Can Japanese Society Survive Without Nuclear Power?

No nuclear power, no Japan -- at least according to the country's own prime minister. In a televised broadcast to the nation last Friday, Yoshihiko Noda said that if the reactors that previously fed the country's energy grid continued to idle, then Japanese society cannot survive.

Yet the country's nuclear opponents and activists, gaining increasing influence even within Noda's own Democratic Party of Japan, respond that Japanese society cannot survive by continuing to live with nuclear power.

That divergence has resulted in a major political upheaval in Japan, with different visions for the country's future.

The grim warning from Noda underscored the country's increasingly difficult energy conundrum.

More than a year after the Fukushima nuclear disaster, all of Japan's 50 nuclear reactors are now offline. The 30 percent gap in national electricity supply is currently being met by greater purchases of fossil fuels from abroad. For a country long worried about an indigenous absence of natural resources and with an ingrained concern over foreign reliance, this has created a dilemma. The choice would be to once again live under the shadow of nuclear power, even when memories of 2011 events are still fresh, or to turn to dirtier fossil fuels that need to be purchased in great volumes abroad.

Experts say that natural and nuclear disasters last year have cost the country $100 billion, but that figure doesn't include the continued burdens the government may need to shoulder to support major power utilities now facing fiscal difficulties or the money spent on importing more energy.

Hopes For Two Reactors

On Monday, the Japanese government got what looked to be a major sign of support for its modest plans to restart two reactors in Fukui Prefecture along the coast of the Sea of Japan. The reactors previously supplied energy to the greater Kansai region and the metropolitan areas around Osaka, Japan's second-largest city.

The local Fukui commission charged with reviewing the restart of two reactors at the Oi power plant (No. 3 and No. 4 reactors in a plant with four total) noted that sufficient lessons had been learned and changes had been made since the March 2011 disaster to justify the action. The commission's leading panel said that even if an earthquake and tsunami that should be assumed based on the Fukushima Daiichi nuclear accident occurs, necessary measures for ensuring safety have been secured.

If the Oi reactors -- operated and owned by the Kansai Electric Power Company (KEPCO) (Tokyo: 9503) -- are restarted, it would give a major boost to efforts to avoid electricity shortages and rolling blackouts this summer. KEPCO estimates an approximate 15 percent shortfall of electricity during the peak summer months between July and early September.

The national government has, in turn, asked for a 15 percent voluntary summertime reduction in energy use in the area by businesses and households. That's a higher request for saving than in any other region in Japan, deepening business anxieties about effects on the economy and manufacturing.

But even with the two reactors back on, there may not be enough power to meet summertime shortages. Analysts expect that Kansai residents, more than 22 million people, would still need to use 6 percent to 7 percent less energy over the summer.

Noda has warned that blackouts could have a tremendously adverse impact. Indeed, the condition would not only affect lighting and cooling during the intense heat of the Japanese summer; it would also mean that water filtration and pumping stations, hospitals, manufacturing plants, train stations and food distributors would be crippled.

The restart is locally supported within Fukui Prefecture itself but faces widespread opposition in the rest of Kansai and across Japan. That's largely due to the huge significance of nuclear energy for the local economy. The region has 14 reactors in total, built with national subsidies of 346 billion yen, or $4.35 billion.

Members of the local Oi municipal government have unanimously said that they would vote in support of a restart if the local nuclear commission approves the action (which it did). The Prefectural Governor, Issei Nishikawa, will likely give his official approval shortly thereafter.

The reactors, located on the tip of the Oshima Peninsula between Wakasa Bay and Obama Bay, could be restarted as early as the end of this week.

Political Suicide?

Noda and his supporters say restarting the reactors is a means of protecting the country and its people. Whether the Japanese people themselves really believe him is another matter entirely.

Surveys and polls conducted by major Japanese news outlets have revealed little public support for the P.M. On June 4, results from a poll taken by the Mainichi Shimbun, a major newspaper, revealed that 71 percent of respondents opposed a quick restart of the Oi reactors.

A poll in May in the Asahi Shimbun, another major newspaper, found that 54 percent opposed the nuclear restart, while only 29 percent supported it. That matched closely the public's support rate for the government: Twenty-nine percent approved of the cabinet; only 51 percent supported it.

A Pew survey put out on June 5 claims that 70 percent of the country approved a reduction in nuclear energy, while more than half were worried that someone in their family had already been affected by radiation.

Political flip-flopping due to concerns over public support has already occurred. One hundred and seventeen members from Noda's own party, the DPJ, offered him a petition on the same day asking him to rethink his stance on the restart.

A day later, the governors of two major Kansai prefectures backtracked from an earlier decision to support reactor restarts. Yukiko Kada and Keiji Yamada, the governors of Shiga and Kyoto prefectures, respectively, joined Osaka governor Toru Hashimoto by stating that the restart ought to be temporary for only the summer months and hinged their support for the decision on whether or not a plan for eventually phasing out nuclear power could be produced. They also asked for the public release of government projections on radiation leakages if an accident occurred at Oi.

Noda has ruled out limiting the operation of the Oi reactors to summer periods.

Power And Other Headaches

Japan imported 18 percent more liquefied natural gas over the last year, as indicated by the government at the end of the Japanese fiscal year in March 2012. The government's previous promises to greatly reduce carbon dioxide emissions from 1990 levels are now being largely questioned by energy experts as impractical.

And increasing reliance on imported energy amid the absence of cheap nuclear power is creating another problem: whether Japanese power utilities can survive without the government.

The situation with the Tokyo Electric Power Company (TEPCO) (Tokyo: 9501) is giving Japan its own taste of too big to fail problems.

In May, the government injected another 1 trillion yen, or $12.6 billion, into TEPCO, bringing its total post-March 2011 investment into the company to 3.5 trillion yen, or $44.1 billion. The government has in effect renationalized the company, now owning more than half of its shares and forcing it to go through a 10-year restructuring period.

TEPCO still faces the massive hurdle of having to pay some 5 trillion yen, or $63 billion, in compensation to the families and individuals affected by the nuclear disaster.

But what if other utility companies around the country started suffering more severely as well, due to continued losses from fossil fuel imports? KEPCO would be one of those most seriously affected, since half of its previous generating capacity came from nuclear plants.

Over the fiscal year ending in March 2012, KEPCO posted a loss of 242.3 billion yen, or more than $3 billion. In the fiscal year ending in 2010, it had income of 127.2 billion yen, or $1.6 billion.

Whether the Japanese government would be able to sustain bailouts of major utilities is being questioned by domestic and international economists. Public debt in the country is now 230 percent of GDP, according to the IMF in April 2012. That's an $13 trillion debt burden.

Noda is taking the news seriously by proposing a sales tax increase to generate more revenue for paying off the fiscal deficit. However, that too is facing high levels of political and public opposition. Nuclear power, in other words, may turn out to be a smaller problem for the Japanese government than its ability to keep borrowing money.