1 00:00:00,120 --> 00:00:02,640 Speaker 1: This is Dana Perkins and you're listening to Switched on 2 00:00:02,920 --> 00:00:07,119 Speaker 1: the BNAF podcast. Prior to March of twenty eleven, Japan's 3 00:00:07,200 --> 00:00:10,360 Speaker 1: energy sector looked significantly different from what it is now. 4 00:00:10,680 --> 00:00:13,320 Speaker 1: Back then, a third of its overall power came from 5 00:00:13,440 --> 00:00:17,239 Speaker 1: nuclear energy. However, in the aftermath of the earthquake and 6 00:00:17,280 --> 00:00:21,599 Speaker 1: subsequent tsunami resulting in the Fukushima nuclear incident, the nation 7 00:00:21,760 --> 00:00:24,240 Speaker 1: took the decision to shut down all of its nuclear 8 00:00:24,280 --> 00:00:28,479 Speaker 1: reactors and reassess its reliance on this power source. Fast 9 00:00:28,560 --> 00:00:31,520 Speaker 1: forward to twenty fifteen, when Japan started up two of 10 00:00:31,560 --> 00:00:34,800 Speaker 1: its reactors again, but between then and now only a 11 00:00:34,840 --> 00:00:37,839 Speaker 1: few more have been brought back online, leaving fossil fuels 12 00:00:37,880 --> 00:00:41,640 Speaker 1: to fill in the energy generation void and raise Japan's emissions. 13 00:00:42,000 --> 00:00:45,280 Speaker 1: So on today's show, we dive deeper into Japan's pathway 14 00:00:45,320 --> 00:00:48,240 Speaker 1: to net zero and the future mix of their energy system. 15 00:00:48,600 --> 00:00:50,920 Speaker 1: To get more perspective on this, I get to speak 16 00:00:51,040 --> 00:00:55,240 Speaker 1: with Issue Kukuma and associate from bnaf's Tokyo office. Together, 17 00:00:55,280 --> 00:00:59,040 Speaker 1: we discuss the energy technology Japan is looking to utilize 18 00:00:59,080 --> 00:01:01,480 Speaker 1: as part of its drive to net zero and the 19 00:01:01,560 --> 00:01:05,240 Speaker 1: unique circumstances such as land constraints that it has to overcome. 20 00:01:05,560 --> 00:01:08,840 Speaker 1: We also discuss the nation's geothermal energy potential and why 21 00:01:08,840 --> 00:01:11,840 Speaker 1: a meaningful rollout of this clean energy source is being 22 00:01:11,880 --> 00:01:16,319 Speaker 1: blocked by an unexpected group, and lastly, Japan's reduced relationship 23 00:01:16,360 --> 00:01:19,600 Speaker 1: with nuclear power and its potential role in the future. 24 00:01:19,959 --> 00:01:23,039 Speaker 1: BNAF subscribers are going to be able to access BNF's 25 00:01:23,120 --> 00:01:26,399 Speaker 1: Japan specific New Energy Outlook report by going to BNF 26 00:01:26,480 --> 00:01:29,959 Speaker 1: dot Com, BNF go on the Bloomberg terminal, or BNF's 27 00:01:29,959 --> 00:01:33,319 Speaker 1: mobile app. Now this report, the New Energy Outlook for 28 00:01:33,440 --> 00:01:36,800 Speaker 1: Japan was actually based off of BNF's New Energy Outlook 29 00:01:36,840 --> 00:01:40,440 Speaker 1: twenty twenty two, where we developed the economic transition scenario, 30 00:01:40,760 --> 00:01:43,679 Speaker 1: which is without admissions constraints, as well as the net 31 00:01:43,800 --> 00:01:47,319 Speaker 1: zero scenario subject to a carbon budget consistent with meeting 32 00:01:47,440 --> 00:01:50,720 Speaker 1: the Paris Agreement goal. Using these scenarios, we're able to 33 00:01:50,760 --> 00:01:55,720 Speaker 1: explore the implications for Japan's electricity, industry and transport sectors, 34 00:01:55,920 --> 00:01:59,160 Speaker 1: along with the investment flows that are required to get there. 35 00:01:59,360 --> 00:02:01,840 Speaker 1: As always, if you like this podcast, make sure to 36 00:02:01,880 --> 00:02:04,639 Speaker 1: subscribe and you'll receive an update when we published future 37 00:02:04,640 --> 00:02:07,680 Speaker 1: episodes and give us a review that'll make us more 38 00:02:07,680 --> 00:02:10,200 Speaker 1: discoverable by others. But right now, let's jump into my 39 00:02:10,240 --> 00:02:25,080 Speaker 1: conversation with issue about Japan and its new energy outlook. Issue. 40 00:02:25,080 --> 00:02:26,919 Speaker 1: Thank you so much for joining us on the show today. 41 00:02:27,160 --> 00:02:28,840 Speaker 2: Yeah, thank you so much for having me. 42 00:02:29,280 --> 00:02:32,600 Speaker 1: We're here to talk about Japan and we want to 43 00:02:32,680 --> 00:02:35,600 Speaker 1: understand everything about the energy system there, and you're actually 44 00:02:35,880 --> 00:02:39,160 Speaker 1: speaking to us today from our office in Tokyo, which 45 00:02:39,200 --> 00:02:41,639 Speaker 1: is great. Let's start at the beginning. You know, we're 46 00:02:41,680 --> 00:02:43,880 Speaker 1: here to talk about the energy system, so can you 47 00:02:44,480 --> 00:02:48,720 Speaker 1: explain the current state of play? What does the existing 48 00:02:49,040 --> 00:02:51,120 Speaker 1: energy system look like in Japan? 49 00:02:51,720 --> 00:02:54,640 Speaker 2: Japan's color anergy max with heavy rely on fourth of field, 50 00:02:54,800 --> 00:02:58,280 Speaker 2: which explain why Japan's emission is too high and also 51 00:02:58,600 --> 00:03:03,320 Speaker 2: explaining japan it's quite emission intensive and among all sectors, 52 00:03:03,360 --> 00:03:06,560 Speaker 2: power sector is the largest source of emissions, which accounts 53 00:03:06,560 --> 00:03:09,120 Speaker 2: for about forty percent of total emissions to Japan. And 54 00:03:09,160 --> 00:03:12,960 Speaker 2: this is because japan a luxurity generation is mainly supplied 55 00:03:13,000 --> 00:03:16,520 Speaker 2: by coal, gas and oil pop plants. 56 00:03:16,760 --> 00:03:19,120 Speaker 1: What are Japan's different emissions targets? 57 00:03:19,360 --> 00:03:22,480 Speaker 2: Yes, so I would like to highlight two major declbnization 58 00:03:22,600 --> 00:03:25,400 Speaker 2: targets for Japan. For the first one is MDC targets, 59 00:03:25,480 --> 00:03:27,799 Speaker 2: so this is more for the near term. So Japan 60 00:03:27,919 --> 00:03:30,480 Speaker 2: is aiming to video some emissions by forty sixty percent 61 00:03:30,639 --> 00:03:33,480 Speaker 2: in two the nand and thirty compared to twenty thirteen level, 62 00:03:33,600 --> 00:03:35,920 Speaker 2: and the other one is netzero target, so this is 63 00:03:35,960 --> 00:03:39,560 Speaker 2: obviously for the more long term, and Japan is pledging 64 00:03:39,560 --> 00:03:42,080 Speaker 2: to achieve netzero by two the fifty and this has 65 00:03:42,120 --> 00:03:44,960 Speaker 2: been legislated since two twenty one. So these two are 66 00:03:45,000 --> 00:03:47,840 Speaker 2: the key decobnization targets for Japan. 67 00:03:48,080 --> 00:03:50,320 Speaker 1: And we're going to talk a bit about history in 68 00:03:50,440 --> 00:03:53,840 Speaker 1: terms of Japan's energy system and then also some of 69 00:03:53,840 --> 00:03:55,960 Speaker 1: the changes we see in the future. But before we 70 00:03:56,040 --> 00:03:57,600 Speaker 1: get into that, I want to know if you think 71 00:03:57,640 --> 00:03:59,720 Speaker 1: that these emissions targets are ambitious. 