Nordic Talks Japan: Energy Security as Driver for the Green Transition
The Russian invasion of Ukraine, the subsequent sanctions, and Russia’s limitations on its natural gas exports to Europe have revealed the inherent vulnerabilities of being dependent on importing energy resources like oil, coal, and natural gas. For many countries, among them the Nordics, these developments have given new impetus to the discussion on how to accelerate the transition to renewable energy, both to increase energy security and to ensure an adequate energy supply, in addition to the climate concerns.
On December 8th, Nordic Innovation House Tokyo, the 5 Nordic Embassies in Japan, and the Finnish Institute in Japan held a Nordic Talks Japan event to further discuss the topic. We had an exciting venue provided by our partner UNIVERSITY of CREATIVITY at Akasaka Biz Tower in Tokyo. Online and offline participation combined, we had a total of around 120 participants listening to the discussion.
Opening Remarks
In his opening remarks, the Ambassador from Denmark to Japan H.E. Peter Taksøe-Jensen mentioned that Russia has created a new energy crisis for all of us, and that green transition is no longer a matter of climate change but is in the interest of international and national security. He mentioned the offshore wind initiative in the North Sea region as an example of collaborative acceleration of green transition and emphasized the necessity to make sure that fossil fuels are not used as a weapon against democracy.
The Ambassador then welcomed the speakers and moderator to the stage and the discussion started.
Mr. Tomas Kåberger, Executive Board Chairman of Renewable Energy Institute in Tokyo
Mr. Stian Sollied, Norwegian Honorary General Consul in Kobe and Country Manager of DNV in Japan
Mr. Lars Lose, Associate Partner at CIP (Copenhagen Infrastructure Partners), former Permanent Secretary at the Danish Ministry of Foreign Affairs
Mr. Yoshiaki Wada, State Minister of Cabinet Office, Member of the House of Representatives
Ms. Vivian Tokai (moderator), North Asia Director, Economist Intelligence Corporate Network
Impact of the Energy Crisis in Sweden, Norway, Denmark, and Japan
Tokai started off the conversation by asking each speaker to briefly share the current energy situation in each speaker’s country.
Kåberger: The consumers are struggling with the rise in electricity costs. This rise is not only caused by the price rise of fossil fuel but from some unfortunate weather in parts of Europe and technical issues with nuclear power plants in France. On the production side, there is an ongoing drive to increase the profitability of renewables and encourage more investments (namely solar and wind).
Sollied: Norway is the 4th biggest gas exporter and 7th biggest oil exporter in the world, and until the crisis, electricity was granted almost for free in the country. We are still financially benefitting as exporters, but it is obvious that demands for oil and gas will decrease as the renewables get more and more affordable, and that eventually, our benefits will decrease. The speed is faster than we estimated 2–3 years ago. We intend to invest more in offshore wind since the demand for green electricity is increasing due to a drastic transformation of our transportation sector to realize 100% electrified public transportation. The current crisis has raised awareness in the country for a faster drive toward renewables.
Lose: Denmark has been on the track toward renewables for years now, and we have about 70%, sometimes even more than 100% of our electricity generated from renewable sources. We aim to achieve 300% so that we can export electricity. We need to think about energy matters at regional levels. We already have the power grid that runs across the Nordic countries but now we are looking at a larger region, as the initiative to generate offshore wind power in the North Sea.
Wada: I envy the geographic situation in the Nordics and Europe where you can connect your grid to your neighboring countries. Japan is totally isolated, and our energy is almost 100% dependent on imports. The current crisis was a wake-up call for energy procurement. We are 20 years behind the Nordics in terms of renewable energy development and we need to speed up in order to maintain a sustainable energy supply.
Obstacles in Japan — call for transparency and easier access to market
Tokai: Japan has only 18% of renewables in its energy mix, and aims to achieve 36–38% by 2030. What are the current obstacles to a larger share of renewables in Japan?
