After decades of sluggish growth, Japan’s economy may be turning a corner. The government is pressing ahead with initiatives to promote population growth and expand energy-intensive industries, particularly artificial intelligence (AI) and semiconductors. But current energy policies are not accounting for increased demand driven by these growth efforts.
However, Japan is taking positive steps in restarting its nuclear reactors under new security and safety measures established after the Fukushima Daiichi accident in 2011. The government recognizes nuclear energy as an important source of baseload electricity generation that can help achieve Japan’s climate targets and bolster energy security to hedge against the volatility of global fossil fuel import markets. To power its economic growth and competitiveness, Japan must continue restarting its existing fleet and commit to the eventual construction of next-generation advanced reactors.
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Japan’s climate and energy security strategy
Japan’s energy system is transforming to decarbonize and ensure energy security. The government’s “S Plus 3E” strategy is based on the four pillars of safety, energy security, economic efficiency, and the environment. To advance these objectives, the government is targeting an electricity mix in which nuclear constitutes 20-22 percent of generation by 2030, alongside a 36-38 percent share for renewables, 20 percent liquefied natural gas, 19 percent coal, and 2 percent oil.
Japan has some offshore wind capacity—currently 0.25 gigawatts (GW)—and ambitious goals of achieving 10 GW by 2030 and 30-40 GW by 2050 under its feed-in-tariff (FIT) scheme. The 2012 FIT significantly boosted solar generation, increasing installed capacity from 5.6 GW before 2012 to 70 GW by May 2023. However, solar deployment has slowed recently due to a shortage of land and grid congestion.
In February 2023, the government announced its Basic Policy for the Realization of GX (Green Transformation), Japan’s vision for a virtuous cycle of emissions reductions and economic growth. The GX Promotion Strategy, adopted in July 2023, identifies support for nuclear power as one of several necessary policies to provide a steady supply of energy. Public approval of nuclear energy has steadily increased since the Russian invasion of Ukraine. In 2023, a majority in Japan favored restarting the existing reactor fleet.
New momentum for nuclear
As of fiscal year (FY) 2022, nuclear energy constituted 5.6 percent of Japan’s electricity production, a significant decrease from 25 percent in FY 2010, the year before the Fukushima Daiichi accident. In the last few years, nuclear generation has recovered steadily, despite remaining well below pre-2011 levels. Nuclear also holds great promise for repowering retired coal-fired power plants, providing firm generation for data centers and semiconductor facilities, producing industrial heat and hydrogen, and powering Japanese industries participating in a growing export market.
Japan operated over fifty nuclear reactors before the accident; as of May 2024, thirty-three reactors are classed as operable. However, only twelve reactors—of the twenty-seven that have applied—have met new regulatory requirements and received approval from the Nuclear Regulation Authority (NRA) to restart. Ten remain under the authority’s review and must obtain local government consent before restarting. Notably, Tsuruga Unit 2 could be the first to be denied restart approval under post-Fukushima regulations, due to its proximity to fault lines and failure to meet new seismic regulatory requirements.
Two notable plants being queued for restart are at Onagawa and Shimane. The Onagawa Nuclear Power Station, which utilizes boiling-water reactors (BWRs), will likely be the first BWR to resume operation in Japan since the 2011 earthquake. This restart is a powerful step toward advancing Japan’s S Plus 3E objectives.
Safety improvements learned from the Fukushima Daiichi accident, such as tsunami walls and earthquake reinforcements, have been implemented for the existing fleet. The restart process has taken over a decade, with continuous reviews and updates required by the NRA. Japan should glean lessons from Onagawa Unit 2’s upcoming reconnection process to refine technical, operational, and regulatory efficiencies for other pending BWR restarts. Improving the clarity and predictability of the regulator’s heightened post-Fukushima safety requirements will also be essential.
Increasing or decreasing demand?
Japan’s government currently projects that energy demand will decrease as a result of a declining population and successful energy efficiency measures. However, these projections have yet to reflect the government’s plans to boost energy-intensive industries and reverse Japan’s population decline.
