Discussions about the Role of Nuclear Power for Achieving the Paris Agreement in Japan Yutaka Nagata and Sumio Hamagata Socio-economic Research Center Central Research Institute of Electric Power Industry, Japan

Three energy issues for setting Japan's INDC Self-Sufficiency Rate Electricity Cost CO2 Emissions Only 6.1% in 2013 Raise to close to 25% - above pre-2011 levels of about 20% - Fuel cost: 9.2T yen + FIT purchase cost: 0.5T yen in 2013 Lower costs from current level 8.4% increase from 2010 to 2013 Set reduction targets comparable with the EU and the US Current Status Current Status Current Status Target Target Target Not only decreasing CO2 emission, but also improving self-sufficiency rate of energy and lowering electricity costs are important for setting Japan's INDC target.

Japan's INDC and power generation mix GHG Emission Power generation mix 1408 mil. ton 35% CO2 emissions factor 0.567kg -CO2/kWh 0.37kg -CO2/kWh 1085 TWh 25% 1065 TWh 1042 mil. ton 4% Other renewables Hydro 7% 13-15% Energy- originated CO2 1235 mil. ton 687 0.9% 9% 41% 20-22% Nuclear LNG 34% 567 27% 213-234TWh 33% Power sector Coal = 548 At least 30GW 360 26% Oil 15% 3% 2013 2030 2013 2030 Zero emission power 44%. Coal occupies a certain share for energy security and low electricity price.

Current status of nuclear power in Japan under construction 4.14GW 2 units not filed 1 under review 19 units to be decomissioned Approved 60 years operation Operated in 2010 54 units 48.96GW 10 units not filed 1970-1980 1.10GW 1970-1980 2.48GW 1980-1990 9.36GW 11 units under review 35 units 34.17GW 1990-2000 15.80GW 5 units approved 9 units restarted 2000-2010 5.42GW To be decomissioned Current status of investigation by Start period of operation Available capacity in 2030 5.42 + 15.80 + 2.48 + 4.14 = 27.85 GW As of August10, 2018 JANSI (2018) Approved 60 years operation Under construction Under 40 years

Effects of nuclear deficit on economy Nuclear power deficit (22→15%) Model simulation Increasing in CO2 emission LNG case Supplemented by LNG power Additional decrease Increase in domestic commodity prices Cost rise in electricity supply Renewable Case Supplemented by solar power (with FIT charge) Lose international competitiveness Additional cost for grid connection and stabilization of intermittency Accounted Decrease in GDP Not accounted

Results of model simulation Cost of electricity supply Changes in real GDP Cumulative loss of real GDP until 2030 LNG Case: 11 trillion yen Renewable Case: 13 trillion yen Energy-originated CO2 emission LNG case: +1.9% Renewable case: ▼0.5%

Conclusion CO2 emission reduction, improving self- sufficiency rate of energy and lowering electricity costs are important for setting Japan's INDC target. Recovering the use of nuclear power is expected in the target, however, increasing the units which are approved for 60 years operation or constructing new power plants is necessary for it. By our calculation, non-negligible economic loss may happen if the use of nuclear power will be limited than the target in the INDC.

A high barrier: uncertain capital recovery Increasing uncertainty of capital investment by regulatory reform instead of the traditional rate-of-return regulation Baseload power market Capacity market Traditional ROR regulation Mix of markets Balancing market Non-fossil value trading market Lots of markets will be prepared to encourage capital investment, but business environment for nuclear power is still unclear.