Thursday, May 26, 2011

What The Fukushima Nuclear Crisis Means for Japan, U.S. And The World

The triple disasters that hit north-eastern Japan on March 11—a magnitude 9.0 earthquake, followed by devastating tsunami and nuclear crisis following the failure of cooling systems at Fukushima Daiichi nuclear plant—have given unprecedented spotlight and momentum to debates surrounding the safety and the very use of nuclear power in Japan, the U.S. and the rest of the world.

Nuclear energy accounts for close to 14% of electricity generation globally. While nuclear power has very high start-up costs, once up and running, it can provide relatively cheap power without producing carbon emissions (The Economic Intelligence Unit). According to Economic Intelligence Unit, Japan had 54 operable nuclear reactors before the March 11th disaster and nuclear power generated approximately 27% of electricity in Japan in 2010. In France, which has the second highest number of nuclear reactors (58) after United States (104), electricity generation through nuclear power accounts for a much higher 77%. In the U.S., the 104 operating nuclear reactors account for 20.2% of electricity production. (An overview of number of nuclear power plants in operation throughout the world and electricity generated is available via an interactive map at

As Japan continues the battle to bring the damaged reactors at the Fukushima Daiichi nuclear plant to a stable state within six to nine months, Prime Minister Naoto Kan on May 6th called for a temporary closure of Hamaoka nuclear plant, “an ageing facility on a tectonic fault line that would pose a tremendous risk for Tokyo if it suffered the same fate as the Fukushima Daiichi plant.” As additional details trickle in regarding the series of events that unfolded at the Fukushima nuclear plant, efforts are underway to assess Japan’s handling of the nuclear accident. According to The New York Times, the nuclear oversight body of the United Nations, International Atomic Energy Agency (IAEA) with its 18 member international team, has started its investigation into the accident. Furthermore, the Japanese Government itself is undertaking an independent inquiry into its response to the disaster.

Announcements of evacuation in Japan more than 10 weeks into the disaster, this time around a greater radius surrounding the crippled Fukushima nuclear plant only add to the gravity of the crisis surrounding Fukushima Daiichi nuclear plant. The BBC that the no-go zone around the Fukushima nuclear plant had been extended and that the residents of towns of Kawamata and Iitate were being sent to evacuation centers.

The disaster at Fukushima Daiichi nuclear plant and its far-reaching aftermath have significantly altered the landscape in which nuclear power plants operated. The Economist notes that in an opinion poll conducted by Asahi Shimbun, the percentage of those opposed to nuclear energy in Japan had risen to 41% from 28% in 2007, with women being the strongest opponents. As more details are made available regarding the contributing factors towards the disaster at Fukushima Daiichi nuclear plant, Japan and the rest of the world will learn lessons far too costly to ignore. As Japan’s own efforts towards reviewing energy use, Prime Minister Naoto Kan announced on May 10th “his intention to rewrite from scratch a blueprint, scarcely a year old, that planned roughly to double nuclear power’s contribution, accounting for half of Japan’s energy mix by 2030.”

In the U.S., the U.S. Nuclear Regulatory Commission (NRC), an independent body created by Congress in 1974, implemented a 24-hour monitoring of the nuclear crisis in Japan until as recently as mid-May. NRC is the primary body responsible for regulating nuclear power plants and other uses of nuclear materials. Following the disaster in Japan, the NRC launched a two-step reiew of U.S. reactor safety: a 90-day review to be completed in July and an in-depth evaluation of emergency operations and procedures to be completed by the end of the year. A summary of findings from inspections conducted at U.S. nuclear power plants and individual Inspection Reports have been made available at NRC website. An article published in The New York Times highlights some of the key findings included in the NRC inspection report and notes that “something under one-third of the 104 U.S. reactors were found to have some vulnerabilities to extreme emergencies, according to the NRC” but that “all issues have been fixed or put on schedule for correction, and that the safety of the reactors was not compromised.”