72 00:04:00,120 --> 00:04:04,080 Speaker 2: Yes, I believe so. So forty six percent emission reduction 73 00:04:04,160 --> 00:04:06,520 Speaker 2: and also basically netro in two there and fifty these 74 00:04:06,560 --> 00:04:10,840 Speaker 2: are very ambitious given what japan energy mix is currently 75 00:04:11,360 --> 00:04:13,960 Speaker 2: looking like. So as I mentioned, japan energy mix is 76 00:04:14,040 --> 00:04:17,120 Speaker 2: very I mentioned intensive, so Japan definitely needs to do 77 00:04:17,279 --> 00:04:21,200 Speaker 2: more to achieve a netro or deploy more renewable or 78 00:04:21,200 --> 00:04:24,159 Speaker 2: more decarbonization solutions in access rated manner. 79 00:04:24,440 --> 00:04:26,000 Speaker 1: So it's going to take some work to get there, 80 00:04:26,160 --> 00:04:28,479 Speaker 1: and before we think about the future, let's go to 81 00:04:28,520 --> 00:04:31,239 Speaker 1: the past. So in twenty eleven, there is this event, 82 00:04:31,680 --> 00:04:35,320 Speaker 1: the earthquake that then is now also synonymous with Fukushima, 83 00:04:35,360 --> 00:04:38,080 Speaker 1: and what happened with that nuclear reactor where you had 84 00:04:38,160 --> 00:04:40,599 Speaker 1: nuclear waste make its way all the way across the 85 00:04:40,600 --> 00:04:43,719 Speaker 1: Pacific at one point and found in California. Can you 86 00:04:43,760 --> 00:04:47,799 Speaker 1: explain how important nuclear used to be to the overall 87 00:04:47,920 --> 00:04:50,479 Speaker 1: energy mix in Japan and where it sits right now? 88 00:04:50,640 --> 00:04:53,040 Speaker 2: A nuclear pop plant used to account for one third 89 00:04:53,040 --> 00:04:56,920 Speaker 2: of total electricity grmination. But the fucustion accident was definitely 90 00:04:56,960 --> 00:05:00,800 Speaker 2: a huge turning point for japan electricity market cause after 91 00:05:00,839 --> 00:05:03,960 Speaker 2: the accident, or nuclear reactors had to shut down, and 92 00:05:04,120 --> 00:05:07,120 Speaker 2: since nuclear had to drop out from the power market 93 00:05:07,160 --> 00:05:09,600 Speaker 2: in Japan, forth of your poplant needed to step in 94 00:05:09,680 --> 00:05:12,599 Speaker 2: to fill in the gap, which increased the emissions in Japan. 95 00:05:12,800 --> 00:05:16,800 Speaker 2: It's been over ten years since the focusing accident. Back 96 00:05:16,800 --> 00:05:19,279 Speaker 2: in Japan, nuclear restart has been that is slow still, 97 00:05:19,400 --> 00:05:22,200 Speaker 2: so by the end of twenty twenty two, only nine 98 00:05:22,240 --> 00:05:25,640 Speaker 2: new Graatee reactors restarted, and this is quite small compared 99 00:05:25,680 --> 00:05:28,600 Speaker 2: to before the accident because we used to or the 100 00:05:28,680 --> 00:05:32,600 Speaker 2: Japan used to have around thirty nuclear reactors and last year, 101 00:05:32,640 --> 00:05:35,040 Speaker 2: if you look at the contribution of nuclear pop plants 102 00:05:35,160 --> 00:05:38,120 Speaker 2: or the nuclear power in japan electricity invention, it was 103 00:05:38,200 --> 00:05:40,640 Speaker 2: less than ten percent when it comes to the annual generation. 104 00:05:40,920 --> 00:05:43,760 Speaker 2: So compared to the one side of the electricity met 105 00:05:43,800 --> 00:05:47,640 Speaker 2: by nuclea before the accident, the current electricity generation by 106 00:05:47,760 --> 00:05:48,880 Speaker 2: nucleate really small. 107 00:05:49,120 --> 00:05:52,480 Speaker 1: But you note that nine reactors have been restarted, and 108 00:05:52,720 --> 00:05:55,560 Speaker 1: this is not a small undertaking to restart a nuclear reactor. 109 00:05:55,640 --> 00:05:58,599 Speaker 1: But going forward are their plans to open more and 110 00:05:58,720 --> 00:06:01,080 Speaker 1: what part of the energy mix would that actually comprise 111 00:06:01,120 --> 00:06:01,679 Speaker 1: in the future. 112 00:06:01,920 --> 00:06:05,039 Speaker 2: Yes, that's a great question. So the Japanese government actually 113 00:06:05,040 --> 00:06:09,000 Speaker 2: has some new clear target and alexis regeneration and according 114 00:06:09,040 --> 00:06:12,440 Speaker 2: to the current electricity mixed target, the government is aiming 115 00:06:12,480 --> 00:06:15,520 Speaker 2: to increase the share of nuclear generation to twenty to 116 00:06:15,520 --> 00:06:18,320 Speaker 2: twenty two percent of the total electricity generation in twenty 117 00:06:18,440 --> 00:06:20,680 Speaker 2: and thirty. So this is basically one fifth of the 118 00:06:20,720 --> 00:06:23,640 Speaker 2: total electricity generation and this is a quite big jump 119 00:06:23,720 --> 00:06:26,360 Speaker 2: from what we're seeing the market. But BENF we don't 120 00:06:26,400 --> 00:06:29,360 Speaker 2: expect the Japanese governments to meet this target because of 121 00:06:29,400 --> 00:06:32,599 Speaker 2: the sole nuclear restart we have seen software and also 122 00:06:32,640 --> 00:06:35,680 Speaker 2: the limited timeline until to the donally to continue the 123 00:06:35,839 --> 00:06:36,840 Speaker 2: restart process. 124 00:06:36,960 --> 00:06:39,200 Speaker 1: I don't know if that was the funniest statement you've made, 125 00:06:39,200 --> 00:06:41,159 Speaker 1: but you can tell for those who are listening the 126 00:06:41,560 --> 00:06:44,600 Speaker 1: issues actually recording from our office in Tokyo, and it's 127 00:06:44,640 --> 00:06:48,679 Speaker 1: an open floor plan, so apologies for any background noise, 128 00:06:48,760 --> 00:06:51,960 Speaker 1: but hopefully people in your office are learning a bit 129 00:06:51,960 --> 00:06:55,279 Speaker 1: more about the power system in Japan today. So there 130 00:06:55,320 --> 00:06:57,880 Speaker 1: we go. Everyone's listening to the recording, they're getting a 131 00:06:57,880 --> 00:07:01,320 Speaker 1: sneak peak. So my next question really has to do 132 00:07:01,400 --> 00:07:04,680 Speaker 1: with how people in Japan are reacting to this. 133 00:07:05,320 --> 00:07:08,240 Speaker 2: Yeah, in the public, there're the mixed feeling. So obviously 134 00:07:08,279 --> 00:07:11,200 Speaker 2: some people still worry about the safety of the nuclear power, 135 00:07:11,480 --> 00:07:14,280 Speaker 2: and this is mainly because what they have seen in 136 00:07:14,320 --> 00:07:18,280 Speaker 2: the past. But this is slightly changing these dates, so 137 00:07:18,360 --> 00:07:21,720 Speaker 2: some people actually see the benefit of having nuclear power 138 00:07:21,800 --> 00:07:26,880 Speaker 2: in Japan. Electricity mix because of increasing electricity retail prices 139 00:07:26,920 --> 00:07:28,840 Speaker 2: that we are seeing in the market right now, because 140 00:07:28,880 --> 00:07:30,560 Speaker 2: of the increase in the commodity prices. 