WEBVTT - Japan Revisits Nuclear But Solar and Wind Are Future 0:00:00.120 --> 0:00:02.640 This is Dana Perkins and you're listening to Switched on 0:00:02.920 --> 0:00:07.119 the BNAF podcast. Prior to March of twenty eleven, Japan's 0:00:07.200 --> 0:00:10.360 energy sector looked significantly different from what it is now. 0:00:10.680 --> 0:00:13.320 Back then, a third of its overall power came from 0:00:13.440 --> 0:00:17.239 nuclear energy. However, in the aftermath of the earthquake and 0:00:17.280 --> 0:00:21.599 subsequent tsunami resulting in the Fukushima nuclear incident, the nation 0:00:21.760 --> 0:00:24.240 took the decision to shut down all of its nuclear 0:00:24.280 --> 0:00:28.479 reactors and reassess its reliance on this power source. Fast 0:00:28.560 --> 0:00:31.520 forward to twenty fifteen, when Japan started up two of 0:00:31.560 --> 0:00:34.800 its reactors again, but between then and now only a 0:00:34.840 --> 0:00:37.839 few more have been brought back online, leaving fossil fuels 0:00:37.880 --> 0:00:41.640 to fill in the energy generation void and raise Japan's emissions. 0:00:42.000 --> 0:00:45.280 So on today's show, we dive deeper into Japan's pathway 0:00:45.320 --> 0:00:48.240 to net zero and the future mix of their energy system. 0:00:48.600 --> 0:00:50.920 To get more perspective on this, I get to speak 0:00:51.040 --> 0:00:55.240 with Issue Kukuma and associate from bnaf's Tokyo office. Together, 0:00:55.280 --> 0:00:59.040 we discuss the energy technology Japan is looking to utilize 0:00:59.080 --> 0:01:01.480 as part of its drive to net zero and the 0:01:01.560 --> 0:01:05.240 unique circumstances such as land constraints that it has to overcome. 0:01:05.560 --> 0:01:08.840 We also discuss the nation's geothermal energy potential and why 0:01:08.840 --> 0:01:11.840 a meaningful rollout of this clean energy source is being 0:01:11.880 --> 0:01:16.319 blocked by an unexpected group, and lastly, Japan's reduced relationship 0:01:16.360 --> 0:01:19.600 with nuclear power and its potential role in the future. 0:01:19.959 --> 0:01:23.039 BNAF subscribers are going to be able to access BNF's 0:01:23.120 --> 0:01:26.399 Japan specific New Energy Outlook report by going to BNF 0:01:26.480 --> 0:01:29.959 dot Com, BNF go on the Bloomberg terminal, or BNF's 0:01:29.959 --> 0:01:33.319 mobile app. Now this report, the New Energy Outlook for 0:01:33.440 --> 0:01:36.800 Japan was actually based off of BNF's New Energy Outlook 0:01:36.840 --> 0:01:40.440 twenty twenty two, where we developed the economic transition scenario, 0:01:40.760 --> 0:01:43.679 which is without admissions constraints, as well as the net 0:01:43.800 --> 0:01:47.319 zero scenario subject to a carbon budget consistent with meeting 0:01:47.440 --> 0:01:50.720 the Paris Agreement goal. Using these scenarios, we're able to 0:01:50.760 --> 0:01:55.720 explore the implications for Japan's electricity, industry and transport sectors, 0:01:55.920 --> 0:01:59.160 along with the investment flows that are required to get there. 0:01:59.360 --> 0:02:01.840 As always, if you like this podcast, make sure to 0:02:01.880 --> 0:02:04.639 subscribe and you'll receive an update when we published future 0:02:04.640 --> 0:02:07.680 episodes and give us a review that'll make us more 0:02:07.680 --> 0:02:10.200 discoverable by others. But right now, let's jump into my 0:02:10.240 --> 0:02:25.080 conversation with issue about Japan and its new energy outlook. Issue. 0:02:25.080 --> 0:02:26.919 Thank you so much for joining us on the show today. 0:02:27.160 --> 0:02:28.840 Yeah, thank you so much for having me. 0:02:29.280 --> 0:02:32.600 We're here to talk about Japan and we want to 0:02:32.680 --> 0:02:35.600 understand everything about the energy system there, and you're actually 0:02:35.880 --> 0:02:39.160 speaking to us today from our office in Tokyo, which 0:02:39.200 --> 0:02:41.639 is great. Let's start at the beginning. You know, we're 0:02:41.680 --> 0:02:43.880 here to talk about the energy system, so can you 0:02:44.480 --> 0:02:48.720 explain the current state of play? What does the existing 0:02:49.040 --> 0:02:51.120 energy system look like in Japan? 