EDITOR: | May 15th, 2013

Japan’s rediscovered economic success to fuel return of Nuclear Power

| May 15, 2013 | No Comments

121214044637-shinzo-abe-monsterThe Japanese economy has started to improve according to the latest indicators. GDP growth is expected to increase 3.1% in the first quarter of 2013 compared to the previous quarter to 1.3% for 2013 and 2.3% for 2014. Perhaps, more significantly, Japanese citizens’ level of confidence in their economy has also improved – which is more than one can say for many other OECD countries – as hinted by a 5% rise in household demand last March. Many Japanese companies have announced they will raise salaries and bonuses. At the same time, residential and business real estate prices in Tokyo have also been recovering while vehicle sales showed a 2% increase year to year. What is perhaps most indicative of Japan’s recovery and rediscovered optimism is that the impact of the Fukushima nuclear accident, which has greatly affected various sectors of the Japanese economy and popular psyche, has now started to fade.

The new Liberal Democratic Party (LDP) government led by Shinzo Abe can take a lot of credit for Japan’s rise from an extended slump, which should translate into considerable political capital. The Prime Minister has only just started to apply his prescription but all indicators point even bigger successes in the long term. His party, the LDP, already has a solid majority in the lower house and the July elections should put the LDP in solid control of the upper house as well, given that PM Shinzo Abe enjoys a 76% approval rate in the polls – a record high for Japan. If the LDP manages to take control of both Houses of parliament by this summer, there will be no real opposition against his policies. It so happens that restarting nuclear reactors and gradually bring Japan back to a 30% share of nuclear generated power is one of pillars of Abe and the LDP’s recipes for Japan’s longer term recovery.

The current successes have given the new government the necessary political and social capital to push ahead with nuclear power. This is fundamental because the use of nuclear power tends to fuel irrational fears especially in the so-called developed countries. Citizens in Japan and the West have been persuaded by popular dramas featuring images of polluted wastelands and toxic rains for several decades. It is no wonder that the Fukushima incident promoted a collapse of nuclear energy demand in Europe: Germany went so far as to ban it irrationally while Switzerland and Spain banned the construction of new reactors. The ‘green lobby’ can take much of the blame or the credit – depending on where one stands – for fueling the fear and influencing politics. Yet, OECD studies, backed by risk statistics, insist on natural gas and nuclear reactors as being the safest energy sources.

The contrast is especially striking in comparison with other realistic energy options. Even backed by the success of his economic policies, PM Abe and his LDP government will still have to battle the ‘crowd’ and its popular culture accented fears of nuclear energy; however, MP’s have already started to challenge popular notions – rationally. Their first step has been to gather evidence to determine what worked to keep all other nuclear reactors safe – only the one at Fukushima had a meltdown because of the tsunami’s water terminating the power supply to the reactor’s cooling mechanism. One of the reactors that continued to operate safely – until it was turned off as a matter of precaution – was just 16 km away from Fukushima. In addition, the communities where the nuclear reactors are located fear economic stagnation if the reactors should remain idle for much longer.

It will be more difficult to hold such arguments at bay now that economic growth in Japan is a reality after more than a decade of slowdown. Of course, the Japanese Nuclear Regulation Authority will enforce new safety regulations and these should be ready as early as July, which means that reactors can start to be inspected and cleared to restart thereafter. Japan’s reactors are commercial enterprises and so far of the 50 that were operating before March 2011 (the Tsunami and Fukushima accident) only two are working. The resumption of nuclear power in Japan may lead to a more rational presentation of the Fukushima accident. This, in conjunction with China’s need to reduce its excessive pollution by resorting to nuclear energy thanks to 100 new reactors by 2020, should help to encourage authorities and the public in most other parts of the world in becoming less averse to nuclear power. To this effect, Japan has joined France and Turkey in a consortium formed by the Japanese companies Itochu and Mitsubishi Heavy Industries and France’s GDF-Suez to build Turkey’s second nuclear reactor in a USD$ 22 billion project. The contract will also feature an as yet to be indentified Turkish company and Areva SA, which owns the world’s largest uranium mine in Mali, will supply the fuel. The consortium beat a competing bid from China’s Guangdong Nuclear Power Holding. The contract represents a great victory for the Japanese nuclear industry, committed to rebuild its credibility to two years since the disaster at Fukushima. All the more so when one considers that Turkey is a country that is subject to strong earthquakes, just like Japan.


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