141 00:07:30,920 --> 00:07:33,200 Speaker 1: So let's talk about what the alternatives are if we 142 00:07:33,240 --> 00:07:35,760 Speaker 1: don't bring a lot of nuclear power back online in 143 00:07:35,880 --> 00:07:38,400 Speaker 1: order to reach these emissions targets that you've outlined, and 144 00:07:38,440 --> 00:07:40,200 Speaker 1: I'm going to start with a really simple one. You know, 145 00:07:40,280 --> 00:07:43,840 Speaker 1: it's an island nation. What is the potential for interconnectors 146 00:07:43,880 --> 00:07:47,400 Speaker 1: with other nearby countries and for them to buy clean 147 00:07:47,520 --> 00:07:50,320 Speaker 1: energy from surrounding states or is this something that they're 148 00:07:50,320 --> 00:07:51,840 Speaker 1: going to have to build domestically. 149 00:07:52,680 --> 00:07:57,200 Speaker 2: I think it's quite ambitious because obviously it's not like 150 00:07:57,360 --> 00:08:00,480 Speaker 2: closest states island nations, So if you're trying to build 151 00:08:00,480 --> 00:08:02,880 Speaker 2: an interconnection or like a power line or anything, it 152 00:08:02,920 --> 00:08:05,520 Speaker 2: will require a huge investment, and on top of that, 153 00:08:05,800 --> 00:08:07,400 Speaker 2: you have to kind of take an account for that 154 00:08:07,440 --> 00:08:11,200 Speaker 2: your politics, let's say between Japan and Korea, or between 155 00:08:11,280 --> 00:08:13,960 Speaker 2: Japan and China. So I think this could be a 156 00:08:14,160 --> 00:08:15,040 Speaker 2: challenging topic. 157 00:08:15,480 --> 00:08:18,200 Speaker 1: So now that we've established that Japan's really going need 158 00:08:18,240 --> 00:08:21,520 Speaker 1: to be developing a lot of their power generation domestically, 159 00:08:21,960 --> 00:08:24,640 Speaker 1: what let's talk about some of the options that actually exist. 160 00:08:24,680 --> 00:08:27,119 Speaker 1: And I think it's maybe the best place to start 161 00:08:27,160 --> 00:08:30,920 Speaker 1: is diving into the traditional renewable energy sources that we 162 00:08:31,000 --> 00:08:33,280 Speaker 1: think of, which are wind and solar. So what are 163 00:08:33,280 --> 00:08:35,199 Speaker 1: the options and kind of what's the outlook for wind 164 00:08:35,240 --> 00:08:36,480 Speaker 1: and solar in Japan. 165 00:08:36,520 --> 00:08:39,360 Speaker 2: Before talking about wind and solar specifically, I just wanted 166 00:08:39,360 --> 00:08:43,040 Speaker 2: to highlight the organization of the power sector should be prioritized, 167 00:08:43,160 --> 00:08:46,160 Speaker 2: especially in your term, I think in Japan, but also globally. 168 00:08:46,360 --> 00:08:50,160 Speaker 2: And this is because renewablets are already matured and those 169 00:08:50,520 --> 00:08:54,480 Speaker 2: renewable technology is already becoming cost competitive, and we know 170 00:08:54,600 --> 00:08:57,040 Speaker 2: what need to do to clean out the power sector, 171 00:08:57,120 --> 00:09:01,080 Speaker 2: which is basically deploying more common free power our pop 172 00:09:01,120 --> 00:09:05,040 Speaker 2: plants and also fade out the emission intensive technologies. And 173 00:09:05,080 --> 00:09:07,680 Speaker 2: when it comes to like the role of solent when 174 00:09:08,240 --> 00:09:11,440 Speaker 2: Japan or these technology have the huge potential in Japan. 175 00:09:11,679 --> 00:09:14,719 Speaker 2: For example, in one of the benf Fragship research in 176 00:09:14,760 --> 00:09:18,520 Speaker 2: New Energy Outlook, which basically long term scenario exercise for 177 00:09:18,720 --> 00:09:21,800 Speaker 2: Japan and also the global energy mix with it, the 178 00:09:21,840 --> 00:09:25,440 Speaker 2: scenario exercise and modeled how the future energy mix needs 179 00:09:25,480 --> 00:09:28,720 Speaker 2: to look like to meet the parents aligned net or target, 180 00:09:28,960 --> 00:09:32,880 Speaker 2: and this scenario exercise basically confirmed that solar and when 181 00:09:32,920 --> 00:09:36,240 Speaker 2: there desically the key for Japan's netual target. So according 182 00:09:36,280 --> 00:09:39,800 Speaker 2: to our research, solar and win account for about eighty 183 00:09:39,840 --> 00:09:44,040 Speaker 2: percent of total electricity into the fifty in our net scenario. 184 00:09:44,320 --> 00:09:46,360 Speaker 2: And if we look at the wind. Actually the share 185 00:09:46,440 --> 00:09:49,320 Speaker 2: is quite big. So the share of wind is over 186 00:09:49,440 --> 00:09:52,720 Speaker 2: fifty percent of the total elexicity generation into the fifty, 187 00:09:52,960 --> 00:09:55,240 Speaker 2: so this is quite big and because of that, I 188 00:09:55,280 --> 00:09:58,559 Speaker 2: think Japan definitely needs to scale the renewables deployment in 189 00:09:58,600 --> 00:10:03,240 Speaker 2: an accescerated manner. So in our network scenario that install 190 00:10:03,280 --> 00:10:07,160 Speaker 2: the capacity of solar needs to be over four hundred gigabat. 191 00:10:07,200 --> 00:10:10,040 Speaker 2: This is five times larger than what we are seeing 192 00:10:10,040 --> 00:10:12,560 Speaker 2: the market today in a full wind, So the wind 193 00:10:12,640 --> 00:10:15,960 Speaker 2: market in Japan is quite tiny. For right now, japanly 194 00:10:16,040 --> 00:10:19,800 Speaker 2: has less than five gigot of wind projects installed, including 195 00:10:19,880 --> 00:10:22,680 Speaker 2: both on show Win off Show Win. However, our net 196 00:10:22,840 --> 00:10:25,560 Speaker 2: scenario shows that on shore wind instration needs to be 197 00:10:25,760 --> 00:10:28,320 Speaker 2: over one hundred and ten gigabat and off show wind 198 00:10:28,400 --> 00:10:31,000 Speaker 2: instration needs to be over one hundred and forty gigat 199 00:10:31,000 --> 00:10:33,400 Speaker 2: in two theou and fifty, so you can see how 200 00:10:33,480 --> 00:10:35,560 Speaker 2: big the jump needs to be for that win and 201 00:10:35,640 --> 00:10:36,320 Speaker 2: also solar. 202 00:10:36,840 --> 00:10:38,560 Speaker 1: So there have been a lot of changes to the 203 00:10:38,679 --> 00:10:41,360 Speaker 1: energy mechs in Japan, and you noted that there was 204 00:10:41,440 --> 00:10:44,680 Speaker 1: quite a bit of nuclear power, which is traditionally considered 205 00:10:44,760 --> 00:10:48,760 Speaker 1: consistent based load power, which came offline, then replaced by 206 00:10:49,120 --> 00:10:52,360 Speaker 1: heavy carbon emitting energy sources, and now looking into the future, 207 00:10:52,440 --> 00:10:55,080 Speaker 1: perhaps a bit more nuclear certainly looks like quite a 208 00:10:55,080 --> 00:10:58,200 Speaker 1: bit more wind. But then there is the fact that 209 00:10:58,240 --> 00:11:00,600 Speaker 1: the wind doesn't always blow and the sun doesn't shine. 