Does Japan Need To Rethink Its Scaling Down of LNG?

November 8, 2023|LNG

Two years ago, Japan set a bold new Basic Energy Strategy, which vowed to boost the role of renewables and cut in half the allocation to natural gas and coal in power generation by 2030. But as the time approaches to update the Strategy, some are urging a re-think.

Based on the current 2021 edition of the Strategy, Japan’s LNG import volumes should decline by about a third come the end of this decade. With Japan as the world’s biggest buyer of LNG, this forecast carried global implications – not least for Japan itself, whose LNG buyers became reluctant to sign new long-term supply deals even as older contracts expired.

As the middle of the decade draws near, however, doubts are creeping in around the validity of walking away from new LNG deals. After all, the capacity that is expected to replace coal- and gas-fired power stations is not yet built. The momentum in the renewables sectors has slowed, while nuclear restarts are proceeding in a stuttering manner that is at odds with the ambitions voiced by Prime Minister Kishida last year.

Meanwhile, geopolitical instability, wars, and rising raw materials costs, among other factors, are pushing all countries to cherish energy security and accept that some usage of fossil fuels will be unavoidable for the time being. And so, energy planners, fuel importers and utilities in Japan are starting to ask the question: Do we really need to rush our exit from gas?

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