0:02:51.720 --> 0:02:54.640 Japan's color anergy max with heavy rely on fourth of field, 0:02:54.800 --> 0:02:58.280 which explain why Japan's emission is too high and also 0:02:58.600 --> 0:03:03.320 explaining japan it's quite emission intensive and among all sectors, 0:03:03.360 --> 0:03:06.560 power sector is the largest source of emissions, which accounts 0:03:06.560 --> 0:03:09.120 for about forty percent of total emissions to Japan. And 0:03:09.160 --> 0:03:12.960 this is because japan a luxurity generation is mainly supplied 0:03:13.000 --> 0:03:16.520 by coal, gas and oil pop plants. 0:03:16.760 --> 0:03:19.120 What are Japan's different emissions targets? 0:03:19.360 --> 0:03:22.480 Yes, so I would like to highlight two major declbnization 0:03:22.600 --> 0:03:25.400 targets for Japan. For the first one is MDC targets, 0:03:25.480 --> 0:03:27.799 so this is more for the near term. So Japan 0:03:27.919 --> 0:03:30.480 is aiming to video some emissions by forty sixty percent 0:03:30.639 --> 0:03:33.480 in two the nand and thirty compared to twenty thirteen level, 0:03:33.600 --> 0:03:35.920 and the other one is netzero target, so this is 0:03:35.960 --> 0:03:39.560 obviously for the more long term, and Japan is pledging 0:03:39.560 --> 0:03:42.080 to achieve netzero by two the fifty and this has 0:03:42.120 --> 0:03:44.960 been legislated since two twenty one. So these two are 0:03:45.000 --> 0:03:47.840 the key decobnization targets for Japan. 0:03:48.080 --> 0:03:50.320 And we're going to talk a bit about history in 0:03:50.440 --> 0:03:53.840 terms of Japan's energy system and then also some of 0:03:53.840 --> 0:03:55.960 the changes we see in the future. But before we 0:03:56.040 --> 0:03:57.600 get into that, I want to know if you think 0:03:57.640 --> 0:03:59.720 that these emissions targets are ambitious. 0:04:00.120 --> 0:04:04.080 Yes, I believe so. So forty six percent emission reduction 0:04:04.160 --> 0:04:06.520 and also basically netro in two there and fifty these 0:04:06.560 --> 0:04:10.840 are very ambitious given what japan energy mix is currently 0:04:11.360 --> 0:04:13.960 looking like. So as I mentioned, japan energy mix is 0:04:14.040 --> 0:04:17.120 very I mentioned intensive, so Japan definitely needs to do 0:04:17.279 --> 0:04:21.200 more to achieve a netro or deploy more renewable or 0:04:21.200 --> 0:04:24.159 more decarbonization solutions in access rated manner. 0:04:24.440 --> 0:04:26.000 So it's going to take some work to get there, 0:04:26.160 --> 0:04:28.479 and before we think about the future, let's go to 0:04:28.520 --> 0:04:31.239 the past. So in twenty eleven, there is this event, 0:04:31.680 --> 0:04:35.320 the earthquake that then is now also synonymous with Fukushima, 0:04:35.360 --> 0:04:38.080 and what happened with that nuclear reactor where you had 0:04:38.160 --> 0:04:40.599 nuclear waste make its way all the way across the 0:04:40.600 --> 0:04:43.719 Pacific at one point and found in California. Can you 0:04:43.760 --> 0:04:47.799 explain how important nuclear used to be to the overall 0:04:47.920 --> 0:04:50.479 energy mix in Japan and where it sits right now? 0:04:50.640 --> 0:04:53.040 A nuclear pop plant used to account for one third 0:04:53.040 --> 0:04:56.920 of total electricity grmination. But the fucustion accident was definitely 0:04:56.960 --> 0:05:00.800 a huge turning point for japan electricity market cause after 0:05:00.839 --> 0:05:03.960 the accident, or nuclear reactors had to shut down, and 0:05:04.120 --> 0:05:07.120 since nuclear had to drop out from the power market 0:05:07.160 --> 0:05:09.600 in Japan, forth of your poplant needed to step in 0:05:09.680 --> 0:05:12.599 to fill in the gap, which increased the emissions in Japan. 