Reuters reported on Japan’s new effort to overhaul its energy policies and replace its lost capacity from the atomic industry. Japanese lawmakers have enacted a national scheme to focus their energy investments on solar, wind, biomass, and other green energies. The bill is expected to pass sometime next week but there are some minor details in dispute that could take the teeth out of the bill. One of these contentious points is the subsidized pricing for the different types of green energy; another is the institutional risk in the Japanese political structure. Unlike the European or the Chinese politics surrounding the green sector, the Japanese investors are not so confident in their long-term prosperity under a stable guiding force from the government.
"Investors say they find no institutional risk in investing in the renewable energy sector in Europe, but they say there is such a risk in Japan given uncertainty of the scheme's prospects and there is also a risk in the country's politics,"
Shinichiro Takiguchi, executive senior researcher, Japan Research Institute.
Another fear is the bubble effect from hard fixing the price per KW energy instead of letting market to control the price point. Currently, the law sets to price solar energy at 40 yen per KW with overage of investment cost subsidized by the government. Takao Kashiwagi, professor of Tokyo Institute of Technology predict that this incentive could drive solar capacity growth of about 3,000 MW a year in the first three years. That is about triple of solar panel shipments of 992 MW in Japan in 2010.
But there is a powerful next-door neighbor, China, that would gladly purchase the over produced panels, if there should be any. Given China’s new Circular Economy policies and its tax incentives to install solar panel, I doubt there will be a danger of bubbling effect as we have seen in the likes of the U.S. Internet business in the 90s or the housing bubble of recent.
Other worries involve the need for heavy investments to improve the ability for the Japanese grid to absorb the massive solar and wind energy that could be generated. This kind of initial risky investment can only drive innovation in terms of energy distribution that is also an interest to the Chinese infrastructure. I believe there is very little Japan has to worry about in terms of making their money back from exporting technologies that will come out of this kind of investing and developments.
While there are other worries, the country seems to be united in pushing forward the research and development of green technology. Even critics of the new bill are asking for more aggressive involvement from the existing energy companies.
"I think the scheme is one-sided as it is focused only on new power suppliers, taking advantage of end-users . . . . We need another plan. We need policy steps to make conventional power companies realize how lucrative it is to invest in the sector and sell green electricity to users . . . ."
Akihiro Sawa, executive senior fellow at the 21st Century Public Policy Institute and a former trade ministry official.
Here in the U.S., the critics of green energy seem to just want the opposite. They are calling for more coal and natural gas drilling. They market the abundance of our natural resources; they tell us how many years our coal will power our nation and how many more will natural gas supply our needs. But the question I always think about: what happens when we come to the end of those years? Japan and Germany will have developed a robust technology sector to supply the demand to power buyers like China. We will be left behind with a century old technology of fracking and drilling. I doubt we will be able to maintain our superpower status if we continue to think our way is better and we don’t need to pay attention to the growing global concerns for resource scarcity.
While the rising sun from the east takes center stage, it’s time for us to seriously consider our position on green energy. What can we do to rally our nation and march in step with the rest of the world so we are not left behind?