Japan’s birth rate has been declining since the 1970s, reaching an all-time low in 2023 with only 727,277 births for a population of 125 million. Prime Minister Fumio Kishida has committed to doubling government spending on child-related programs and established the Children and Families Agency in an attempt to reverse this trend. If successful, the government will need to revise its expectations that falling birth rates will contribute to plummeting energy demand.
Economic growth is also challenging those assumptions. The domestic semiconductor industry is growing, with Taiwan Semiconductor Manufacturing Company (TSMC) investing $20 billion for two plants in southwest Japan, one of which opened in February 2024. Micron Technology intends to build a manufacturing facility in Hiroshima, and Tokyo-based Rapidus aims to build a facility in northern Japan, an effort reinforced by $6 billion in government support.
Rapid adoption of new AI tools is boosting Japan’s economy and tech sector. Digitalization gained momentum during the pandemic, and tech giants like Microsoft—which is investing $2.9 billion in AI data centers over the next two years—and Oracle—which is planning to invest over $8 billion in cloud computing and AI within the next decade—underscore this AI boom.
These factors are expected to increase power demand significantly. The International Energy Agency forecasts that data centers and data transmission services—and their insatiable appetite for electricity—could double their power consumption between 2022-26. This level of growth is already being seen in some markets. In the United States, a recent Energy Information Administration survey found that, because of large-scale computing facilities, commercial demand for electricity generation surged by 27 billion kilowatt-hours in Texas and Virginia from 2019-23, and increased by 40 percent in North Dakota over the same period.
As a result, Japan’s Ministry of Economy, Trade and Industry (METI) is supporting the restart of nuclear power plants to meet growing energy needs, particularly to backstop load growth from its expanding tech and AI industries. METI’s Advisory Committee for Natural Resources and Energy will no doubt capture these emerging dynamics in its forthcoming seventh Strategic Energy Plan, currently under discussion and expected later this year.
Moving forward with nuclear energy
In August 2022, Kishida proclaimed that restarting idled nuclear power plants is a strategic imperative to avert crisis and secure Japan’s electricity supply, urging additional units approved by the NRA be brought online.
Echoing this sentiment at the March 2024 Nuclear Energy Summit in Brussels, Kishida said, “Japan will work to push forward the restart of nuclear power plants, extend their operational periods, and foster the development and construction of next-generation advanced reactors.”
Japan has moved to utilize its existing nuclear power units and restarted twelve reactors. It is imperative, however, to look to the future when the existing fleet will need to be replaced and new reactors built. To create a favorable business environment and enable utilities to construct next-generation advanced reactors, policies that promote large initial capital investments and improved business predictability are crucial. Additionally, the nuclear industry struggles with an aging workforce and an illiquid market for skilled labor, necessitating sustained investments in human capital and a strengthened talent pipeline. Japan must also work to bolster supply chains needed for eventual plant construction and operation. Moreover, if Japan is to compete in the global market—and team up with the United States and other like-minded countries on reactor export tenders—efforts such as the Nuclear Supply Chain Platform are essential and will enable the Japanese nuclear workforce to maintain expertise.
To overcome these challenges, Japan must maintain positive momentum and implement robust measures to support the nuclear sector, ensuring it can meet growing electricity demand and secure its energy future. Nuclear power plants are not solely physical components of critical electrical infrastructure; they are long-term strategic assets that generate clean, firm power and can strengthen green growth strategies, as articulated in Japan’s GX policy. Japan can harness its existing fleet and leverage its technical prowess to secure and invest in a brighter economic future.
Note: This blog post is based on the authors’ recent trip to Japan, having attended a workshop on advanced reactor technologies at Tohoku University in Sendai. The authors wish to thank Tohoku Electric Power Company for hosting a tour of Onagawa Nuclear Power Station in May 2024.
Lauren Hughes is the deputy director of the Nuclear Energy Policy Initiative at the Atlantic Council Global Energy Center.
Maia Sparkman is the former associate director for climate diplomacy at the Atlantic Council Global Energy Center.
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Image: Shot from atop the Roppongi Hills Mori tower, Minato City, Tokyo, Japan. Credit: unsplash