Brexit could bring benefits to the UK energy sector. Theresa May’s cabinet should seize the opportunity to reshape energy cooperation with non-EU partners, including Japan.
Japan and Britain are long-standing trading partners who have enjoyed a history of fruitful cooperation in different sectors. In the energy field, the UK-Japan relations – known as Nichiei Kankei in Japanese – have thrived on nuclear. Collaboration between the two islands began already in the 60s, when the UK supplied Japan’s first commercial power reactor.
But first, why is nuclear so important for London and Tokyo? Historically, nuclear power has represented a core element in both countries’ domestic energy policies and their climate strategies. Nuclear has been an essential energy source to ensure stability and security of supply, reduce greenhouse gas (GHG) emissions and tackle fuel poverty at national level.
Japan is notably poor in energy resources and has recently ranked as the least self-sufficient among other developed economies. Nuclear has then helped the Asian nation satisfy its energy needs for decades. In 2011, before the Great East Japan Earthquake which triggered a tsunami causing the meltdown of three reactors at the Fukushima Daiichi power plant, the country produced up to 30% of its electricity from nuclear.
After having shut down most of its reactors, this figure fell drastically, and nuclear currently provides less than 2 percent of the country’s power. However, it is not a mystery that Prime Minister Shinzō Abe is now betting again on nuclear. The Japanese Ministry for Economy, Trade and Industry (METI) wants to generate between 20 and 22 percent of the nation’s power supply in 2030 from this energy source. This target would require 25 to 30 reactors in operation by that year, experts indicate. In such scenario, Japan would diminish its reliance on rising coal and natural gas imports, but also divert investments for renewable energy generation and technologies.
In the UK, even Whitehall has often shown enthusiasm and been broadly supportive of nuclear especially over the last few years. In October 2013, Prime Minister David Cameron secured the deal with Electricité de France (EDF) for the construction of the heavily-criticised Hinkley Point C plant. Under Theresa May, the Department for Business, Energy and Industrial Strategy (BEIS) has made clear on several occasions that increasing generation from nuclear power is among its top priorities for the years to come. In the next few decades, there are plans to build several new reactors across the country. This includes small modular ones (SMRs), with capacity between 10 and 300 MWe, on which the UK may take the international lead in technology development. According to BEIS data, nuclear generated 21 percent of total electricity in 2017 and it with renewables will account for over 80 percent of total generation in 2050.
Similar domestic policies and objectives have led Japan and the UK to align their positions at the international level. In May 2018, they joined the “Nuclear Innovation: Clean Energy” (Nice) coalition, a global alliance championed by the US, supporting nuclear power as a carbon-free source for the future energy systems.
However, as said, both nations consider each other as a strategic partner on nuclear energy. Cooperation in the field spans a wide range of commercial and regulatory areas, including nuclear safety, decontamination, research and development and plant construction. Additionally, in 2012, in the aftermath of the Fukushima accident, former Prime Ministers David Cameron and Yoshihiko Noda formalised the strategic partnership through the launch of bilateral annual nuclear dialogues.
Concurrently, the two countries have developed complementary expertise, paving the way for joint projects and experience sharing in the sector. Interestingly enough, Japan has often looked into British technology for decommissioning and waste management, while the UK has taken guidance from at the Japanese leadership in plant design and construction.
Recently, the Japanese conglomerate Hitachi has taken on the development of the Wyfla power station in Wales, which will consist of two nuclear reactors with a minimum capacity of 2,700 Megawatt (MW). On 4 June 2018, the Business and Energy Secretary Greg Clark announced to the Parliament that the government was considering to co-finance the project with direct investment alongside the Japanese giant and other government agencies. This would represent a return to public funding to nuclear construction in the UK, previously ruled out by government policy for decades. Nevertheless, as of July 2018, it is still unclear what the financial commitment will look like.
As Brexit approaches, should May’s cabinet pursue cooperation in other energy fields? With increasingly cheaper renewables challenging other energy sources, will Nichiei Kanke in the energy sector still rotate around nuclear in the future? In the author’s opinion, nuclear will continue to dominate the Japanese-British cooperation in the sector.
However, after leaving the European Union, the UK should bring clean energy to the centre of its partnership with Japan. Renewables and related technologies are already one of the top priorities of the EU-Japan Energy Dialogue. Japanese energy markets are currently going through a radical phase of liberalisation and renewable energy sources have gained momentum since the Fukushima disaster, as the Asian country aims to increase their share in the energy mix.
Japan has then an interest in investing in decentralised types of energy and can learn from the UK experience with offshore wind and marine energy. On the other side, British companies could find fertile ground for their distributed energy resource, storage, demand-side response and smart energy management solutions. A more diversified energy mix would certainly make the Land of the Rising Sun shine again.
Fabio Orlando is Head of the Energy & Climate Programme at Agora.