0:05:12.800 --> 0:05:16.800 It's been over ten years since the focusing accident. Back 0:05:16.800 --> 0:05:19.279 in Japan, nuclear restart has been that is slow still, 0:05:19.400 --> 0:05:22.200 so by the end of twenty twenty two, only nine 0:05:22.240 --> 0:05:25.640 new Graatee reactors restarted, and this is quite small compared 0:05:25.680 --> 0:05:28.600 to before the accident because we used to or the 0:05:28.680 --> 0:05:32.600 Japan used to have around thirty nuclear reactors and last year, 0:05:32.640 --> 0:05:35.040 if you look at the contribution of nuclear pop plants 0:05:35.160 --> 0:05:38.120 or the nuclear power in japan electricity invention, it was 0:05:38.200 --> 0:05:40.640 less than ten percent when it comes to the annual generation. 0:05:40.920 --> 0:05:43.760 So compared to the one side of the electricity met 0:05:43.800 --> 0:05:47.640 by nuclea before the accident, the current electricity generation by 0:05:47.760 --> 0:05:48.880 nucleate really small. 0:05:49.120 --> 0:05:52.480 But you note that nine reactors have been restarted, and 0:05:52.720 --> 0:05:55.560 this is not a small undertaking to restart a nuclear reactor. 0:05:55.640 --> 0:05:58.599 But going forward are their plans to open more and 0:05:58.720 --> 0:06:01.080 what part of the energy mix would that actually comprise 0:06:01.120 --> 0:06:01.679 in the future. 0:06:01.920 --> 0:06:05.039 Yes, that's a great question. So the Japanese government actually 0:06:05.040 --> 0:06:09.000 has some new clear target and alexis regeneration and according 0:06:09.040 --> 0:06:12.440 to the current electricity mixed target, the government is aiming 0:06:12.480 --> 0:06:15.520 to increase the share of nuclear generation to twenty to 0:06:15.520 --> 0:06:18.320 twenty two percent of the total electricity generation in twenty 0:06:18.440 --> 0:06:20.680 and thirty. So this is basically one fifth of the 0:06:20.720 --> 0:06:23.640 total electricity generation and this is a quite big jump 0:06:23.720 --> 0:06:26.360 from what we're seeing the market. But BENF we don't 0:06:26.400 --> 0:06:29.360 expect the Japanese governments to meet this target because of 0:06:29.400 --> 0:06:32.599 the sole nuclear restart we have seen software and also 0:06:32.640 --> 0:06:35.680 the limited timeline until to the donally to continue the 0:06:35.839 --> 0:06:36.840 restart process. 0:06:36.960 --> 0:06:39.200 I don't know if that was the funniest statement you've made, 0:06:39.200 --> 0:06:41.159 but you can tell for those who are listening the 0:06:41.560 --> 0:06:44.600 issues actually recording from our office in Tokyo, and it's 0:06:44.640 --> 0:06:48.679 an open floor plan, so apologies for any background noise, 0:06:48.760 --> 0:06:51.960 but hopefully people in your office are learning a bit 0:06:51.960 --> 0:06:55.279 more about the power system in Japan today. So there 0:06:55.320 --> 0:06:57.880 we go. Everyone's listening to the recording, they're getting a 0:06:57.880 --> 0:07:01.320 sneak peak. So my next question really has to do 0:07:01.400 --> 0:07:04.680 with how people in Japan are reacting to this. 0:07:05.320 --> 0:07:08.240 Yeah, in the public, there're the mixed feeling. So obviously 0:07:08.279 --> 0:07:11.200 some people still worry about the safety of the nuclear power, 0:07:11.480 --> 0:07:14.280 and this is mainly because what they have seen in 0:07:14.320 --> 0:07:18.280 the past. But this is slightly changing these dates, so 0:07:18.360 --> 0:07:21.720 some people actually see the benefit of having nuclear power 0:07:21.800 --> 0:07:26.880 in Japan. Electricity mix because of increasing electricity retail prices 0:07:26.920 --> 0:07:28.840 that we are seeing in the market right now, because 0:07:28.880 --> 0:07:30.560 of the increase in the commodity prices. 0:07:30.920 --> 0:07:33.200 So let's talk about what the alternatives are if we 0:07:33.240 --> 0:07:35.760 don't bring a lot of nuclear power back online in 0:07:35.880 --> 0:07:38.400 order to reach these emissions targets that you've outlined, and 0:07:38.440 --> 0:07:40.200 I'm going to start with a really simple one. You know, 0:07:40.280 --> 0:07:43.840 it's an island nation. What is the potential for interconnectors 0:07:43.880 --> 0:07:47.400 with other nearby countries and for them to buy clean 0:07:47.520 --> 0:07:50.320 energy from surrounding states or is this something that they're 0:07:50.320 --> 0:07:51.840 going to have to build domestically. 