This is another of an occasional series from The Globe and Mail's Brian Milner, who visited Japan to assess the results of dramatic efforts to revitalize the world's third-largest economy.
One commercial office building in Tokyo's busy Uchisaiwaicho district is notable for its constant police presence. That's because it's the headquarters of Tokyo Electric Power Co. (TEPCO), provider of power to nearly 30 million people and one of Japan's more reviled companies.
TEPCO gained its spot in the Hall of Shame over its dreadful handling of the Fukushima nuclear disaster triggered by the massive earthquake and tsunami in March, 2011, as well as subsequent revelations of poor maintenance and safety flaws and anger over the slow pace of compensation. Huge anti-nuclear demonstrations followed, and the public outcry has scarcely abated. As recently as its annual meeting in June, management had to fend off activist shareholders demanding a permanent end to nuclear power.
Now, a year since the complete shutdown of the rest of Japan's 48 reactors for safety checks, those demands have taken on new urgency. The Nuclear Regulation Authority, the government's watchdog, has given the green light for another utility, Kyushu Electric Power Co., to restart two reactors at its Sendai plant in southwestern Japan. Other utilities are seeking the go-ahead to turn another 18 reactors back on.
Prime Minister Shinzo Abe needs to get at least part of the country's substantial nuclear capacity back on line to cut a soaring energy import tab – including hefty government subsidies – that makes Japanese industry less competitive and presents one more obstacle to his recovery strategy. Power-generating costs shot up more than 40 per cent between 2010 and 2012, and that was despite falling demand. Costs have only gone higher since then.
Efforts to reduce electricity consumption are evident everywhere. During Tokyo's typically hot summer months, air conditioning is lowered in most buildings and shut off in lobbies and unused offices. Many office workers depart by 6 p.m., as power was cut.
As many as a dozen reactors may remain out of service for good, and some experts say the total could be far higher because of serious safety shortcomings. Other reactors will require expensive upgrades and retrofits that will take years to complete before they can be switched back on. And even the Sendai restart could still be blocked by local officials, who are well aware that a majority of Japanese still oppose any return to a nuclear power option.
This will spell bad news for investors in TEPCO – which is controlled by the government fund that bailed it out – and other utility stocks. But it's good news for global energy prices. TEPCO and other utilities are aggressively pursuing long-term supplies of liquefied natural gas, and Japan intends to be a player in shale-gas developments in Mexico and elsewhere.
Further down the road, the Japanese hope to exploit what are believed to be vast deposits of methane hydrate deep below the seabed around Japan as a major source of natural gas. But high extraction costs remain an obstacle. And if officials think the public is furious about nuclear power, wait until they start tampering with the marine environment.
So at least for now, exporters of thermal coal and natural gas don't have to worry either about nuclear restarts or new technologies disrupting their lucrative market.