tokyo’s answer to the military-industrial complex that warps Washington policymaking.
Since taking office in 2012, has Abe expended countless time, energy and political capital in restarting reactors. He’s done so, however, in the face of intense public disapproval. The Fukushima crisis turned the vast majority of Japanese against nuclear power. And given seismic-activity risks, Abe’s government should follow suit.
The obvious alternative is incentivizing a surge in renewable-energy innovation. Here, Abe should be listening to his new environment minister.
Show me the innovation
Koizumi, like his dad, favors phasing out reactors. For former Prime Minister Koizumi, this was a late-career change in positions. During his 2001-06 tenure, he was pro-nuclear. Now, the former premier is a leading industry critic.
Yet both Koizumis are couching the phase-out in economic terms, not just for safety. Japan’s startup culture is tepid. There are plenty of tiny ones, but few create genuine economic energy, jobs and wealth from the ground up. Indonesia, remember, has already produced twice as many tech “unicorns” as Japan.
No industry holds greater promise for Japanese innovators than renewable energy. Japan, after all, has decades of success in the realm of battery innovation. In 2014, when Tesla billionaire Elon Musk set up his $5 billion lithium-ion gigafactory in the Nevada desert, his first partnership was with battery pioneer Panasonic.
SoftBank billionaire Masayoshi Son, meantime, is investing tens of billions of dollars building vast solar farms and in other new technologies. If only Abe’s government would give greater access to power grids to store energy.
Abe could give his structural-reform push a reboot with tax incentives and government-backed venture capital schemes to boost innovation in batteries, solar, wind and geothermal power. Why not borrow the Silicon Valley model where investors, universities and companies collaborate to disrupt the economy? It also might attract more foreign talent.
Such efforts would help Abe regain reformist momentum. It also would do something the Bank of Japan’s ultraloose policies can’t: Build new ecosystems to generate faster, more productive growth.
It also would increase Tokyo’s global standing and recharge the “Cool Japan” offensive – batteries included.