210 00:11:00,800 --> 00:11:03,520 Speaker 1: Anybody listening to this podcast is very familiar with that. 211 00:11:03,720 --> 00:11:06,640 Speaker 1: From a security a supply standpoint, what has been happening 212 00:11:06,679 --> 00:11:10,040 Speaker 1: with the grid and has there essentially with the changes 213 00:11:10,080 --> 00:11:12,880 Speaker 1: that have been taking place, have there been any issues 214 00:11:13,080 --> 00:11:15,080 Speaker 1: around reaching peak demand? 215 00:11:15,640 --> 00:11:17,600 Speaker 2: That's a great point. So I think in terms of 216 00:11:17,800 --> 00:11:21,560 Speaker 2: energy security, Japan energy security is at risk, and this 217 00:11:21,720 --> 00:11:24,679 Speaker 2: is because, as you mentioned, nuclear used to provide a 218 00:11:24,760 --> 00:11:27,920 Speaker 2: quite huge channel of electricity in Japan. But after the 219 00:11:28,160 --> 00:11:31,560 Speaker 2: focuss marks then Japan actually needed to increase the rely 220 00:11:31,640 --> 00:11:34,640 Speaker 2: on on foth of field, which means Japan increase the 221 00:11:34,720 --> 00:11:37,120 Speaker 2: rely on on the force of your imports. So when 222 00:11:37,200 --> 00:11:40,199 Speaker 2: it comes to energy security, I think deploy more renewablets 223 00:11:40,200 --> 00:11:45,000 Speaker 2: actually improved japan energy security. One huge benefit of installing 224 00:11:45,040 --> 00:11:47,319 Speaker 2: more renewables in Japan. The other thing I'd like to 225 00:11:47,400 --> 00:11:50,400 Speaker 2: highlight is over the last few years, especially between the 226 00:11:50,640 --> 00:11:53,640 Speaker 2: twenty and to the twenty two, actually Japan has seen 227 00:11:53,679 --> 00:11:57,559 Speaker 2: a tight power supply demand balance, and this is because 228 00:11:57,720 --> 00:12:00,839 Speaker 2: Japan retired many fourths of your pop plants, not for 229 00:12:00,880 --> 00:12:03,880 Speaker 2: the cogonization effort, but it was because many of the 230 00:12:04,080 --> 00:12:06,559 Speaker 2: fourths of your pub plants the end of the lifetime. 231 00:12:06,800 --> 00:12:10,120 Speaker 2: And because of that, in winter last winter, last summer, 232 00:12:10,200 --> 00:12:14,320 Speaker 2: the Japanese government had to ask household and also businesses 233 00:12:14,400 --> 00:12:18,480 Speaker 2: to conserve electricity during the peak hours in peak season. 234 00:12:18,880 --> 00:12:21,920 Speaker 1: How did they go about asking people to conserve energy. 235 00:12:22,000 --> 00:12:24,320 Speaker 1: Was it a blanket statement that you need to conserve 236 00:12:24,440 --> 00:12:26,720 Speaker 1: or was it something like I know have happened in 237 00:12:26,720 --> 00:12:29,080 Speaker 1: the state of California where they're getting next to peak 238 00:12:29,120 --> 00:12:31,960 Speaker 1: demand and they've had to take certain amounts of electricity 239 00:12:32,000 --> 00:12:34,360 Speaker 1: off the grid, and they essentially sent out a text 240 00:12:34,360 --> 00:12:37,000 Speaker 1: message to everybody telling them for the next couple of hours, 241 00:12:37,360 --> 00:12:39,520 Speaker 1: you need to reduce your consumption. Is it over a 242 00:12:39,559 --> 00:12:41,680 Speaker 1: short period of time or a long period of time? 243 00:12:41,800 --> 00:12:44,600 Speaker 1: And how is the Japanese government communicating with people? 244 00:12:44,920 --> 00:12:47,480 Speaker 2: So I think it was like over day typically, so 245 00:12:48,120 --> 00:12:51,120 Speaker 2: when the incident was said to happen, based on some 246 00:12:51,200 --> 00:12:54,079 Speaker 2: of the electricity demand podcast and also the weather condition, 247 00:12:54,280 --> 00:12:58,760 Speaker 2: typically the government asked a household and businesses to reduce 248 00:12:58,800 --> 00:13:03,200 Speaker 2: electricity consumption or perhaps considered using the electricity during the 249 00:13:03,240 --> 00:13:06,440 Speaker 2: non peak hours through websites and also some of the 250 00:13:06,480 --> 00:13:10,000 Speaker 2: TV programs, and I think when the Japanese government requests 251 00:13:10,000 --> 00:13:12,960 Speaker 2: to ask something to the businesses, typically this is like 252 00:13:13,120 --> 00:13:16,880 Speaker 2: the message that the business must follow, and also into 253 00:13:16,920 --> 00:13:19,719 Speaker 2: household I don't think we got the text messages, but 254 00:13:19,840 --> 00:13:23,120 Speaker 2: still all the TV program was like showing the real 255 00:13:23,240 --> 00:13:25,000 Speaker 2: time power supply demand balance. 256 00:13:25,400 --> 00:13:28,200 Speaker 1: So it was a really effective demand side way of 257 00:13:28,240 --> 00:13:31,960 Speaker 1: dealing with an upcoming peak energy demand issue. 258 00:13:32,080 --> 00:13:34,640 Speaker 2: Yes, but also a supply side made a lot of 259 00:13:34,679 --> 00:13:37,200 Speaker 2: efforts as well. For example, I think a lot of 260 00:13:37,240 --> 00:13:39,560 Speaker 2: fourth of your pup plants ramp up quite a lot. 261 00:13:39,600 --> 00:13:42,240 Speaker 2: And on top of that, Japan has quite a huge 262 00:13:42,360 --> 00:13:45,719 Speaker 2: capacity of pumped hydro and pampto hydro actually saved the 263 00:13:45,840 --> 00:13:48,840 Speaker 2: day because they have that quite long duration of the 264 00:13:48,960 --> 00:13:50,920 Speaker 2: storage capacity that can be used. 265 00:13:51,160 --> 00:13:53,400 Speaker 1: It sounds like a very dynamic system that's able to 266 00:13:53,400 --> 00:13:56,520 Speaker 1: dial up and dial down various things which may be 267 00:13:56,679 --> 00:13:59,840 Speaker 1: needed if you end up adding more renewable energy sources 268 00:13:59,880 --> 00:14:02,640 Speaker 1: like wind, which do have intermittency. Let's talk about wind 269 00:14:02,720 --> 00:14:05,720 Speaker 1: specifically though, because you point out that wind is likely 270 00:14:05,760 --> 00:14:08,000 Speaker 1: to make up a good percentage of the supply in 271 00:14:08,040 --> 00:14:10,680 Speaker 1: the future, and more than likely this is going to 272 00:14:10,720 --> 00:14:14,720 Speaker 1: be dominated by offshore wind. What is the sea bed 273 00:14:14,880 --> 00:14:20,040 Speaker 1: like directly surrounding Japan? And the question I'm really trying 274 00:14:20,040 --> 00:14:23,080 Speaker 1: to get at here is are these very challenging projects 275 00:14:23,200 --> 00:14:26,240 Speaker 1: or are these going to be the ideal circumstances for 276 00:14:26,320 --> 00:14:29,480 Speaker 1: an offshore wind project, because certainly the depth of the 277 00:14:29,520 --> 00:14:33,000 Speaker 1: ocean nearby can dramatically impact the overall costs. 