Wednesday, 15 January 2014

The Evolution of Energy in Japan

As you read this, you are using something. It’s the same basic force which allows you to move, allows the earth to spin and your laptop to turn on. In its crudest form, it’s energy. Oil, Gas and nuclear cores have all become proponents which are driving factors behind the civilisation of today.  These vital materials construct the basis of the economy and therefore affect the lives of each and every human being on the planet.

We’ve recently been bombarded with some home truths about using these specific materials in peculiar ways which have adverse effects on the planet. I’m not going to bore you with an Al Gore style memorandum warning you of the implications of global warming because you’ve most likely heard them an immeasurable number of times. What I will remind you of however is that green energy has never really been a viable alternative for many countries, just because of the lack of innovation, and the timing. Nevertheless, in recent years, the availability and more so the safety of these traditional energy sources have become more and more precarious forcing us to seriously consider what the future holds

In an attempt at keeping it simple, we look to the current energy situation which is troubling Japan. It’s difficult to look at the worldwide situation, because each country has its own politics, problems and economics which determine their needs. In this instance, Japan’s recent energy crisis proves to be a perfect case study to critically assess to what extent a green revolution really is viable. In light of the Fukushima disaster, Japan’s energy crisis has spawned into a multifaceted juggernaut of problems, encapsulating everything from socio economic woes to political tremors. Luckily, as readily as energy was the cause for most of their problems, it could also be the answer to their problems.

Following the Fukushima nuclear disaster, Japan had become the world’s largest importer of LNG or liquefied natural gas, which is also known as one of the cleanest options for producing electricity without relying of nuclear cores. For a while, it looked like Japan had learnt its lesson of relying on nuclear cores as a main source of energy. However, there have been quiet rumours within Japanese government of turning the nuclear reactors back on. Unsurprisingly, 58% of Japanese people polled were completely against turning on the reactors again, and instead favoured alternative methods of energy generation. Of course, Japan’s government have to look at it from an economic standpoint; LNG is just too expensive. They spent $60 billion importing 83.7 million metric tons in 2012. Unfortunately, a key feature of short time frames and restricted supplies are higher costs. Immediately after the disaster the only countries which could fulfil Japan’s requirements were Qatar and Russia, both of which would have charged a premium on LNG after the resource had been so heavily undervalued for more than a decade. Nonetheless, as more options of supply appear for Japan, it necessarily becomes a more competitive and viable long term option for the country. This is not a hypothetical situation either, as Japan has also taken note that with America’s shale gas boom, to import American gas, for the same purpose of producing electricity, would work out cheaper. Nevertheless, there still remains a more suitable option both economically and environmentally which we will soon explore. 

In any case, this situation which Japan has found itself in has had a multitude of consequences. Most significantly, the political economy is in turmoil over the apparent lack of communication or support from the government to the survivors of the tsunami and equally importantly the rumoured disregard for the wellbeing of Northern Japan. This has led to the vast majority of the country becoming disillusioned with the current state of the government.

Essentially, Japan’s problems are two pronged: One of securing a sustainable energy supply; and also of mending the broken rapport with its own citizens.

So here’s where the solution comes in: Green Energy. Sounds a bit anti climatic right? Wrong. Before you shut it down as green fingered garbage take a second to think about the economic and investment opportunity which arises from all of this.

To begin, let’s contemplate investment from  an energy/ utility company’s perspective. Firstly, large utility companies such as E.on and other European and Asian firms have already begun developing green technologies to harvest green energy. From a statistical standpoint, between 2010 and 2011, Japan saw a 25% increase in demand for energy from solar power alone. In terms of having experts in solar farms and the production of solar energy, Japan is being forced to look abroad to established European energy companies who have expertise in this area. At the same time, European energy companies are coming to grips with the fact that the International energy agency has predicted a 2% decrease in Europe wide demand over the next decade, making Japan and the rest of Asia a very viable financial prospect. For Japan, what does this mean exactly? It means a wealth of new investment opportunities which could see it become a world leader in innovative energy technologies. This would essentially place Japan not only at the centre of an environmental revolution, but also a financial one. Since 2002, Japan’s GDP growth has pretty much remained between -5.5% and 2%. Couple this tragic fact with the knowledge that imports as a percentage of GDP in the same period have grown by 4% whilst exports have grown by only 1%, you’ve got yourself a dire situation. For Japan to return to the glory days of being a financial powerhouse, they need something drastic to happen.

Now if we take a sociological framework and look at the green revolution, we can recognise some immediate benefits. Turning back on the reactors is one thing, but facing the public backlash is another; Japanese support for whichever route the government will go is essential. It’s not always been the case as most Japanese citizens have refrained from commenting on the government’s choices in the past, but as the younger and more outspoken generation of Japanese come into the frame, it becomes a real issue which the politicians must consider. The energy crisis has actually become a precursor to many underlying political tensions which the country is currently facing. In the wake of the 2011 crisis, suicide rates sky rocketed amongst the survivors of the tsunami, who felt they were abandoned and forgotten by the Government; Even now, in the north of Japan, public opinion is largely against the Government. Enson Inoue, whose missions we have been following has kept us all updated on the real situation which still exists in Japan. People are still living in make shift camps and school halls with little more than the basic necessities. This sort of reality doesn’t bode well for the politicians in Tokyo. Let us not be misled here though; Green revolution doesn’t forgive the government, but it shows that they have learnt from their mistakes and are safeguarding Japan’s future. Often times it’s not the “sorry” that counts but the action you take to rebuild.

It’s no longer a case of discussing things from simply an economic angle because as Keynes said, in the long run we’re all dead. And although ultimately it will be economics and statistics which have the final say, we have to look at this situation from a view of improving society and leaving a legacy to the future which we won’t necessarily be a part of. This decision will ultimately affect each and every human being that walks this planet today as well as generations to come. Nevertheless, caveats of information like this seem to hold little to no bearing upon politicians who are undeniably satisfying the wills of major corporations. I was actually a little disturbed today when I found out that right here at home, Mr. David Cameron went as far as saying that fracking for oil in the UK would cause no harm to the environment. Absurd, preposterous and naïve- All of the above can be used to describe this sort of rhetoric, especially when the UK has some extremely exciting prospects for green energy. With these sorts of short sighted ideas, options like the one Japan is currently faced with are simply brushed under the rug, in hopes that this energy crises will simply disappear.

It’s easy to brush topics like this under the rug, and it’s easy to say what we should and shouldn’t do, but in today’s world, the only thing which will define the future is the bottom line. That’s it. It’s that simple, and although we can look at the green revolution from a moral perspective, the more realistic and persuasive way of looking at it is through economics and the monetary profits of it. For the first time ever a well-developed nation has all the right circumstances and abilities to make this a financial reality as well as secure a future. What we are witnessing is more so an evolution than revolution to be honest, humans are meant to evolve and so are economies. This could be the end of an era, but also the beginning of a new one. Keep your eyes on Japan, because the moves they make along with the UK in the next few years will surely determine a future for pretty much all of us. 

By Viren Samani (@VirenSamani1)  


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