As much as $71 billion of Japanese coal assets could be at risk as the economic viability of plants is undermined by cheaper renewable energy, research by the University of Tokyo, Carbon Tracker and the Carbon Disclosure Project showed on Sunday. The report, called Land of the Rising Sun and Offshore Wind, used project financial models to analyse the economics of new and existing coal plants in Japan.
It found that Japan's planned and existing coal capacity could be jeopardised by low utilisation rates and cheaper renewable energy, namely onshore and offshore wind and large-scale solar photovoltaics (PV). Offshore wind, solar PV and onshore wind could be cheaper than new coal plants by 2022, 2023 and 2025 respectively.
Added to that, offshore wind and large-scale solar PV could be cheaper than the long-run marginal cost of existing coal plants by 2025 and 2027 for onshore wind, the report said. To meet a globally-agreed goal of limiting temperature rise to below 2 degrees Celsius this century, planned and operational coal capacity would need to be shut down and Japanese consumers could face $71 billion in higher power prices as the cost of stranded coal assets is passed on.
Of this amount, $29 billion could be avoided if the Japanese government reconsidered the development of planned and under construction capacity straight away, according to the report. Coal-fired power generation is a major contributor to carbon dioxide and other pollutants that contribute to global warming, which is causing heat waves, rising sea levels, droughts and other extreme weather events.
The Japanese government has said renewables should be the main source of power and the country should aim to be carbon-neutral as soon as possible after 2050, to meet the Paris global climate agreement. However, the Fukushima nuclear plant disaster in 2011 and shutdown of Japan's reactors increased its fossil fuel import dependence to nearly 95% in 2016, from 80% in 2010, and resulted in carbon emissions from power generation rising by a quarter, according to the International Energy Agency.