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Reality Check: Japan’s Coal Boom Continues

Mari Iwata, The Wall Street Journal

Japan is continuing to re-embrace coal to make up for its lack of nuclear energy, with plans for another power station released Thursday bringing the number of new coal-fired plants announced this year to seven.

Utilities in Japan are eager to take advantage of coal’s relative cheapness to give them a competitive edge at a time when other countries are seeking to reduce their greenhouse-gas emissions by moving away from a fuel source seen as dirty.

The liberalization of Japan’s power industry by 2020 will pit power companies against each other as rivals for the first time. In addition, with a relaxation of restrictions on coal power and no new emissions targets on the horizon, utilities are increasingly seeing coal as an important part of their business plans.

Kansai Electric Power Co. and Marubeni Corp. informed Akita prefecture on Thursday of their plans to build a new, 1.3-gigawatt coal-fired power station in the northern prefecture of Japan, the two companies said.

If all seven projects including the plant in Akita materialize, they will increase the nation’s coal-power generation by up to 7.26 gigawatts by around 2025. That is equivalent to seven medium-size nuclear reactors. […]

The relative cheapness of coal was indicated in a 2011 government report that estimated the cost of coal power in Japan at ¥7.5, or about 6 cents, per kilowatt-hour including construction and operation. The same report put the cost of nuclear power at ¥9 per kwh, gas power at ¥10 per kwh and oil power at ¥19 per kwh.

The moves by the power companies are “understandable” in light of the prolonged nuclear outage that has forced power utilities to rely on old, inefficient oil- and gas-power stations, said Hidetoshi Shioda, energy-industry analyst of SMBC Nikko Securities.

All of Japan’s 48 reactors are offline over safety concerns following the Fukushima nuclear accident, though four of them are expected to come back online later this year.

Before the nuclear accident in March 2011, the environment ministry had essentially blocked the building of new coal-power stations through tighter environmental assessments as Japan sought to meet ambitious greenhouse-gas reduction goals that have since been scrapped.

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