Japan's Third Disaster

Disaster has come in threes to Japan. Earthquakes, tsunami, and the Fukushima nuclear power plant explosion. The crisis there may get worse, but it is already bad, and will have a huge impact on Japan's future, even if the feared meltdown never takes place

Fukushima can only aggravate the already very uneasy acceptance of nuclear power by the Japanese people.  As the only people on earth to have lived through nuclear attacks on their cities, fears of radiation entering the environment  are even greater than overseas. Peace Park and its museum in Hiroshima make an indelible impression of horror, one that is part of the Japanese cultural DNA.

Japan is utterly dependent on foreign sources for energy, and so nuclear power seemed a natural for it, and the government and business establishments threw themselves behind the project of bringing nuclear power to Japan. (Full disclosure: in the course of my consulting work I have worked with a number of major players in the Japanese nuclear power industry).  To a large extent, they succeeded, but not without controversy.

I lived in Japan at the time of construction of several major nuclear power stations, which faced serious, adamant opposition. The opponents inevitably raised serious question about safety in the event of earthquakes, and were always assured the utmost precautions would be taken. The usual pattern was for local groups in the rural regions chosen to be bought off one way or another, with increased tax revenue and other funds making their way to locals, and opponent groups to be bulldozed.

Tokyo Electric Power, the owner of Fukushima, is a massive company, supplying the same amount of electricity Italy consumes to its customers.  It was once highly respected, but had a scandal over a cover up of defects at its nuclear plants,  resulting in the
resignation of its chairman and president in 2002, and  will no doubt come in for serious criticism no matter what the outcome of the Fukushima crisis. Toden (as the Japanese call it -- Wall Street calls it TEPCO) also has the inevitable reputation for arrogance that accompanies a big power company building and operating major facilities in rural areas.

Recovering from the quake and tsunami is already going to be a huge challenge, financially and otherwise. If Japan faces pressure to shut down its nuclear power facilities, it will be a catastrophe for Japan, leading to shortages of electricity and financial disaster for electricity users. Japan's 54 nuclear stations
account for a third of its power, scheduled to hit 40% by 2018, but their importance is far greater than that figure reveals.
The nuclear plants are base load plants, running all the time, supplying the basic demand for electricity. Peak load power is provided by hydrocarbon-based fuels and hydro. If nuclear is shut down, it will require bigger purchases of oil, LNG, and coal, costing Japan more, and inflating demand and prices on world markets. If the base load capacity is taken offline, it is a real challenge to keep the peak fscilities running 24 hours a day, and there is no extra margin for peak load demands.

So I expect that Japan will be roiled by questions about continued operation of nuclear power, that Tokyo Electric will be rocked, and that the consequences will compound the difficulty of rebuilding.  What a sad outlook for a country on its knees.
Disaster has come in threes to Japan. Earthquakes, tsunami, and the Fukushima nuclear power plant explosion. The crisis there may get worse, but it is already bad, and will have a huge impact on Japan's future, even if the feared meltdown never takes place

Fukushima can only aggravate the already very uneasy acceptance of nuclear power by the Japanese people.  As the only people on earth to have lived through nuclear attacks on their cities, fears of radiation entering the environment  are even greater than overseas. Peace Park and its museum in Hiroshima make an indelible impression of horror, one that is part of the Japanese cultural DNA.

Japan is utterly dependent on foreign sources for energy, and so nuclear power seemed a natural for it, and the government and business establishments threw themselves behind the project of bringing nuclear power to Japan. (Full disclosure: in the course of my consulting work I have worked with a number of major players in the Japanese nuclear power industry).  To a large extent, they succeeded, but not without controversy.

I lived in Japan at the time of construction of several major nuclear power stations, which faced serious, adamant opposition. The opponents inevitably raised serious question about safety in the event of earthquakes, and were always assured the utmost precautions would be taken. The usual pattern was for local groups in the rural regions chosen to be bought off one way or another, with increased tax revenue and other funds making their way to locals, and opponent groups to be bulldozed.

Tokyo Electric Power, the owner of Fukushima, is a massive company, supplying the same amount of electricity Italy consumes to its customers.  It was once highly respected, but had a scandal over a cover up of defects at its nuclear plants,  resulting in the
resignation of its chairman and president in 2002, and  will no doubt come in for serious criticism no matter what the outcome of the Fukushima crisis. Toden (as the Japanese call it -- Wall Street calls it TEPCO) also has the inevitable reputation for arrogance that accompanies a big power company building and operating major facilities in rural areas.

Recovering from the quake and tsunami is already going to be a huge challenge, financially and otherwise. If Japan faces pressure to shut down its nuclear power facilities, it will be a catastrophe for Japan, leading to shortages of electricity and financial disaster for electricity users. Japan's 54 nuclear stations
account for a third of its power, scheduled to hit 40% by 2018, but their importance is far greater than that figure reveals.
The nuclear plants are base load plants, running all the time, supplying the basic demand for electricity. Peak load power is provided by hydrocarbon-based fuels and hydro. If nuclear is shut down, it will require bigger purchases of oil, LNG, and coal, costing Japan more, and inflating demand and prices on world markets. If the base load capacity is taken offline, it is a real challenge to keep the peak fscilities running 24 hours a day, and there is no extra margin for peak load demands.

So I expect that Japan will be roiled by questions about continued operation of nuclear power, that Tokyo Electric will be rocked, and that the consequences will compound the difficulty of rebuilding.  What a sad outlook for a country on its knees.