278 00:14:33,080 --> 00:14:35,840 Speaker 2: Well, I think of when there's a huge potential in Japan, 279 00:14:36,000 --> 00:14:38,200 Speaker 2: and I think that's one of the key technologies that 280 00:14:38,320 --> 00:14:41,640 Speaker 2: Japanese Garden are trying to push for the cognization. One 281 00:14:41,720 --> 00:14:44,320 Speaker 2: challenge for the offshoal win in Japan is that typically 282 00:14:44,560 --> 00:14:48,440 Speaker 2: sea bed or the ocean gets deeper right off the 283 00:14:48,640 --> 00:14:52,000 Speaker 2: cost So in the sense the potential for the bottom 284 00:14:52,120 --> 00:14:54,920 Speaker 2: fixth off your wind project may be limited compared to 285 00:14:55,040 --> 00:14:57,680 Speaker 2: other countries. But at the same time, it also showcased 286 00:14:57,760 --> 00:15:00,560 Speaker 2: the huge potential the bass potential of the full tea 287 00:15:00,560 --> 00:15:02,800 Speaker 2: in off Showan, and that's one of the key areas 288 00:15:02,920 --> 00:15:05,760 Speaker 2: where the Japanese company is actually trying to expand. 289 00:15:06,240 --> 00:15:09,160 Speaker 1: Now are a lot of the investment opportunities into these 290 00:15:09,200 --> 00:15:13,200 Speaker 1: projects being done by domestic Japanese companies or is there 291 00:15:13,200 --> 00:15:14,800 Speaker 1: a lot of foreign investment. 292 00:15:14,640 --> 00:15:18,520 Speaker 2: That makes up both domestic and overseas players. Obviously the 293 00:15:18,600 --> 00:15:21,359 Speaker 2: Japanese players that are trying to tap into the potentials, 294 00:15:21,400 --> 00:15:24,720 Speaker 2: but also from overseas developer perspective, they have a lot 295 00:15:24,720 --> 00:15:27,600 Speaker 2: of experienses from overseas market, but at the same time 296 00:15:27,680 --> 00:15:31,320 Speaker 2: they need some local players because Japan's tender process has 297 00:15:31,360 --> 00:15:33,920 Speaker 2: a lot of implication, and also they need some support 298 00:15:34,000 --> 00:15:37,360 Speaker 2: from domestic player for the outreach with a local player 299 00:15:37,560 --> 00:15:38,640 Speaker 2: or the stakeholders. 300 00:15:39,160 --> 00:15:42,040 Speaker 1: Are there any other challenges that are worth noting to 301 00:15:42,280 --> 00:15:45,080 Speaker 1: this rollout and I'm thinking of one specifically because we 302 00:15:45,120 --> 00:15:47,760 Speaker 1: did a show a few shows back so fairly recently 303 00:15:47,880 --> 00:15:51,720 Speaker 1: about grids generally and grid connections. What is the state 304 00:15:51,720 --> 00:15:54,800 Speaker 1: of the Japanese grid and essentially is grid connection and 305 00:15:54,840 --> 00:15:59,000 Speaker 1: the associated cost of potentially expanding the connection to accommodate 306 00:15:59,080 --> 00:16:02,000 Speaker 1: new renewable sources. Is that a big part or a 307 00:16:02,080 --> 00:16:04,120 Speaker 1: big issue that might be standing in the way of 308 00:16:04,200 --> 00:16:05,360 Speaker 1: more deployment in the future. 309 00:16:05,800 --> 00:16:08,880 Speaker 2: Great connection is definitely one of the challenges that renewablet 310 00:16:08,920 --> 00:16:12,640 Speaker 2: in Japan facing, Similar to the global trends, Many renewboat 311 00:16:12,680 --> 00:16:15,400 Speaker 2: projects are waiting for the Great connections, and this is 312 00:16:15,440 --> 00:16:18,880 Speaker 2: also similar to the global markets. But the low transparency 313 00:16:18,920 --> 00:16:21,520 Speaker 2: around the Greek Connection costs and also the Great Connection 314 00:16:21,600 --> 00:16:24,440 Speaker 2: timeline can be a huge development risk for the renewable 315 00:16:24,560 --> 00:16:25,960 Speaker 2: energy projects in Japan. 316 00:16:26,200 --> 00:16:28,880 Speaker 1: And of course timelines then impact whether or not a 317 00:16:28,960 --> 00:16:31,680 Speaker 1: country is able to actually reach the targets that they've 318 00:16:31,680 --> 00:16:35,400 Speaker 1: set because it's not just an overall carbon abatement target, 319 00:16:35,640 --> 00:16:37,960 Speaker 1: it's by a certain year. And do you think that 320 00:16:38,000 --> 00:16:40,200 Speaker 1: some of the process I guess involved with getting these 321 00:16:40,240 --> 00:16:44,400 Speaker 1: projects online will be really dramatically impacting whether or not 322 00:16:44,440 --> 00:16:45,440 Speaker 1: those targets are met. 323 00:16:45,520 --> 00:16:48,360 Speaker 2: I think so. Some of the projects, especially the large 324 00:16:48,400 --> 00:16:51,520 Speaker 2: scale are renewable energy project connecting those projects to the 325 00:16:51,560 --> 00:16:55,400 Speaker 2: GRIT could take over three years, so if more projects 326 00:16:55,440 --> 00:16:59,040 Speaker 2: are requesting for the Great Connection, this timeline could get delayed. 327 00:16:59,160 --> 00:17:01,840 Speaker 2: So this GRET connection can be definitely a one challenge 328 00:17:01,920 --> 00:17:05,520 Speaker 2: or could pose a huge challenge for the japantic carbonization targets. 329 00:17:05,920 --> 00:17:08,639 Speaker 1: Are there other issues do you think would be worth 330 00:17:08,840 --> 00:17:10,680 Speaker 1: bringing up that maybe I'm missing. 331 00:17:10,720 --> 00:17:13,840 Speaker 2: One of the key challenges which is probably unique compared 332 00:17:13,840 --> 00:17:17,959 Speaker 2: to other markets. The land constraints in Japan. So in Japan, 333 00:17:18,040 --> 00:17:20,760 Speaker 2: I think related to the lands constraint, high cost of 334 00:17:20,760 --> 00:17:24,040 Speaker 2: renewables are also like a big challenge for renewables, and 335 00:17:24,080 --> 00:17:27,240 Speaker 2: this is because it's hard to reach the economies of 336 00:17:27,320 --> 00:17:30,240 Speaker 2: scale in Japan due to the land constraint. And if 337 00:17:30,280 --> 00:17:34,159 Speaker 2: I may another challenges related to a renewable diploment, it's 338 00:17:34,240 --> 00:17:39,359 Speaker 2: probably the carbon pricing. So technically Japan has nationwide carbon 339 00:17:39,440 --> 00:17:43,679 Speaker 2: pricing mechanism or more specifically nationwide carbon tax, but the 340 00:17:43,680 --> 00:17:47,040 Speaker 2: current carbon tax is very low, so it is two 341 00:17:47,080 --> 00:17:49,400 Speaker 2: hundred and eighty nine ym part ton of CO two, 342 00:17:49,480 --> 00:17:52,480 Speaker 2: which is probably less than two dollars part on of 343 00:17:52,560 --> 00:17:54,440 Speaker 2: COO two with the current exchange rate. 344 00:17:56,040 --> 00:17:58,840 Speaker 1: Before we pivot to some other technologies, I actually want 345 00:17:58,880 --> 00:18:01,080 Speaker 1: to know about the role of the Japanese government in this, 346 00:18:01,320 --> 00:18:04,480 Speaker 1: because we have gotten to a place with the deployment 347 00:18:04,600 --> 00:18:07,200 Speaker 1: of a lot of different energy sources at scale is 348 00:18:07,240 --> 00:18:10,120 Speaker 1: going to require certain amount of support from government. It's 349 00:18:10,240 --> 00:18:12,320 Speaker 1: just a statement of fact, and I want to know 350 00:18:12,480 --> 00:18:15,200 Speaker 1: if the Japanese government, first of all, how it's organized, 351 00:18:15,240 --> 00:18:18,760 Speaker 1: and whether or not there has a strong amount of 352 00:18:18,800 --> 00:18:22,160 Speaker 1: support in terms of how the programs are actually laid 353 00:18:22,160 --> 00:18:25,359 Speaker 1: out to actually then meet these net zero targets, because 354 00:18:25,359 --> 00:18:27,159 Speaker 1: it's one thing to have a target, but it's another 355 00:18:27,200 --> 00:18:30,840 Speaker 1: thing entirely for the government to have organized around actually 356 00:18:30,880 --> 00:18:32,840 Speaker 1: obtaining it in practice. 