0:07:52.680 --> 0:07:57.200 I think it's quite ambitious because obviously it's not like 0:07:57.360 --> 0:08:00.480 closest states island nations, So if you're trying to build 0:08:00.480 --> 0:08:02.880 an interconnection or like a power line or anything, it 0:08:02.920 --> 0:08:05.520 will require a huge investment, and on top of that, 0:08:05.800 --> 0:08:07.400 you have to kind of take an account for that 0:08:07.440 --> 0:08:11.200 your politics, let's say between Japan and Korea, or between 0:08:11.280 --> 0:08:13.960 Japan and China. So I think this could be a 0:08:14.160 --> 0:08:15.040 challenging topic. 0:08:15.480 --> 0:08:18.200 So now that we've established that Japan's really going need 0:08:18.240 --> 0:08:21.520 to be developing a lot of their power generation domestically, 0:08:21.960 --> 0:08:24.640 what let's talk about some of the options that actually exist. 0:08:24.680 --> 0:08:27.119 And I think it's maybe the best place to start 0:08:27.160 --> 0:08:30.920 is diving into the traditional renewable energy sources that we 0:08:31.000 --> 0:08:33.280 think of, which are wind and solar. So what are 0:08:33.280 --> 0:08:35.199 the options and kind of what's the outlook for wind 0:08:35.240 --> 0:08:36.480 and solar in Japan. 0:08:36.520 --> 0:08:39.360 Before talking about wind and solar specifically, I just wanted 0:08:39.360 --> 0:08:43.040 to highlight the organization of the power sector should be prioritized, 0:08:43.160 --> 0:08:46.160 especially in your term, I think in Japan, but also globally. 0:08:46.360 --> 0:08:50.160 And this is because renewablets are already matured and those 0:08:50.520 --> 0:08:54.480 renewable technology is already becoming cost competitive, and we know 0:08:54.600 --> 0:08:57.040 what need to do to clean out the power sector, 0:08:57.120 --> 0:09:01.080 which is basically deploying more common free power our pop 0:09:01.120 --> 0:09:05.040 plants and also fade out the emission intensive technologies. And 0:09:05.080 --> 0:09:07.680 when it comes to like the role of solent when 0:09:08.240 --> 0:09:11.440 Japan or these technology have the huge potential in Japan. 0:09:11.679 --> 0:09:14.719 For example, in one of the benf Fragship research in 0:09:14.760 --> 0:09:18.520 New Energy Outlook, which basically long term scenario exercise for 0:09:18.720 --> 0:09:21.800 Japan and also the global energy mix with it, the 0:09:21.840 --> 0:09:25.440 scenario exercise and modeled how the future energy mix needs 0:09:25.480 --> 0:09:28.720 to look like to meet the parents aligned net or target, 0:09:28.960 --> 0:09:32.880 and this scenario exercise basically confirmed that solar and when 0:09:32.920 --> 0:09:36.240 there desically the key for Japan's netual target. So according 0:09:36.280 --> 0:09:39.800 to our research, solar and win account for about eighty 0:09:39.840 --> 0:09:44.040 percent of total electricity into the fifty in our net scenario. 0:09:44.320 --> 0:09:46.360 And if we look at the wind. Actually the share 0:09:46.440 --> 0:09:49.320 is quite big. So the share of wind is over 0:09:49.440 --> 0:09:52.720 fifty percent of the total elexicity generation into the fifty, 0:09:52.960 --> 0:09:55.240 so this is quite big and because of that, I 0:09:55.280 --> 0:09:58.559 think Japan definitely needs to scale the renewables deployment in 0:09:58.600 --> 0:10:03.240 an accescerated manner. So in our network scenario that install 0:10:03.280 --> 0:10:07.160 the capacity of solar needs to be over four hundred gigabat. 0:10:07.200 --> 0:10:10.040 This is five times larger than what we are seeing 0:10:10.040 --> 0:10:12.560 the market today in a full wind, So the wind 0:10:12.640 --> 0:10:15.960 market in Japan is quite tiny. For right now, japanly 0:10:16.040 --> 0:10:19.800 has less than five gigot of wind projects installed, including 0:10:19.880 --> 0:10:22.680 both on show Win off Show Win. However, our net 0:10:22.840 --> 0:10:25.560 scenario shows that on shore wind instration needs to be 0:10:25.760 --> 0:10:28.320 over one hundred and ten gigabat and off show wind 0:10:28.400 --> 0:10:31.000 instration needs to be over one hundred and forty gigat 0:10:31.000 --> 0:10:33.400 in two theou and fifty, so you can see how 0:10:33.480 --> 0:10:35.560 big the jump needs to be for that win and 0:10:35.640 --> 0:10:36.320 also solar. 