Japan's Slow Nuclear Return Is Already Cutting LNG Demand. The Contract Book Has Not Caught Up

When the Fukushima Daiichi accident struck in 2011, Japan had 48 other reactors. By 2013 every one of them had been taken offline, and the country replaced the lost output almost entirely with imported liquefied natural gas. Thirteen years later, the return of nuclear power has been far slower than either its supporters or its critics expected. Yet the effect on gas imports is already visible, and it is large enough to matter for an LNG market that is about to receive a wave of new supply.

Since then, according to the US Energy Information Administration, 12 units have restarted, bringing operating nuclear capacity to about 11 gigawatts. Kansai Electric restarted Takahama Unit 1 on 28 July 2023, more than 12 years after it entered an inspection outage in January 2011. The timeline from application to restart for the Takahama pair was more than eight years. Kansai applied in March 2015, the regulator confirmed compliance in April 2016, and the restart was further delayed by additional fire protection work.

Small as the restart programme has been, its effect on gas demand is measurable. The EIA reports that Japan's LNG imports in 2022 were 15 per cent lower than in 2015, a fall of 1.7 billion cubic feet per day. Fossil fuels still supplied 71 per cent of Japanese generation in 2022, with natural gas accounting for 35 per cent of total generation. Japan's gas purchasing is built on long-term contracts, which supply up to 90 per cent of its LNG imports in a typical year.

The case for nuclear restarts in Japan is often made in climate terms, but the stronger argument in Tokyo has been energy security. The Japanese government's GX decarbonisation policy treats nuclear as a central part of the power mix, and recent legislation allows reactors to operate beyond 60 years by excluding time spent offline for safety reviews. For Japanese planners, the policy question is how to combine restarts with a sensible contract book.