Today, Executive Director of Operations of U.S. Nuclear Regulatory Commission, Bill Borchardt speaks at Japan Society on the various approaches being taken by NRC for a systematic review of nuclear power plant safety in the U.S. The discussion is moderated by Gal Luft, Executive Director of Institute for the Analysis of Global Security.

--Anu Tulachan

Thursday, May 19, 2011

Optimism And Hope Glimmer Behind Gloomy Realities Of Post-Quake Japan

Detail from Nikmak's "Japan is Arising". Via.

Two months after the devastating earthquake and tsunami, which unleashed a nuclear crisis in the Tohoku region of Japan, the enormity and complexity of the problems the country now faces are daunting. More than 14,000 people lost their lives and nearly 200,000 have been evacuated from the region and remain in emergency shelters. The Japanese government now estimates that the cost of the damage could reach $310 billion.

In a discussion on Japan’s prospects after the Tohoku earthquake entitled Why Japan May Surprise the World: Rebirth after the Tohoku Quake?, a panel of leading economists at Japan Society did not sugar coat the challenges the country must now overcome. “It will have a pretty darn big effect on GDP,” said Bruce Kasman, Chief Economist at JP Morgan. The panel however, said the economic outlook for Japan, like the people, shows signs of resilience.

The immediate impact of the disaster was serious said Bruce Kasman, with a 15% drop in production in March. Retail sales fell 8% and car sales were down 40% for March and April. Overall he estimated a drop of 4% of GDP on an annualized basis over the second and third quarters of this year. But he predicted that after all the “sound and fury” had died down, Japan would be back at 90% of production capacity by the end of the summer and back on a growth path by the end of the year in part because of fiscal stimulus programs launched in response to the quake.

Paul Sheard, Global Chief Economist with Nomura said the quake had been a huge blow to Japan’s national confidence. Many had been waiting for the next “big one” to strike Tokyo or Tokai not Tohoku. The result was that many now feel another earthquake could still hit elsewhere. However, he suggested the negative impact of the crisis could also have a positive outcome. While the supply chain disruption caused by the earthquake, could lead companies to shift production offshore, it also reminded the rest of the world just how crucial Japan’s technology sector is to the global economy. Reconstruction not just by the government but also by the private sector looking to protect its own infrastructure from future disasters, could create a major economic boost for Japan. He estimated that while GDP would shrink by 0.5% this year, next year Japan’s economy would grow by 3.1%.

The panel saw the crisis as an opportunity for Japan to address some hard questions. Mr Sheard said now was the time for Japan to grapple aggressively with its deflation perhaps by issuing bonds. He also recommended that Japan look at its immigration policy in the face of its ageing society. He said opposition to immigration might diminish and the government should draw up a new structured, strategic immigration plan. It is also a time when strong leadership and continuity would be essential, he said.

The impact of the earthquake will have ramifications in all sectors of the economy but Kyohei Morita, Barclays Capital Chief Japan Economist, felt that problems the economy is facing were there long before the earthquake struck. He predicted that while Japan now enjoys a healthy current account surplus, the ageing society and an outdated tax policy which relies too heavily on corporate tax, will mean that the surplus disappears by 2018. "A current-account deficit would change completely the way the Japanese economy looks," he said. Companies facing expensive power supply and a weaker yen could take their business overseas resulting in what he described as “hollowing out” of the economy. Mr. Morita said that the nuclear crisis would spark a debate in the near term about electricity production in Japan. He said use could be made of thermal and hydroelectric power but in his opinion it would be “impossible” to shift way from nuclear power completely.

Much has been made of the reduced capacity for electricity production with predictions of a shortfall of 20% by the summer months. But the panel felt this was being overplayed and that Japan would rise to the challenge and find ways to make sure that power could stay switched on.

The panel agreed that there was much to overcome and that strong policy initiatives would be essential to Japan’s success. Jeffrey Shafer, a former Citigroup executive, who chaired the event, said the panel had pointed out some gloomy realities but that there was “optimism and hope glimmers”.

-Juliet Hindell

Hindell was BBC Tokyo bureau chief and Daily Telegraph Tokyo correspondent and is now based in New York.