0:10:36.840 --> 0:10:38.560 So there have been a lot of changes to the 0:10:38.679 --> 0:10:41.360 energy mechs in Japan, and you noted that there was 0:10:41.440 --> 0:10:44.680 quite a bit of nuclear power, which is traditionally considered 0:10:44.760 --> 0:10:48.760 consistent based load power, which came offline, then replaced by 0:10:49.120 --> 0:10:52.360 heavy carbon emitting energy sources, and now looking into the future, 0:10:52.440 --> 0:10:55.080 perhaps a bit more nuclear certainly looks like quite a 0:10:55.080 --> 0:10:58.200 bit more wind. But then there is the fact that 0:10:58.240 --> 0:11:00.600 the wind doesn't always blow and the sun doesn't shine. 0:11:00.800 --> 0:11:03.520 Anybody listening to this podcast is very familiar with that. 0:11:03.720 --> 0:11:06.640 From a security a supply standpoint, what has been happening 0:11:06.679 --> 0:11:10.040 with the grid and has there essentially with the changes 0:11:10.080 --> 0:11:12.880 that have been taking place, have there been any issues 0:11:13.080 --> 0:11:15.080 around reaching peak demand? 0:11:15.640 --> 0:11:17.600 That's a great point. So I think in terms of 0:11:17.800 --> 0:11:21.560 energy security, Japan energy security is at risk, and this 0:11:21.720 --> 0:11:24.679 is because, as you mentioned, nuclear used to provide a 0:11:24.760 --> 0:11:27.920 quite huge channel of electricity in Japan. But after the 0:11:28.160 --> 0:11:31.560 focuss marks then Japan actually needed to increase the rely 0:11:31.640 --> 0:11:34.640 on on foth of field, which means Japan increase the 0:11:34.720 --> 0:11:37.120 rely on on the force of your imports. So when 0:11:37.200 --> 0:11:40.199 it comes to energy security, I think deploy more renewablets 0:11:40.200 --> 0:11:45.000 actually improved japan energy security. One huge benefit of installing 0:11:45.040 --> 0:11:47.319 more renewables in Japan. The other thing I'd like to 0:11:47.400 --> 0:11:50.400 highlight is over the last few years, especially between the 0:11:50.640 --> 0:11:53.640 twenty and to the twenty two, actually Japan has seen 0:11:53.679 --> 0:11:57.559 a tight power supply demand balance, and this is because 0:11:57.720 --> 0:12:00.839 Japan retired many fourths of your pop plants, not for 0:12:00.880 --> 0:12:03.880 the cogonization effort, but it was because many of the 0:12:04.080 --> 0:12:06.559 fourths of your pub plants the end of the lifetime. 0:12:06.800 --> 0:12:10.120 And because of that, in winter last winter, last summer, 0:12:10.200 --> 0:12:14.320 the Japanese government had to ask household and also businesses 0:12:14.400 --> 0:12:18.480 to conserve electricity during the peak hours in peak season. 0:12:18.880 --> 0:12:21.920 How did they go about asking people to conserve energy. 0:12:22.000 --> 0:12:24.320 Was it a blanket statement that you need to conserve 0:12:24.440 --> 0:12:26.720 or was it something like I know have happened in 0:12:26.720 --> 0:12:29.080 the state of California where they're getting next to peak 0:12:29.120 --> 0:12:31.960 demand and they've had to take certain amounts of electricity 0:12:32.000 --> 0:12:34.360 off the grid, and they essentially sent out a text 0:12:34.360 --> 0:12:37.000 message to everybody telling them for the next couple of hours, 0:12:37.360 --> 0:12:39.520 you need to reduce your consumption. Is it over a 0:12:39.559 --> 0:12:41.680 short period of time or a long period of time? 0:12:41.800 --> 0:12:44.600 And how is the Japanese government communicating with people? 0:12:44.920 --> 0:12:47.480 So I think it was like over day typically, so 0:12:48.120 --> 0:12:51.120 when the incident was said to happen, based on some 0:12:51.200 --> 0:12:54.079 of the electricity demand podcast and also the weather condition, 0:12:54.280 --> 0:12:58.760 typically the government asked a household and businesses to reduce 0:12:58.800 --> 0:13:03.200 electricity consumption or perhaps considered using the electricity during the 0:13:03.240 --> 0:13:06.440 non peak hours through websites and also some of the 0:13:06.480 --> 0:13:10.000 TV programs, and I think when the Japanese government requests 0:13:10.000 --> 0:13:12.960 to ask something to the businesses, typically this is like 0:13:13.120 --> 0:13:16.880 the message that the business must follow, and also into 0:13:16.920 --> 0:13:19.719 household I don't think we got the text messages, but 0:13:19.840 --> 0:13:23.120 still all the TV program was like showing the real 0:13:23.240 --> 0:13:25.000 time power supply demand balance. 