Renewables Update

Why is Japan letting China win the renewables race? in Japanese

20 March 2015 John A. Mathews, Professor, MGSM, Macquarie University

The debate over energy reform in Japan has been focused on the linked issues of managing the future trajectories of nuclear and fossil fuels and changing the structure of the power generation market. The recent case of a joint venture between Tepco and Chubu Electric Power over LNG supplies is a classic case in point. This emphasis means that energy security is viewed as a matter of diversifying sources of fuel supply and consolidating Japan’s purchases, where fuels are interpreted to mean nuclear or fossil fuels. Renewables have been viewed as an additional but marginal energy source, and one that has merit as a factor in climate change mitigation, but not in making much impact on overall energy security.

This is not how the situation is viewed in China, which in recent years has built the largest renewable power system on the planet. The year 2014 saw China adding approx. 200 TWh of electric energy generated from water, wind and solar, while electricity generated from fossil fuels actually declined by 1.1%. This decline is a first in recent history – an exceedingly important milestone. In terms of capacity, China added 52 GW from hydro, wind and solar sources – or a 1-GW power station each week, on average. And investment in renewables outranks that in thermal power sources every year. These totals all dwarf those for Japan.

China is hardly doing all this as a favour to the world. A plausible explanation for China’s strong emphasis on green energy sources is that they provide a ready solution to the problem of black skies and black water. Cleaning up China’s black energy system is clearly a political priority of the highest order. But a medium-term goal is that renewables offer a form of energy security that does not involve the international entanglements that have become so familiar in the fossil fuel era – and which are all too evident in Japan’s strategies.

The reason that renewables offer real energy security is that they are all products of manufacturing, and manufacturing can be controlled as a domestic activity subject to increasing returns and declining costs. Renewables all benefit from cost reductions as the scale of production increases – a process highly visible as China ramps up production of solar photovoltaic cells and wind turbines, and where cost reductions are now emerging also in battery production and concentrated solar mirrors and lenses. This is an aspect of renewables policy – viewing renewables as an export platform and pillar manufacturing industry of the future – that has been overlooked by countries that still see renewables solely in terms of climate change mitigation. Yes, renewables do offer zero carbon energy (or close to zero) and this is a most convenient attribute – but it is arguably not their primary feature in the eyes of Chinese policy makers.

The same cannot yet be said for Japanese policy makers. There still seems to be a pervasive view in Japan that “serious” energy policy and energy security discussions focus on diversifying fossil fuel supply lines – while the potential of renewables as manufactured systems to provide for energy security and export success is ignored or downplayed. Renewables as products of manufacturing would play to Japan’s strengths as the world’s premier manufacturing nation. Yet Japan is allowing China to lead in this most important industry of the 21st century, while remaining locked itself in a 20th century mindset of fossil fuels and nuclear power. It is losing the race to build a powerful manufacturing system that generates energy security. One has to ask how long will Japan’s policy-making elite allow this situation to continue.

Please also see ‘The Greening of China’s Black Electric Power System? Insights from 2014 Data’ issued onThe Asia-Pacific Journal, Vol. 13, Issue 10, No. 2, March 16, 2015, written by John A. Mathews and Hao Tan