Kåberger: In Japan, the power market is not functioning as it is in the Nordics. For example, it lacks independent transmission system operators, an open market, and transparency in the market. This is all making it less attractive for investors to invest in the industry. Also, the permission processes are extremely tedious, and demands from authorities and electric power companies are making it difficult and expensive for new market entries. There is ample room for legislators to work on simplification and removing barriers.
Lose: The procedures are not that easy as well in Europe. Renewables are a completely new system of energy so we have to think dynamically. Governments can concentrate on distribution to consumers. Private companies can concentrate on generating power. It is already becoming a good business and it does not need subsidies. Soon green ammonia and hydrogen will be a commodity on a global level. There are so many investors who are willing to invest, the technology is there, and political ambition is there, but we lack a connection between them, such as a fair tender process.
Sollied: Japan had a very ambitious and well-organized plan for ammonia and hydrogen development. Japan can focus on that field to become the market leader.
Wada: That is our long-term goal, but for now the industry still needs subsidies to rely on.
Scale matters to achieve competitiveness
Tokai: Are renewable sources price competitive? Did the current crisis help to make it competitive?
Lose: Renewables were competitive even before the crisis.
Kåberger: It was when we had a sufficient scale when the offshore wind cost came down in Northern Europe. Sufficient scaling in offshore wind requires a large-scale and long-term schedules on a Gigawatt level. Only long-term scalability can decrease the price.
Private initiatives rather than Politics
Tokai: How do you see the role of politics in energy security?
Lose: As we saw in COP27, the role of international politics is very limited. Maybe 10–15 years ago political ambitions were necessary, but now the industry has grown and is the leading force. If there was a role for governments it is to remove barriers for the industry to grow.
Sollied: Governments can learn from best practices, and work on deregulation and creating new systems that will make things predictable in the market.
Wada: Politics still matters. We still need strong political initiatives. Next year Japan is hosting the G7 Summit in Hiroshima, and I am proposing an Energy Summit Meeting in Hokkaido where we can appeal to the region as a leader in renewables.
Renewables as a Revitalizer for Rural Regions
Kåberger: Yes Hokkaido has a huge potential for solar and offshore windmills. We have seen examples in Northern Sweden where the renewable industry is functioning as a revitalizer for rural regions.
Lose: In Denmark, too, the Faroe Islands is a good example. Offshore wind is not only the windmill itself, but it involves many other elements such as harbor construction, and those can bring in many resources to the site.
Q&A
As the final part of the session, we welcomed a couple of questions from the audience.
Ambassador from Finland to Japan: When we talk about energy in the Nordics we not only discuss the energy supply but how to consume less energy. That is how technologies that consume less energy are developing (smart construction, three-layered windows, etc), and awareness education is taking place. How is the situation in Japan?
Wada: We are constantly working on how to consume less energy as well.
Kåberger: When we talk about energy saving, we need to think about efficient use, not sacrificing. I see sometimes in Japan that it is moving towards sacrificing, which can negatively affect people’s productivity and lives.
Ambassador from Iceland to Japan: Japan aims to have an energy mix with 20% of it coming from nuclear power. How realistic is this, and how competitive is the price?
Wada: Without the nuclear power plants running, we can’t fulfill the demand, especially for the upcoming few years. Electricity prices will decrease once we have the plants running.
Kåberger: Nuclear power plants are not price-efficient compared with solar or wind power. Worldwide, nuclear power covers less than 10% of electricity.
Closing Remarks
The closing remarks were addressed by the Ambassador from Norway to Japan H.E. Inga M. W. Nyhamar.
“While today’s discussion made be faithful that green transition will take place in both the Nordics and in Japan, it is an urgent task for all of us to have a diverse energy supply source. We also need a strong partnership, both in the private and public sectors, and help each other recognize the opportunities that are lying ahead. As we say in Norway: let’s roll up our sleeves and get to work”.
Thank you for reading to the end! You can also follow the whole discussion from the recording:
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