0:13:25.400 --> 0:13:28.200 So it was a really effective demand side way of 0:13:28.240 --> 0:13:31.960 dealing with an upcoming peak energy demand issue. 0:13:32.080 --> 0:13:34.640 Yes, but also a supply side made a lot of 0:13:34.679 --> 0:13:37.200 efforts as well. For example, I think a lot of 0:13:37.240 --> 0:13:39.560 fourth of your pup plants ramp up quite a lot. 0:13:39.600 --> 0:13:42.240 And on top of that, Japan has quite a huge 0:13:42.360 --> 0:13:45.719 capacity of pumped hydro and pampto hydro actually saved the 0:13:45.840 --> 0:13:48.840 day because they have that quite long duration of the 0:13:48.960 --> 0:13:50.920 storage capacity that can be used. 0:13:51.160 --> 0:13:53.400 It sounds like a very dynamic system that's able to 0:13:53.400 --> 0:13:56.520 dial up and dial down various things which may be 0:13:56.679 --> 0:13:59.840 needed if you end up adding more renewable energy sources 0:13:59.880 --> 0:14:02.640 like wind, which do have intermittency. Let's talk about wind 0:14:02.720 --> 0:14:05.720 specifically though, because you point out that wind is likely 0:14:05.760 --> 0:14:08.000 to make up a good percentage of the supply in 0:14:08.040 --> 0:14:10.680 the future, and more than likely this is going to 0:14:10.720 --> 0:14:14.720 be dominated by offshore wind. What is the sea bed 0:14:14.880 --> 0:14:20.040 like directly surrounding Japan? And the question I'm really trying 0:14:20.040 --> 0:14:23.080 to get at here is are these very challenging projects 0:14:23.200 --> 0:14:26.240 or are these going to be the ideal circumstances for 0:14:26.320 --> 0:14:29.480 an offshore wind project, because certainly the depth of the 0:14:29.520 --> 0:14:33.000 ocean nearby can dramatically impact the overall costs. 0:14:33.080 --> 0:14:35.840 Well, I think of when there's a huge potential in Japan, 0:14:36.000 --> 0:14:38.200 and I think that's one of the key technologies that 0:14:38.320 --> 0:14:41.640 Japanese Garden are trying to push for the cognization. One 0:14:41.720 --> 0:14:44.320 challenge for the offshoal win in Japan is that typically 0:14:44.560 --> 0:14:48.440 sea bed or the ocean gets deeper right off the 0:14:48.640 --> 0:14:52.000 cost So in the sense the potential for the bottom 0:14:52.120 --> 0:14:54.920 fixth off your wind project may be limited compared to 0:14:55.040 --> 0:14:57.680 other countries. But at the same time, it also showcased 0:14:57.760 --> 0:15:00.560 the huge potential the bass potential of the full tea 0:15:00.560 --> 0:15:02.800 in off Showan, and that's one of the key areas 0:15:02.920 --> 0:15:05.760 where the Japanese company is actually trying to expand. 0:15:06.240 --> 0:15:09.160 Now are a lot of the investment opportunities into these 0:15:09.200 --> 0:15:13.200 projects being done by domestic Japanese companies or is there 0:15:13.200 --> 0:15:14.800 a lot of foreign investment. 0:15:14.640 --> 0:15:18.520 That makes up both domestic and overseas players. Obviously the 0:15:18.600 --> 0:15:21.359 Japanese players that are trying to tap into the potentials, 0:15:21.400 --> 0:15:24.720 but also from overseas developer perspective, they have a lot 0:15:24.720 --> 0:15:27.600 of experienses from overseas market, but at the same time 0:15:27.680 --> 0:15:31.320 they need some local players because Japan's tender process has 0:15:31.360 --> 0:15:33.920 a lot of implication, and also they need some support 0:15:34.000 --> 0:15:37.360 from domestic player for the outreach with a local player 0:15:37.560 --> 0:15:38.640 or the stakeholders. 