Countries have been forced to ease soaring energy prices

Jun Arima

The Russia–Ukraine War is a reminder of the vital importance of a low-cost, stable supply of energy and the impact of geopolitics on securing it.
Europe, especially Germany, is feeling this keenly. Germany, which is committed to a nuclear and coal phase out, had been promoting the introduction of renewable energy sources like wind power while using Russian natural gas to adjust for the fluctuations in the output of renewable energy sources. The conflict in Ukraine has derailed plans for a new German–Russian gas pipeline, Nord Stream 2, and Germany is now facing the threat of energy supply disruptions.
Energy policy in developed countries has been dominated by the policy goal of decarbonisation since the 2015 Paris Agreement. Despite the continued significance of fossil fuels, emphasis has been on arguments that fossil fuels must be eliminated and fossil fuel investments will become stranded assets. This is why investment has been slow despite rising energy prices. These arguments jeopardise the stable supply of fossil fuels. Energy transition will not happen overnight. It is necessary to recalibrate policies with energy security in mind. That must include fossil fuels.
Rising energy, raw materials and food prices due to the Russia–Ukraine war and the risk of a global economic downturn could we-aken momentum for action on climate change. Of cou-rse, global warming prevention is a powerful political slogan, as witnessed in the Leaders’ Communique at the 2022 G7 Summit, which reaffirmed strong commitment to the COP26 Glasgow Climate Pact. The question is whether real action will accompany it.
Despite the ambitious language of the Glasgow agreement, countries have been forced to ease soaring energy prices. The Biden administration — which has been calling for decarbonisation and renewable energy — is releasing oil reserves, asking the oil and gas industry to increase production, resuming oil imports from previously sanctioned Venezuela and freezing the federal gasoline tax to curb soaring gasoline prices. Europe, a leader in decarbonisation, is expanding coal imports on the back of high gas prices. In China and India, coal production and coal-fired power generation have increased significantly. In Japan, gasoline subsidies have been introduced.
These actions run counter to global warming prevention but they are political realities. If soaring energy costs have a negative impact on livelihoods and industry, the priority must be ensuring low-cost energy supply.
According to the United Nation’s Sustainable Development Goals awareness survey, climate action priority is ranked first in Sweden and third in Japan, but only fifteenth in China and ninth in Russia and Indonesia. It is unsurprising that poverty, education, health and employment are prioritised over climate protection in developing countries. Now that the world’s economic situation is deteriorating and energy prices are skyrocketing, climate action in developing countries is even less of a priority.
The key to future global energy demand and greenhouse gas emission trends will be held by developing countries, especially in Asia. Across Asia, dependence on coal is 48 per cent, as opposed to 12 per cent in Europe and 9 per cent in North America. If the Asian region lags in gas conversion due to soaring natural gas prices, it will be difficult to reduce greenhouse gas emissions.
Global warming prevention has been the focus of attention since the end of the Cold War when international cooperation was gaining momentum. But now a new Cold War-like confrontation is emerging. This will have a negative impact on climate change action which above all requires international cooperation. As military spending by developed countries expands, the funds available to support developing countries in global warming mitigation and adaptation could decline. Develo-ping countries will have no choice but to slow their climate change response.
The Ukraine crisis poses various challenges to Japan’s energy security. Rising oil and natural gas prices and a weakening exchange rate are raising Japan’s energy costs, which are already the highest of any developed country. This is a major burden on the Japanese economy.
Japan is challenged by a lack of domestic fossil fuel resources and interconnection lines with neighbouring countries. Its terrain limits space for solar panels and ocean depths make offshore wind power costly. Compared to the resource-rich countries like the United States and Europe, where regions are connected by power grids and pipelines, Japan’s energy security suffers an overwhelming disadvantage.
The argument that ‘now is the time to get rid of fossil fuels and nuclear power’ ignores the desperate situation Japan is in. All available options should be used. A one-leg approach to renewable energy could lead to a repeat of the situation in Germany.
Accelerating the resumption of nuclear power plant operations is a pressing issue. One unit of nuclear power saves 1 million tonnes of liquified natural gas (LNG). This would be beneficial for Japan’s energy security and contribute to easing the global LNG supply–demand crunch. The pressure on power-supply–demand in summer and winter could be largely alleviated by accelerating a nuclear power restart. Both the restart of nuclear power plants and the construction of new plants is necessary to decarbonise.
The Ukraine crisis has reminded Japan of its energy security risks due to its proximity to China, Russia and North Korea. Re-examination of the national and economic security system is an urgent task. Energy policy heavily focused on decarbonisation also need to be rebalanced with an eye towards energy security, the most fundamental demand of all.