Ng Weng Hoong explains why coal’s decline is far from certain, as Tokyo abandons its climate goals to tackle the country’s domestic energy crisis.
Those calling for coal’s decline on account of China’s plan to clean up its toxic air should pay close attention to Japan, where the government has announced that it will assign coal an enhanced role in the nation’s future energy mix. Under prime minister Shinzo Abe’s new energy plan, the government will provide support for the Japanese coal industry’s efforts to develop mines and reserves abroad; export clean coal technology; and invest in coal-fired power plants at home and in other countries.
Abe’s coal legacy
The Abe government is pitching coal’s expanded role on two fronts: as a cheap, plentiful and reliable energy source compared with expensive liquefied natural gas (LNG) and increasingly volatile oil imports; and as a source of export earnings through the sale of Japan’s technology and engineering and consulting services for coal-fired power plants and projects.
The Ministry of Energy, Trade and Industry (METI) hinted at the impending policy change last November, when it published a report showing that Japan relied on coal to generate just 28% of its electricity compared with the global average of 41%. “Coal-fired power generation, along with LNG-fired power generation, is an important power source. Now that Japan’s nuclear power plants have suspended operation, resulting in a growing dependence on LNG-fired power generation, coal-fired power generation is gathering attention as a base power source,” said the report. “This is because coal as an energy source is not only cheap, but is in ample supply.”
Sweetening its coal pitch, the Abe government said Japan will boost its export earnings by helping developing countries use the fuel more efficiently to generate inexpensive electricity. According to the METI, Japanese companies will generate income from supplying “clean coal” technology to help others reduce greenhouse gas emissions, filter soot and increase the efficiency of coal-based power plants. Its minister, Toshimitsu Motegi, has claimed that Japanese technology can help three of the world’s leading coal users, China, India and the US, reduce their carbon emissions by a total of 1.5 billion tpa.
Coal to the rescue
Japan’s coal demand surged by an estimated 3.2% to a record 189.6 million t in the last financial year to April 2014. Coal demand is expected to rise by a further 0.9% in FY2014 for its fourth consecutive annual increase, according to the Institute of Energy Economics Japan (IEEJ). Japan will use an increasing amount of coal to generate electricity, as well as produce cement and steel as a key feature of Abe’s policies to stimulate economic growth. The nation’s coal appetite will also be stimulated by the fuel’s low price on the global markets.
Several Japanese firms are leading the charge, with Tepco starting up and operating two ultra-supercritical coal-fired plants with a combined 1.6 GW of capacity since last December. According to the company, the 600 MW plant in Hirono and the 1 GW plant in Hitachinaka, both in eastern Japan, have the world’s highest thermal efficiency rate of 45.2% and are equipped to reduce SOx and NOx emissions. It also owns half of Tohoku Electric’s 2 GW unit at Haramachi, lifting the company’s coal-fired capacity to 3.6 GW at the end of 2013 from 1.6 GW two years ago.
Tepco is also working with the Mitsubishi group to jointly develop and build a new generation of coal-fired power plants in Fukushima. The plant will operate on the gasification combined cycle technology of Mitsubishi Heavy Industries to produce more power using less energy, while producing less emissions compared with conventional coal-fired plants.
Separately, Tokyo Gas Co. is looking to expand its coal-fired power capacity, as it prepares to compete for a bigger share of the residential electricity market, which will open to competition in 2016, while trading house, Marubeni Corp., has set up a new subsidiary to add at least 400 MW of capacity through the construction of four thermal coal-fired power plants to serve the greater Tokyo market. Marubeni Thermal Power Co. Ltd (MTPC), which will operate and maintain the group’s domestic thermal power generation assets, plans to build two gas-fired and two coal-fired power plants, each of about 100 MW capacity, by 2016.
As part of its plan to reform Japan’s troubled power sector, the government is also encouraging the country’s two largest trading houses, Mitsubishi Corp. and Mitsui & Co, to add both fossil fuel and renewables-based plants from 2016 to serve greater Tokyo. With the area’s addition of 1.5 GW of new capacity by 2020, the government hopes to keep a lid on energy cost, as well as reduce the threat of power supply disruptions.
Japan’s support for coal-fired power plants and coal technology
With Tokyo’s support, Japanese companies are expected to continue developing coal technology and coal-fired power plants for domestic use and the export markets. Between 2007 – 2013, the Japan Bank for International Co-operation (JBIC) lent a total of US$ 12 billion to help developing countries build 21 coal-fired power plants, according to the US National Resources Defense Council. The loans are often attached with conditions requiring the participation of Japanese engineering and technology providers, such as Mitsubishi Corp., Hitachi and Toshiba, which claim to build energy-efficient power plants that use less coal and produce less emissions than their competitors.
Other Japanese companies are also playing important roles in the development of coal-fired power plants in Indonesia, Turkey, Vietnam and Bangladesh:
- In Indonesia, Japanese companies are working with state-owned power producer PT PLN to build energy-efficient plants equipped with ultra-supercritical coal technology. PLN and a group of 30 Japanese companies led by major engineering players, including Mitsubishi, Mitsui, Yokogawa and Shimizu, are planning to start construction of several plants on the islands of Sumatra, Sulawesi, Java and Kalimantan next year with completion targeted for 2019.
- In Turkey, Mitsui is conducting a feasibility study to build two coal-fired power plants in Kahramanmaras province to add to the two already at the Afsin-Elbistan site with a combined capacity of 2795 MW.
- Marubeni said it will soon begin building a second 600 MW coal-fired power plant for state-owned Eletricity Vietnam (EVN) in Nghi Son in Vietnam’s Thanh Hoa province. Marubeni said it recently secured the US$ 900 million project targeted for start-up in 2018, as it aims to complete Nghi Son’s first 600 MW coal-fired plant later this year. The contract is supported by overseas loans provided by the Japanese government through the Japan International Co-operation Agency (JICA).
- In Bangladesh, the Japanese Government said it will help build a coal-fired power plant on Matarbari Island, as part of its provision of a new package of aid totaling US$ 1.18 billion for 2014.
Poland and Africa are potential coal suppliers
As it continues to debate the revival of its idled nuclear energy plants, Japan is also looking to develop new sources of coal supplies from Africa and Poland, as part of its energy diversification measures. Last December, Poland’s economy minister, Janusz Piechocinski, told the local media that Japan had enquired about buying coal for two power plants being planned in the greater Tokyo region, among 14 gas and coal-fired projects expected to be launched over the next few years.
In January, Abe unveiled a government-backed plan to help Mozambique develop its natural gas and coal reserves, starting with a programme to train 200 nationals from the east African country. Abe met with the political and business leaders of 15 west African countries during a visit of the continent to bolster trade and political ties.
Note: A longer version of this article first appeared in the July 2014 issue of World Coal.
Written by Ng Weng Hoong. Edited by Jonathan Rowland
Read the article online at: https://www.worldcoal.com/special-reports/11082014/world-coal-regional-report-japan-into-the-breach-coal1187/