0:15:39.160 --> 0:15:42.040 Are there any other challenges that are worth noting to 0:15:42.280 --> 0:15:45.080 this rollout and I'm thinking of one specifically because we 0:15:45.120 --> 0:15:47.760 did a show a few shows back so fairly recently 0:15:47.880 --> 0:15:51.720 about grids generally and grid connections. What is the state 0:15:51.720 --> 0:15:54.800 of the Japanese grid and essentially is grid connection and 0:15:54.840 --> 0:15:59.000 the associated cost of potentially expanding the connection to accommodate 0:15:59.080 --> 0:16:02.000 new renewable sources. Is that a big part or a 0:16:02.080 --> 0:16:04.120 big issue that might be standing in the way of 0:16:04.200 --> 0:16:05.360 more deployment in the future. 0:16:05.800 --> 0:16:08.880 Great connection is definitely one of the challenges that renewablet 0:16:08.920 --> 0:16:12.640 in Japan facing, Similar to the global trends, Many renewboat 0:16:12.680 --> 0:16:15.400 projects are waiting for the Great connections, and this is 0:16:15.440 --> 0:16:18.880 also similar to the global markets. But the low transparency 0:16:18.920 --> 0:16:21.520 around the Greek Connection costs and also the Great Connection 0:16:21.600 --> 0:16:24.440 timeline can be a huge development risk for the renewable 0:16:24.560 --> 0:16:25.960 energy projects in Japan. 0:16:26.200 --> 0:16:28.880 And of course timelines then impact whether or not a 0:16:28.960 --> 0:16:31.680 country is able to actually reach the targets that they've 0:16:31.680 --> 0:16:35.400 set because it's not just an overall carbon abatement target, 0:16:35.640 --> 0:16:37.960 it's by a certain year. And do you think that 0:16:38.000 --> 0:16:40.200 some of the process I guess involved with getting these 0:16:40.240 --> 0:16:44.400 projects online will be really dramatically impacting whether or not 0:16:44.440 --> 0:16:45.440 those targets are met. 0:16:45.520 --> 0:16:48.360 I think so. Some of the projects, especially the large 0:16:48.400 --> 0:16:51.520 scale are renewable energy project connecting those projects to the 0:16:51.560 --> 0:16:55.400 GRIT could take over three years, so if more projects 0:16:55.440 --> 0:16:59.040 are requesting for the Great Connection, this timeline could get delayed. 0:16:59.160 --> 0:17:01.840 So this GRET connection can be definitely a one challenge 0:17:01.920 --> 0:17:05.520 or could pose a huge challenge for the japantic carbonization targets. 0:17:05.920 --> 0:17:08.639 Are there other issues do you think would be worth 0:17:08.840 --> 0:17:10.680 bringing up that maybe I'm missing. 0:17:10.720 --> 0:17:13.840 One of the key challenges which is probably unique compared 0:17:13.840 --> 0:17:17.959 to other markets. The land constraints in Japan. So in Japan, 0:17:18.040 --> 0:17:20.760 I think related to the lands constraint, high cost of 0:17:20.760 --> 0:17:24.040 renewables are also like a big challenge for renewables, and 0:17:24.080 --> 0:17:27.240 this is because it's hard to reach the economies of 0:17:27.320 --> 0:17:30.240 scale in Japan due to the land constraint. And if 0:17:30.280 --> 0:17:34.159 I may another challenges related to a renewable diploment, it's 0:17:34.240 --> 0:17:39.359 probably the carbon pricing. So technically Japan has nationwide carbon 0:17:39.440 --> 0:17:43.679 pricing mechanism or more specifically nationwide carbon tax, but the 0:17:43.680 --> 0:17:47.040 current carbon tax is very low, so it is two 0:17:47.080 --> 0:17:49.400 hundred and eighty nine ym part ton of CO two, 0:17:49.480 --> 0:17:52.480 which is probably less than two dollars part on of 0:17:52.560 --> 0:17:54.440 COO two with the current exchange rate. 0:17:56.040 --> 0:17:58.840 Before we pivot to some other technologies, I actually want 0:17:58.880 --> 0:18:01.080 to know about the role of the Japanese government in this, 0:18:01.320 --> 0:18:04.480 because we have gotten to a place with the deployment 0:18:04.600 --> 0:18:07.200 of a lot of different energy sources at scale is 0:18:07.240 --> 0:18:10.120 going to require certain amount of support from government. It's 0:18:10.240 --> 0:18:12.320 just a statement of fact, and I want to know 0:18:12.480 --> 0:18:15.200 if the Japanese government, first of all, how it's organized, 0:18:15.240 --> 0:18:18.760 and whether or not there has a strong amount of 0:18:18.800 --> 0:18:22.160 support in terms of how the programs are actually laid 0:18:22.160 --> 0:18:25.359 out to actually then meet these net zero targets, because 0:18:25.359 --> 0:18:27.159 it's one thing to have a target, but it's another 0:18:27.200 --> 0:18:30.840 thing entirely for the government to have organized around actually 0:18:30.880 --> 0:18:32.840 obtaining it in practice. 