357 00:18:33,119 --> 00:18:36,159 Speaker 2: When it comes to the government structure in Japan, especially 358 00:18:36,200 --> 00:18:39,840 Speaker 2: around the energy issues, the key ministry is the Ministry 359 00:18:39,880 --> 00:18:43,199 Speaker 2: of Economy, Trade and Industry or METI. So when it 360 00:18:43,200 --> 00:18:46,520 Speaker 2: comes to energy matters or energy policy, METI is the 361 00:18:46,560 --> 00:18:51,040 Speaker 2: one who's discussing a lot of policy or incentive or 362 00:18:51,119 --> 00:18:54,639 Speaker 2: perhaps I guess the penalty, the requirement for of energy 363 00:18:54,680 --> 00:18:57,760 Speaker 2: projects and such. At the same time, when it comes 364 00:18:57,760 --> 00:19:01,720 Speaker 2: to the cognization target, Minister of the Environment it's the 365 00:19:01,800 --> 00:19:04,320 Speaker 2: one who's kind of setting up those targets. And I 366 00:19:04,320 --> 00:19:06,960 Speaker 2: think they're the one also dealing with a lot of 367 00:19:07,000 --> 00:19:10,199 Speaker 2: permitting and environmental impact assessment in Japan. 368 00:19:10,440 --> 00:19:13,280 Speaker 1: And would you say that things are running reasonably smoothly. 369 00:19:13,560 --> 00:19:17,280 Speaker 2: I mean METI is not the only one bafically famalizing everything. 370 00:19:17,480 --> 00:19:19,960 Speaker 2: For example, for off show win, it involves a lot 371 00:19:20,000 --> 00:19:23,160 Speaker 2: of ministry efforts and METI is not the only one 372 00:19:23,200 --> 00:19:27,040 Speaker 2: who's like talking about these issues. METI collaborate with other ministries, 373 00:19:27,080 --> 00:19:31,080 Speaker 2: including Minister of Environment and also other ministries in charge 374 00:19:31,119 --> 00:19:33,560 Speaker 2: of ports because of show Win involves a lot of 375 00:19:33,600 --> 00:19:38,000 Speaker 2: relationship with port owners and also the port infrastructure development. 376 00:19:38,119 --> 00:19:41,040 Speaker 2: So I think collaboration is typically done really well. 377 00:19:41,280 --> 00:19:43,640 Speaker 1: Now let's pivot to a technology that I think many 378 00:19:43,720 --> 00:19:45,840 Speaker 1: of us actually think about when we think of Japan, 379 00:19:45,880 --> 00:19:48,640 Speaker 1: but maybe not in such a literal sense, geothermal. When 380 00:19:48,640 --> 00:19:51,800 Speaker 1: I think of geothermal in Japan, I actually think of 381 00:19:51,920 --> 00:19:56,000 Speaker 1: these kind of almost idealic views of a bathhouse and 382 00:19:56,080 --> 00:19:59,800 Speaker 1: the use of geothermal hot springs by several parts of 383 00:19:59,800 --> 00:20:05,119 Speaker 1: the population. Geothermal energy is that something that is really 384 00:20:05,520 --> 00:20:09,200 Speaker 1: quite ideally located for Japan and does it have a 385 00:20:09,280 --> 00:20:10,119 Speaker 1: tangible future. 386 00:20:10,280 --> 00:20:13,800 Speaker 2: That's a great point. So as many listeners are probably aware, 387 00:20:13,960 --> 00:20:16,840 Speaker 2: Japan is well known for the hot spring industry or 388 00:20:16,920 --> 00:20:20,760 Speaker 2: onsend industry. And the good thing is Japanese government is 389 00:20:20,800 --> 00:20:24,399 Speaker 2: offering subsidy to geo thermal projects through feeling type scheme. 390 00:20:24,720 --> 00:20:27,560 Speaker 2: But that challenge is, like we are seeing the quite 391 00:20:27,600 --> 00:20:30,920 Speaker 2: limited deployment software and that's because of like high work 392 00:20:31,080 --> 00:20:34,160 Speaker 2: and risks around the drilling, and also some challenges are 393 00:20:34,200 --> 00:20:38,440 Speaker 2: on stakeholder engagement between developers and also the powerful hot 394 00:20:38,440 --> 00:20:42,400 Speaker 2: spring industry who occasionally have misconception around the technologies. 395 00:20:42,800 --> 00:20:45,360 Speaker 1: So let's start with the risks around the drilling. Can 396 00:20:45,400 --> 00:20:47,760 Speaker 1: you just explain what some of those risks are and 397 00:20:47,840 --> 00:20:50,040 Speaker 1: kind of what the worst case scenario could be. 398 00:20:50,440 --> 00:20:53,120 Speaker 2: The first risk that I can come up is basically 399 00:20:53,160 --> 00:20:56,679 Speaker 2: hard to estimate where the actual resource it is and 400 00:20:56,720 --> 00:20:59,320 Speaker 2: also how big the resource is. And this is obviously 401 00:20:59,440 --> 00:21:02,520 Speaker 2: like something the technology can help, but still it's not 402 00:21:02,600 --> 00:21:05,800 Speaker 2: like you get one hundred percent correct to estimate or 403 00:21:05,880 --> 00:21:10,320 Speaker 2: identify the resources of the geosalmal power or geosarmal resources. 404 00:21:10,480 --> 00:21:13,520 Speaker 2: I think another challenge of land the drilling is this 405 00:21:13,640 --> 00:21:16,159 Speaker 2: is also kind of related to the land constraint, but 406 00:21:16,320 --> 00:21:19,719 Speaker 2: it's really difficult to bring some of the drilling equipment 407 00:21:19,920 --> 00:21:23,560 Speaker 2: to some of the location with the high potential for giosarmal. 408 00:21:23,840 --> 00:21:26,520 Speaker 2: So some of the equipment needs to be smaller than 409 00:21:26,760 --> 00:21:30,639 Speaker 2: perhaps equipment in other countries, or some developers needs to 410 00:21:30,720 --> 00:21:34,520 Speaker 2: bring those big equipment in a narrow road. So those 411 00:21:34,520 --> 00:21:37,680 Speaker 2: are the big challenges for the drilling technologies. 412 00:21:38,000 --> 00:21:39,760 Speaker 1: So it's hard to get the equipment in place, and 413 00:21:39,800 --> 00:21:42,240 Speaker 1: then when you get there. You mentioned there is opposition. 414 00:21:42,359 --> 00:21:44,919 Speaker 1: Talk to me a little bit about who is opposing this. 415 00:21:45,440 --> 00:21:50,439 Speaker 2: Typically obviously that people who own the hot springs and 416 00:21:50,480 --> 00:21:54,600 Speaker 2: also perhaps like running the tourism industry. The other one 417 00:21:54,680 --> 00:21:58,120 Speaker 2: who could oppose to the idea of having geosarmal projects 418 00:21:58,119 --> 00:22:01,919 Speaker 2: nearby because they think the geo thermal resources that the 419 00:22:01,960 --> 00:22:04,840 Speaker 2: local industry is using for the host spring could be 420 00:22:05,040 --> 00:22:08,200 Speaker 2: depleted because of having a geosomal project nearby. 421 00:22:08,720 --> 00:22:11,640 Speaker 1: How are they going about opposing it? Is it protesting 422 00:22:11,880 --> 00:22:14,240 Speaker 1: or is it putting pressure on the government. 