Japan’s Third Disaster

Japan’s Third Disaster

By Thomas
Lifson

 

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.

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