0:18:33.119 --> 0:18:36.159 When it comes to the government structure in Japan, especially 0:18:36.200 --> 0:18:39.840 around the energy issues, the key ministry is the Ministry 0:18:39.880 --> 0:18:43.199 of Economy, Trade and Industry or METI. So when it 0:18:43.200 --> 0:18:46.520 comes to energy matters or energy policy, METI is the 0:18:46.560 --> 0:18:51.040 one who's discussing a lot of policy or incentive or 0:18:51.119 --> 0:18:54.639 perhaps I guess the penalty, the requirement for of energy 0:18:54.680 --> 0:18:57.760 projects and such. At the same time, when it comes 0:18:57.760 --> 0:19:01.720 to the cognization target, Minister of the Environment it's the 0:19:01.800 --> 0:19:04.320 one who's kind of setting up those targets. And I 0:19:04.320 --> 0:19:06.960 think they're the one also dealing with a lot of 0:19:07.000 --> 0:19:10.199 permitting and environmental impact assessment in Japan. 0:19:10.440 --> 0:19:13.280 And would you say that things are running reasonably smoothly. 0:19:13.560 --> 0:19:17.280 I mean METI is not the only one bafically famalizing everything. 0:19:17.480 --> 0:19:19.960 For example, for off show win, it involves a lot 0:19:20.000 --> 0:19:23.160 of ministry efforts and METI is not the only one 0:19:23.200 --> 0:19:27.040 who's like talking about these issues. METI collaborate with other ministries, 0:19:27.080 --> 0:19:31.080 including Minister of Environment and also other ministries in charge 0:19:31.119 --> 0:19:33.560 of ports because of show Win involves a lot of 0:19:33.600 --> 0:19:38.000 relationship with port owners and also the port infrastructure development. 0:19:38.119 --> 0:19:41.040 So I think collaboration is typically done really well. 0:19:41.280 --> 0:19:43.640 Now let's pivot to a technology that I think many 0:19:43.720 --> 0:19:45.840 of us actually think about when we think of Japan, 0:19:45.880 --> 0:19:48.640 but maybe not in such a literal sense, geothermal. When 0:19:48.640 --> 0:19:51.800 I think of geothermal in Japan, I actually think of 0:19:51.920 --> 0:19:56.000 these kind of almost idealic views of a bathhouse and 0:19:56.080 --> 0:19:59.800 the use of geothermal hot springs by several parts of 0:19:59.800 --> 0:20:05.119 the population. Geothermal energy is that something that is really 0:20:05.520 --> 0:20:09.200 quite ideally located for Japan and does it have a 0:20:09.280 --> 0:20:10.119 tangible future. 0:20:10.280 --> 0:20:13.800 That's a great point. So as many listeners are probably aware, 0:20:13.960 --> 0:20:16.840 Japan is well known for the hot spring industry or 0:20:16.920 --> 0:20:20.760 onsend industry. And the good thing is Japanese government is 0:20:20.800 --> 0:20:24.399 offering subsidy to geo thermal projects through feeling type scheme. 0:20:24.720 --> 0:20:27.560 But that challenge is, like we are seeing the quite 0:20:27.600 --> 0:20:30.920 limited deployment software and that's because of like high work 0:20:31.080 --> 0:20:34.160 and risks around the drilling, and also some challenges are 0:20:34.200 --> 0:20:38.440 on stakeholder engagement between developers and also the powerful hot 0:20:38.440 --> 0:20:42.400 spring industry who occasionally have misconception around the technologies. 0:20:42.800 --> 0:20:45.360 So let's start with the risks around the drilling. Can 0:20:45.400 --> 0:20:47.760 you just explain what some of those risks are and 0:20:47.840 --> 0:20:50.040 kind of what the worst case scenario could be. 0:20:50.440 --> 0:20:53.120 The first risk that I can come up is basically 0:20:53.160 --> 0:20:56.679 hard to estimate where the actual resource it is and 0:20:56.720 --> 0:20:59.320 also how big the resource is. And this is obviously 0:20:59.440 --> 0:21:02.520