Japan's coal consumption to stay near record highs next year: think tank

[TOKYO] Japan's total coal consumption is likely to stay near a record high next year as a prolonged shut down of nuclear plants and a softer economy prompt power utilities to stock up on the cheaper fuel, a government-affiliated energy research institute said.

The continued high demand from the world's second-biggest coal importer will support a depressed mining sector, but could make Japan a target for criticism at United Nations climate talks next year as coal is one of the dirtiest fuels for generating electricity. "We had expected coal-fired plants to go into maintenance once nuclear plants restart this business year and next," said Akira Yanagisawa, senior economist at the Institute of Energy Economics, Japan (IEEJ). "But the maintenance apparently won't be happening as expected due to delayed nuclear restarts." Japan's 48 nuclear reactors were gradually shut down after the Fukushima catastrophe in 2011, with no schedule for restarts set.

Even if the first reactors return next year, analysts say utilities in the country would cut their use of more expensive fuel oil, crude and natural gas before coal.

Japan's total coal consumption will see a small rise in the year through March 2015, while a drop in the year after will be lower than projected, Yanagisawa said.

The IEEJ had previously forecast that Japan would burn 0.4 per cent less coal in the current fiscal year and 2.7 per cent less in the year to March 2016, assuming the country may have 7 reactors back up by March 2015 and a total of 19 by March 2016.

Thermal and coking coal consumption soared to a record of 194.2 million tonnes last year as utilities moved away from expensive fossil fuels to cut costs.

Japan, which unexpectedly slipped into recession, gets about 30 per cent of its electricity from coal and analysts do not expect consumption to come down any time soon.

Only a shutdown of thermal power plants for maintenance could curb coal use but that will have to be further pushed back as nuclear plants remain idle.

Utilities must inspect thermal power plant boilers every two years and turbines every four years, but they were allowed to postpone the checks by up to 12 months to ensure power supplies after the shutdown of nuclear power plants.

REUTERS