Japanese government officials on Friday announced a proposal to phase out nuclear power by the late 2030s, a major policy shift that ensures the country will need to rely on imported energy and could secure its position as the world's biggest importer of liquefied natural gas (LNG).

The change was sparked by the March 2011 meltdown at the Fukushima Daiichi nuclear power plant (see Daily GPI, March 14, 2011).

According to media reports, a cabinet panel of Prime Minister Yoshihiko Noda's government is proposing to reverse plans to rely on nuclear power for 50% of domestic energy needs by 2030. Instead, the panel said the country should begin retiring aging nuclear reactors after they have been operational for 40 years and not replace them.

"We are only at the starting line," Noda said, as reported by the Associated Press. "Now we are going to begin an extremely difficult challenge. No matter how difficult it is, we can no longer put it off."

It was unclear if the policy shift would continue following upcoming general elections in Japan, which could be held as early as October. Noda's Democratic Party is reportedly unpopular and could be voted out of office.

Business interests in Japan are reportedly opposed to abandoning nuclear power entirely, fearing that a reliance on fossil fuels and renewables will be costly and make them uncompetitive. "To consider such an energy policy runs counter to a growth strategy," Hiromasa Yonekura, chairman of Sumitomo Chemical Co. and the Japan Business Federation, told Reuters.

Before the Fukushima catastrophe, Japan relied on nuclear power to meet one-third of its domestic energy needs. Only two of the nation's 50 nuclear reactors are currently operational, with the rest idled pending safety inspections by the government.

Last June, the U.S. Energy Information Administration (EIA) predicted that Japan 's energy fuel mix would likely change in the wake of Fukushima, with natural gas rising in importance and being the "preferred fuel of choice" to make up for the shortfall from the reduced nuclear capacity. The EIA said industry analysts projected Japan would import between 4.1 and 4.5 Bcf of LNG in 2012, depending upon how many nuclear facilities were operational.

Industry analysts are watching several proposals to export LNG from the U.S., perhaps as early as 2015 (see Daily GPI, Sept. 12).

In August, Cheniere Energy began construction on its Sabine Pass LNG export terminal, which has U.S. approvals to export to both Free Trade Agreement (FTA) and non FTA countries (see Daily GPI, Aug. 13). Meanwhile Sempra Global's Cameron LNG LLC is proposing to build an export facility alongside its Louisiana import plant. It has authorization to export to FTA countries and has filed to market to non FTA countries (see Daily GPI, May 11).

Also in August, Freeport LNG filed to add liquefaction and export facilities to its existing LNG import terminal in Brazoria County, TX (see Daily GPI, Sept. 4). Dominion Cove Point LNG has received approval to export to FTA countries, but is awaiting action on its request to access non FTA country markets before proceeding with construction of an export plant alongside its import facilities in Maryland (see Daily GPI, Oct. 5, 2011).

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