Global Energy Policy Research

(June 4, 2012)

The government has decided to institute electrical power-demand countermeasures over an extended three-month period running from July to September. Businesses and homes will be asked to broadly conserve electricity. Kansai Electric Power (KEPCO), in particular, is facing a 15% power conservation requirement referenced to peak demand during the summer of 2010—a consequence of not being permitted to restart Oi Nuclear Power Plant Units 3 and 4. Although a power usage restriction order was avoided, business activities, home life, and consumption could sustain a serious negative impact in the Kansai Region, whose weakened economy will be further harmed.

At a press conference, Makoto Yagi, President of KEPCO lowered his head and apologized deeply to electricity users not just within the Kansai area, but to users of Chubu, Hokuriku, and Chugoku Electric Power. But why does the chief executive of KEPCO need to apologize? I don’t get it. KEPCO has done nothing wrong. In fact, restarting Oi Nuclear Power Plant can alleviate the tight demand for power. The big apology should be issued from the national and regional politicians who are being pushed around by the emotional “anti-nuclear” discourse, and neglecting their judgment and decisiveness as leaders.

Especially for the Kansai area manufacturing industry, being mandated a 15% cut in power is a life-or-death matter. The business community is largely taking steps in the following three ways.

1) Some companies are taking defensive measures, such as purchasing and installing private generators. The politicians need to be aware of this normally unnecessary, expensive investment being demanded. The money for this is being trimmed from investments to expand business, from profits, and from employee wages—sweat and blood is being squeezed. A private electricity generator consists of a huge investment, between 10 million and 50 million yen, and represents a cost too large to bear for small business. Furthermore, the demand for generators is extraordinarily heavy. They will not be delivered or installed by summer, even if ordered now.

2) Some companies are shifting manufacture sites outside the Kansai area. Hitachi Zosen has started to relocate manufacturing outside of Kansai, and SK-Electronics (Kyoto manufacturer of original plates for LCD panels) is considering a production transfer to its Taiwan Plant. Chairman Noriyuki Inoue of Daikin Industries is quoted, “If safety is secured, the minimum [nuclear power plants] should be operated to improve Japan’s economy for the short term.” (Sankei News) Postponing the restart of nuclear power plans will accelerate the hollowing out of industry through the relocation of plants overseas.

３） Companies that can neither purchase generators nor relocate outside Kansai are beginning advance production prior to summer. Moreover, the possibility of scheduled outages has not been completely eliminated at this time.

Although a direct relationship to the electricity problem is uncertain, reports of transfers from Osaka to Tokyo have increased recently. Nearly 20% of the MBA students at GLOBIS’ Graduate School of Management have transferred to Tokyo, for instance. Transfers from Tokyo to Osaka are less than one-tenth of this figure. Before chanting for an “Osaka Metro Government,” stimulating the Kansai economy should come first. Besides, for what purpose and for whom is this “anti-nuclear” position?

How many politicians will listen sincerely to the painful cries of the Kansai industry and take corrective action? A rash effort to quit nuclear energy will inflict irreversible, serious damage to the Japanese economy. We must resolutely monitor the actions of our political leaders from this perspective.

All commercial nuclear power plants stopped operating on May 5. If nuclear power is quickly dispensed with, our reliance on fossil fuels inevitably will grow. The added expense is said to be 3 trillion yen annually. A significant increase in electricity rates cannot be avoided. That increase pressures household finances, and accelerates the exporting of manufacturing outside the country.

We have two choices now. We must calmly think through and figure out which path to take.

（１）Sincerely learn from the accident entailing a total loss of power at the Fukushima Dai-Ichi Nuclear Power Plant, institute countermeasures, and begin the restarting of nuclear power plants whose safety are validated. In parallel, rapidly devise mid- and long-term comprehensive energy policies purposed for the growth of Japan.

（２）Hastily institute “de-nuclearization,” and permit no restarting of nuclear power plants. Resignedly suffer the inevitable destruction of our stable energy infrastructure, the rate increases, and the draining of national wealth to the tune of 3 trillion yen.

My choice is an unqualified (1), because I believe this is the necessary, correction action for the future of our children in Japan. We, the voting public, must send an emphatic “No” to politicians worrying about their elections and acquiescing to emotional anti-nuclear and de-nuclear discourse, or otherwise irresponsibly using this conversation as a tool for political battle.

The other day, I heard a respected individual remind us in the following way: “The nuclear issue is like litmus paper that measures the capability of a politician. You can learn how well he or she comprehends energy policy, diplomacy, defense, the economy, environmental policy, and maintains a historical perspective. Don’t they know that Japan was forced into the last big war, because the nation had no energy?”

I can’t argue with that comment.

Voters obviously are not voting in agreement with all of the policies set forth by their chosen candidate. Voters are selecting a leader who appears capable of leading us in the right direction. After winning the election, those leaders, therefore, are obligated to abide by the changing circumstances over time, amend policies as necessary, make efforts to properly track the people’s opinion, and execute the appropriate policy that might even conflict at times with the people’s opinion.

I have no intention of leveling this responsibility just against our political leaders. The silence among many business leaders who fear criticism is another cause for this derelict condition. Business cannot expect to see changes without stronger appeals and vocal demands. Fortunately, the recent increase in positive views towards restarting the nuclear power plants leads me to believe that the tide is changing. The path to resolution is simply a steady, calm, and enduring accumulation of debate.

Last year on August 5 in the evening, I participated in a public debate over energy policy with Masayoshi Son, president of SoftBank, for nearly four hours. My position today over the dangers of rash “de-nuclearization” remains wholly unchanged from the perspectives of (1) Safety and security, (2) Environmental friendliness and human life toll, (3) Feasibility/stability/economy, and (4) Our future 50 and 100 years ahead.

(References: Presentation material on Tokoton (thorough) debate (Japanese only), Transcript (1) of Masayoshi Son Vs. Yoshito Hori: “Before Screaming for “De-Nuclear” (Japanese only), Yoshito Hori blog (mostly Japanese))

In the end, political leaders are tasked with the decision-making. Their responsibility is heavy; yet they are not permitted to postpone matters or hide from the issues. The use of anti-nuclear sentiment as a tool for political battle is unconscionable. I urgently hope for the proper choice and decision for the future of Japan and our children.

Yoshito Hori, President
Graduate School of Management, GLOBIS University
Managing Partner, Globis Capital Partners
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