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What was the "discrepancy" in Japan’s energy policy after Fukushima nuclear crisis?

After the Fukushima nuclear crisis following the Great East Japan Earthquake of March 11, 2011, it is not correct to say that Japan decided to change energy policy dramatically from a fuel mix heavily reliant on nuclear power to one involving growing use of renewable power. Nor is it correct to say that Japan intends to expand renewable energy to such an extent that it becomes Japan's primary energy source. Japan has been facing two problems. The first is the destabilization of the energy market caused by the Fukushima nuclear power crisis and electricity market reform. The other is the destabilization of energy policy caused by the "discrepancy" between people's perception of electricity market reform in Japan and the structure of Japan's energy sector. The "discrepancy" means that the Japanese government has had an overly optimistic view on the crisis, believing that the rise in energy prices and energy market reform or supply shock were not serious problems for people's lives, and that the public could handle these problems. In addition, this discrepancy arose as a consequence of Japan's incomplete energy market liberalization which began in the 1980s, and also due to political factors under the administration of the Democratic Party of Japan. Currently, Japan's energy policy is discussed more logically and calmly because this "discrepancy" has been progressively eliminated. In fact, the Sendai nuclear power plant-owned by Kyushu Electric Power Co. restarted operation on August 11th 2015.
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JEL Codes:L94: Electric Utilities, Q41: Energy: Demand and Supply; Prices, D02: Institutions: Design, Formation, Operations, and Impact

Keywords: Fukushima nuclear crisis, Japan, electricity market, power market liberalization, energy policy, JEPX, JKM

DOI: 10.5547/2160-5890.5.1.knis

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Published in Volume 5, Number 1 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.