423 00:22:14,560 --> 00:22:18,240 Speaker 2: When developers come to the area, obviously they need to 424 00:22:18,359 --> 00:22:21,000 Speaker 2: kind of explain what kind of the project they're planning 425 00:22:21,040 --> 00:22:23,879 Speaker 2: to do in the area, and that include explaining the 426 00:22:23,920 --> 00:22:28,359 Speaker 2: projects to the local industry. That's when the discussion gets 427 00:22:28,359 --> 00:22:31,920 Speaker 2: a bit tricky because if the local players are opposed 428 00:22:31,960 --> 00:22:35,639 Speaker 2: to the project, the project, if we cannot get approval 429 00:22:35,880 --> 00:22:41,639 Speaker 2: from the municipalities, which will basically lead to the project cancelations, possibly. 430 00:22:41,680 --> 00:22:44,280 Speaker 1: So very much at the local government level and getting 431 00:22:44,280 --> 00:22:47,440 Speaker 1: them necessary permitting to get these projects even off the ground. 432 00:22:48,119 --> 00:22:51,199 Speaker 1: So pivoting a little bit to another technology that is 433 00:22:51,520 --> 00:22:54,160 Speaker 1: talked about so very often many parts of the world. 434 00:22:54,240 --> 00:22:56,679 Speaker 1: What is the state of play of hydrogen in Japan? 435 00:22:57,040 --> 00:22:59,960 Speaker 2: That's one of the most frequently asked questions from our 436 00:23:00,400 --> 00:23:03,119 Speaker 2: so happy to go through that. So when it comes 437 00:23:03,119 --> 00:23:07,200 Speaker 2: to hydrogen, Japanese government tends to pay attention to sectors 438 00:23:07,200 --> 00:23:11,560 Speaker 2: where hydrogen use shouldn't be prioritized for decarbonization. For example, 439 00:23:11,840 --> 00:23:15,600 Speaker 2: the Japanese government and also some big Japanese maker that 440 00:23:15,760 --> 00:23:18,440 Speaker 2: tends to focus on hydrogen use for the fartinger vehicles 441 00:23:18,640 --> 00:23:21,879 Speaker 2: or field cell vehicles, but according to our analysis, electric 442 00:23:22,000 --> 00:23:26,320 Speaker 2: vehicles more economic ways to decominize the transport sector. And 443 00:23:26,480 --> 00:23:29,760 Speaker 2: similarly for the power sector, the Japanese government and also 444 00:23:29,880 --> 00:23:34,200 Speaker 2: some key electric utilities in Japan's pushing for the ammonia 445 00:23:34,280 --> 00:23:38,359 Speaker 2: co firing technology existing core poplants. The idea is that 446 00:23:38,480 --> 00:23:42,000 Speaker 2: for this ammoniacal FIGN technologies to reduce yourther mission by 447 00:23:42,080 --> 00:23:46,000 Speaker 2: coi firing ammonia at existing core poplants because ammonia doesn't 448 00:23:46,040 --> 00:23:50,000 Speaker 2: include carbon in its chemistry. However, our research actually found 449 00:23:50,040 --> 00:23:53,280 Speaker 2: that this ammoniacal FIGN technology is very expensive and it's 450 00:23:53,320 --> 00:23:56,480 Speaker 2: actually more much more expensive than renewables to decognize the 451 00:23:56,520 --> 00:23:59,639 Speaker 2: base fload power. So our view is that Japan should 452 00:23:59,680 --> 00:24:03,240 Speaker 2: deploy more venewables rather than trying to rely on ammonia 453 00:24:03,280 --> 00:24:06,959 Speaker 2: confrone technologis and yeah, long story short, Japan and Japanese 454 00:24:07,000 --> 00:24:09,679 Speaker 2: comments tend to pay attention to a wrong sector for 455 00:24:09,720 --> 00:24:13,160 Speaker 2: the hydrogen use that set. One positive development we're seeing 456 00:24:13,160 --> 00:24:16,919 Speaker 2: the market is that recent hydrogen strategy update in June 457 00:24:17,000 --> 00:24:20,040 Speaker 2: into the tw twenty three this year, Japan actually updated 458 00:24:20,080 --> 00:24:23,960 Speaker 2: the hygien strategy and expanded the focus of hydrogen consumption 459 00:24:24,080 --> 00:24:27,840 Speaker 2: to other sectors including hard two upbate sectors. And as 460 00:24:27,880 --> 00:24:31,240 Speaker 2: a part of the strategy update, Japan also added the 461 00:24:31,359 --> 00:24:35,560 Speaker 2: new hydrogen demand target for forty. So Japan even before 462 00:24:35,560 --> 00:24:38,760 Speaker 2: the update of the hygien strategy, Japan already had the 463 00:24:38,840 --> 00:24:42,240 Speaker 2: hydrogen demand target FOROTO than thirty and fifty, but basically 464 00:24:42,280 --> 00:24:45,720 Speaker 2: added the new interim target photo forty. And I think 465 00:24:45,760 --> 00:24:49,919 Speaker 2: this addition is good because it basically showcased that Japan 466 00:24:50,040 --> 00:24:53,880 Speaker 2: is committed to the hydrogen society. And I guess one 467 00:24:53,920 --> 00:24:57,359 Speaker 2: last thing if I may here, is the hydrogen supply 468 00:24:57,440 --> 00:25:01,600 Speaker 2: chain development. So Japanese company, then Japanese government actually looking 469 00:25:01,640 --> 00:25:05,760 Speaker 2: into hydrogen imports rather than production of hydrogen domestically. And 470 00:25:05,800 --> 00:25:08,800 Speaker 2: this is partially because of land constrained but also this 471 00:25:08,920 --> 00:25:13,400 Speaker 2: is because other countries can produce hydrogen or ammonia cheaper 472 00:25:13,440 --> 00:25:15,400 Speaker 2: than in Japan. So I think some of the key 473 00:25:15,440 --> 00:25:19,119 Speaker 2: markets that Japanese companies and also Japanese government are looking 474 00:25:19,160 --> 00:25:22,960 Speaker 2: into the source of the ammonia or hydrogen are like 475 00:25:23,040 --> 00:25:26,280 Speaker 2: Australia or some region in the Middle East, and also 476 00:25:26,600 --> 00:25:30,920 Speaker 2: possibly the US because of the Inflation Reduction Act. 477 00:25:31,480 --> 00:25:34,320 Speaker 1: So it's very possible that they may be importing hydrogen. 478 00:25:34,600 --> 00:25:38,560 Speaker 1: But of the domestically produced hydrogen, which sources do you 479 00:25:38,880 --> 00:25:41,639 Speaker 1: expect to see it come from? Will it be renewable 480 00:25:41,680 --> 00:25:43,280 Speaker 1: resourced or nuclear sourced? 481 00:25:43,600 --> 00:25:47,480 Speaker 2: Domestic one? Possibly hydrogen sourced by renewables, but I know 482 00:25:47,600 --> 00:25:50,680 Speaker 2: that some of the electric utilities in Japan are also 483 00:25:50,920 --> 00:25:55,200 Speaker 2: discussing the possibility of hydrogen production using nuclear power. That 484 00:25:55,240 --> 00:25:57,560 Speaker 2: could happen in Japan. But when it comes to the 485 00:25:57,720 --> 00:26:01,040 Speaker 2: hydrogen imports, any hydrogen in as long as they are 486 00:26:01,040 --> 00:26:04,760 Speaker 2: a low carbon Japanese companies interested in sourcing. 487 00:26:05,320 --> 00:26:08,520 Speaker 1: So it's safe to say that the increased emphasis on 488 00:26:08,640 --> 00:26:13,800 Speaker 1: hydrogen could potentially drive forward nuclear and renewables industries. 