Bloomberg News

Noda Tells Wary Japanese Atomic Power Needed to Save Economy

September 04, 2011

(Updates with opinion polls in twelfth paragraph.)

Sept. 5 (Bloomberg) -- Japan’s new Prime Minister Yoshihiko Noda in his first days in office started to deliver a difficult message to a public still in shock from the Fukushima nuclear disaster: Atomic power is needed to save the economy.

Nuclear power provided about 30 percent of the electricity in the world’s third biggest economy before the March 11 earthquake and tsunami. Now, about 80 percent of Japan’s 54 reactors are offline with more shutting for scheduled maintenance in the months ahead.

With the majority of opinion polls showing the public oppose the use of atomic power, Noda needs to convince his electorate so-called stress tests on reactors will make them safer to restart. Industry leaders have said they may shift production overseas if power supplies aren’t stable, threatening an economic recovery.

“There will be very little reserve electricity for peak hours in the winter and summer if the operating rate of reactors keeps falling,” said Yugo Nakamura, an analyst for Bloomberg New Energy Finance. Noda is “trying to avoid economic disruptions by restarting reactors after safety checks.”

Noda’s predecessor, Naoto Kan, called for Japan to end its reliance on atomic power after the world’s worst nuclear accident in 25 years. Public concern about safety has meant that reactors closed for maintenance haven’t been allowed to restart, forcing Japan this year to impose power-savings measures for the first time since the 1970s.

Shrinking Economy

Japan’s gross domestic product shrank at an annualized 1.3 percent rate in the three months ended June 30, marking three consecutive quarters of declines, the Cabinet office said last month.

The new premier seems in agreement with Kan that Japan’s energy future should shift focus to renewable power, while saying for the current economy to grow nuclear power is needed.

“It’s a realistic option to use existing plants to a certain extent and develop nuclear technology until at least 2030 while aiming to decrease our dependency on atomic power,” Noda said in an article for the Bungeishunju magazine published on Aug. 10.

“We will build a framework so we can restart reactors shut for maintenance after ensuring they are safe following stress tests and gaining the understanding of local residents,” Noda said on Sept. 2 after appointing his Cabinet.

“It’s important for us to prepare for restarts,” he said in comments on possible power shortages next year.

Opinion Polls

Sixty-eight percent of respondents to an Asahi newspaper poll published on Aug. 8 said they wanted Kan’s successor to continue the policy of phasing out atomic energy.

Noda’s approval rating was 65 percent, according to a poll published yesterday by the Yomiuri newspaper, the country’s biggest. The Nikkei newspaper and Kyodo News put his popularity rating at 67 percent and 63 percent respectively. None of the polls gave a margin of error.

Noda named Yoshio Hachiro, 63, to be Trade and Industry Minister in his Cabinet lineup, giving him the responsibility to rebuild the ministry that has played conflicting roles in both regulating nuclear energy and promoting its use.

The government in July said it would set up a regulator outside of the ministry and in August, the previous minister, Banri Kaieda, fired the country’s top energy bureaucrats in what he called “sweeping” changes.

Stress Tests

To address public anxiety, the government in July said electricity companies must carry out the stress tests on all nuclear stations.

Japan may submit the results of the checks to the International Atomic Energy Agency for review, Hachiro said yesterday on NHK Television.

“The current review system of Japan’s nuclear governing body has failed to earn the trust of the people,” Goshi Hosono, the minister in charge of dealing with the Fukushima nuclear disaster, said on the same program.

Plans to build more reactors were also shelved after the March 11 earthquake and tsunami caused three reactor meltdowns at Tokyo Electric Power Co.’s Fukushima Dai-Ichi plant.

Winning public support for extending reactor lives or building new ones won’t be easy Kan said on July 22, a comment repeated by Noda last week.

Nuclear Village

Kan also talked about the power of the so-called nuclear village, the nexus of the power companies, regulators and politicians supporting the industry, in highlighting the difficulties in moving away from atomic power.

“I did feel that I was subject to criticism,” Kan said on the day he stepped down when asked about his decision to shut a nuclear station near Tokyo to beef up quake and tsunami defense.

The powerful interests behind the nuclear industry, which powered Japan’s economic rise in the 1970s and 1980s, may make it harder to reform the Ministry of Economy, Trade and Industry for Hachiro, who has a background in agriculture.

“Hachiro is capable. But he isn’t strong enough to stand up to METI bureaucrats,” Minoru Morita, a Tokyo-based independent political analyst, said by phone on Sept. 2.

Japan’s parliament on Aug. 26 approved a bill to subsidize electricity from renewable sources, in one of the last acts of the Kan administration. The use of clean energy sources will improve the country’s energy security and create new industries, Noda has said.

Japan should increase clean energy supply to 20 percent of the total in the 2020’s from the current 9 percent, he said in the Bungeishunju article.

“This crisis has the potential to revive Japanese industries in the long run,” Noda said.

--With assistance from Makoto Miyazaki, Tsuyoshi Inajima, Taku Kato, Chris Cooper, Ichiro Suzuki and John Brinsley in Tokyo. Editors: Aaron Sheldrick, Peter Langan

To contact the reporter on this story: Chisaki Watanabe in Tokyo at cwatanabe5@bloomberg.net

To contact the editor responsible for this story: Teo Chian Wei at cwteo@bloomberg.net


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