Japan renewable energy push clears key hurdle

Reuters News
Posted: Aug 23, 2011 1:43 AM
Japan renewable energy push clears key hurdle

By Risa Maeda

TOKYO (Reuters) - A lower house committee of Japan's parliament passed a bill on Tuesday to promote investment in solar and other renewable energy sources, marking an important step toward the country's goal of reducing its reliance on nuclear power.

The radiation crisis at the tsunami-hit Fukushima Daiichi nuclear plant has shattered the public's confidence in the safety of atomic power, prompting an overhaul of energy policy centered on boosting generation from solar and wind.

The bill, which will require utilities to buy electricity from solar and other renewable sources, is now in line to be approved by the upper house as early as later this week. Related laws are due to take effect in July, 2012.

The bill's passage follows weeks of intense deliberations between ruling and opposition parties, and paves the way for the resignation of unpopular Prime Minister Naoto Kan, who had designated its passage as a condition of his departure.

"It is for certain that we are steering our wheels toward the promotion of the renewable sector," Yasutoshi Nishimura, a lawmaker in the main opposition Liberal Democratic Party who helped negotiate the bill, told Reuters in a recent interview.

The bill leaves key details unresolved that could ultimately dilute its impact on energy policy. These include the price to be paid by utilities for green energy, which will be decided by a parliament-appointed panel not set to meet until next year.

Japan's revolving-door governments is another concern given the mandatory review of the scheme after 3 years.

The new laws will require utilities to buy any amount of electricity generated from solar, wind, biomass, geothermal and small-sized hydro power plants at preset rates for up to 20 years, and allow utilities to pass the cost to end-users.

The bill includes provisions for energy-intensive industries, such as electric furnace steel makers, that will trim extra costs by at least 80 percent in a bid to cushion the impact on the world's third-biggest economy.

The government has said it wants the feed-in tariff scheme to boost capacity of the five renewable energy types by more than 30,000 megawatts (MW) over a decade. That would add over 12 percent to Japan's total generation capacity before the nuclear disaster of 240,000 MW.

But critics of the bill have argued that the mandatory review after 3 years may prevent companies and individuals from taking the risk of investing in renewable energy projects, some of which can take much longer to generate profits.

(Editing by Nathan Layne)