489 00:26:14,000 --> 00:26:14,800 Speaker 2: Possibly yes. 490 00:26:15,320 --> 00:26:17,680 Speaker 1: So next technology that I want to know whether or 491 00:26:17,680 --> 00:26:20,560 Speaker 1: not Japan has its eyes on is carbon capture and storage. 492 00:26:20,680 --> 00:26:23,280 Speaker 1: Is that something that's currently being looked at in a 493 00:26:23,320 --> 00:26:24,640 Speaker 1: particular degree of detail. 494 00:26:24,640 --> 00:26:26,959 Speaker 2: In Japan, this is one of the key area that 495 00:26:27,080 --> 00:26:30,439 Speaker 2: Japanese government is also looking into. So the government is 496 00:26:30,480 --> 00:26:34,600 Speaker 2: definitely trying to scale the FFIs market and the government 497 00:26:34,760 --> 00:26:37,800 Speaker 2: set up the targets and also the government launched the 498 00:26:37,880 --> 00:26:42,000 Speaker 2: lot map for CFS. So in the FFIs WorldMap, Japanese government, 499 00:26:42,119 --> 00:26:44,880 Speaker 2: if I mean to have annual capture capacity of six 500 00:26:44,960 --> 00:26:48,000 Speaker 2: to twelve million metric tons of FIO two by twenty 501 00:26:48,080 --> 00:26:51,080 Speaker 2: and thirty, and right now in Japan, there are seven 502 00:26:51,160 --> 00:26:54,439 Speaker 2: large scale CFS projects in the pipeline and according to 503 00:26:54,480 --> 00:26:57,960 Speaker 2: our research, if you adapt all the capacity for these 504 00:26:58,000 --> 00:27:01,440 Speaker 2: seven large scale CFIAS projects in upon the capture capacity 505 00:27:01,520 --> 00:27:04,360 Speaker 2: will be thirteen million metric tonto field two. So this 506 00:27:04,440 --> 00:27:06,960 Speaker 2: is quite in line with what the japanesecoman is trying 507 00:27:07,000 --> 00:27:10,160 Speaker 2: to do or what they mentioned in the CFAs world Map. 508 00:27:10,280 --> 00:27:12,720 Speaker 2: And also these projects should come online by jw th 509 00:27:12,720 --> 00:27:13,240 Speaker 2: than thirty. 510 00:27:13,720 --> 00:27:16,760 Speaker 1: So there's a lot happening that's actually changing the way 511 00:27:16,840 --> 00:27:19,560 Speaker 1: that the Japanese grid well what it's comprised of. But 512 00:27:19,600 --> 00:27:22,159 Speaker 1: then I want to think about future demand. So in 513 00:27:22,200 --> 00:27:24,560 Speaker 1: a lot of parts of the world you see future 514 00:27:24,600 --> 00:27:28,680 Speaker 1: demand really only increasing. And one of the things about 515 00:27:28,760 --> 00:27:32,760 Speaker 1: Japan is actually low birth rates and a shrinking population, 516 00:27:33,000 --> 00:27:35,520 Speaker 1: and my question really revolves around whether or not this 517 00:27:35,600 --> 00:27:38,879 Speaker 1: will have an impact on decreasing energy demand in the future, 518 00:27:38,960 --> 00:27:41,760 Speaker 1: and that the power system being built today maybe doesn't 519 00:27:41,800 --> 00:27:46,200 Speaker 1: need to grow indefinitely, and reaching these net zero targets 520 00:27:46,280 --> 00:27:49,159 Speaker 1: might in some ways be more attainable because you have 521 00:27:49,200 --> 00:27:51,600 Speaker 1: a more predictable future energy demand. 522 00:27:52,000 --> 00:27:55,080 Speaker 2: Well if there's something we actually covered in our new 523 00:27:55,160 --> 00:27:58,960 Speaker 2: energy outlook. So one scenario is called economic transitional scenario, 524 00:27:59,000 --> 00:28:02,439 Speaker 2: which is basically that baseline scenario for are modeling, and 525 00:28:02,560 --> 00:28:07,040 Speaker 2: in that economic transition scenario, actually the electricity demand is 526 00:28:07,280 --> 00:28:11,240 Speaker 2: expected to shrink over two thirty to twenty and fifty 527 00:28:11,359 --> 00:28:15,639 Speaker 2: and this is because, as you mentioned, declining population, improvement 528 00:28:15,800 --> 00:28:20,320 Speaker 2: and energy efficiency, but also a shift in economic structure 529 00:28:20,400 --> 00:28:23,600 Speaker 2: from manufacturing industry to the service industry in Japan. 530 00:28:24,320 --> 00:28:27,439 Speaker 1: My final question really then also drives back again to 531 00:28:27,560 --> 00:28:30,680 Speaker 1: the Japanese population, whether or not you perceive that there 532 00:28:30,760 --> 00:28:32,960 Speaker 1: is a lot of support for the net zero targets 533 00:28:33,080 --> 00:28:35,480 Speaker 1: or is this something that's largely being implemented by the 534 00:28:35,480 --> 00:28:37,119 Speaker 1: government and happening in the background. 535 00:28:37,480 --> 00:28:41,200 Speaker 2: A lot of groups, including environmental groups, are definitely requesting 536 00:28:41,360 --> 00:28:45,120 Speaker 2: higher targets. Japan's current venio bilergy target is thirty six 537 00:28:45,200 --> 00:28:48,160 Speaker 2: to thirty eight percent of the total electricity generation into 538 00:28:48,200 --> 00:28:50,960 Speaker 2: the DOND thirty but some feel this is too low, 539 00:28:51,120 --> 00:28:53,880 Speaker 2: especially compared to other markets and also in terms of 540 00:28:53,960 --> 00:28:57,440 Speaker 2: timeline to reach net throw. Some claims that Japan needs 541 00:28:57,440 --> 00:29:00,920 Speaker 2: to take more aggressive actions to set the higher or 542 00:29:00,960 --> 00:29:04,160 Speaker 2: more ambitious revenewable energy targets. So I think that's definitely 543 00:29:04,160 --> 00:29:07,360 Speaker 2: something we are seeing the market. And actually next year 544 00:29:07,480 --> 00:29:10,280 Speaker 2: to the twenty four if the year the Japanese government 545 00:29:10,360 --> 00:29:14,760 Speaker 2: will revise its electricity mixed target, because the Japanese government 546 00:29:14,920 --> 00:29:18,600 Speaker 2: is revising the country the electricity mix target every three years, 547 00:29:18,680 --> 00:29:21,280 Speaker 2: so I think we are going to see more discussion 548 00:29:21,480 --> 00:29:25,240 Speaker 2: and more opinions from different groups. So I'm looking forward 549 00:29:25,280 --> 00:29:27,680 Speaker 2: to see how or what kind of targets that Japanese 550 00:29:27,680 --> 00:29:30,200 Speaker 2: goverment is going to produce for the next update. 551 00:29:30,640 --> 00:29:33,080 Speaker 1: Well Ishue, thank you so much for taking us through 552 00:29:33,120 --> 00:29:36,840 Speaker 1: this incredibly wide tour of the energy system in so 553 00:29:36,920 --> 00:29:39,480 Speaker 1: many different parts of what's happening in Japan. Hopefully we 554 00:29:39,480 --> 00:29:41,560 Speaker 1: can have you back for a future show to dig 555 00:29:41,600 --> 00:29:44,720 Speaker 1: into any one of these topics, because they are all 556 00:29:44,760 --> 00:29:47,760 Speaker 1: each in their own right, very fascinating, Thank you so much. 557 00:29:56,640 --> 00:29:59,640 Speaker 1: Bloomberg ne EF is a service provided by Bloomberg Finance 558 00:29:59,720 --> 00:30:03,240 Speaker 1: LP in its affiliates. 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