Japan Net Zero Plan Hits Speed Bump as Small Utilities Balk

(Bloomberg) -- Japan’s pledge to be a net-zero greenhouse gas emitter by 2050 is running into headwinds: smaller power utilities addicted to coal and natural gas.

Regional electricity providers including Hokkaido Electric Power Co. and Shikoku Electric Power Co. said this week they can’t set deadlines to become emissions neutral because it’s too costly to replace power output that would be lost by closing plants that burn fossil fuels.

“The target set by the prime minister is too challenging for us to achieve with technologies available now,” Kohei Satake, the vice president of Shikoku Electric’s Tokyo office, said in a briefing Thursday after the company released first-half earnings. “We cannot declare a net-zero emissions target now.”

Japan will have to accelerate the closure of coal plants and ramp up renewable energy capacity over the next decade to meet Prime Minister Yoshihide Suga’s pledge to be emissions neutral in 30 years.

That’s a tough task for the utilities, which have been struggling to compete against new retailers that offer cheaper rates to a shrinking pool of customers. Other regional power providers had this to say on why they couldn’t set a green deadline:

• Hokuriku Electric Power Co. said cheap power generated by coal plants makes them competitive in Japan’s wholesale power market
• Tohoku Electric Power Co. said available technologies aren’t enough to lower emissions to zero
• Hokkaido Electric said they won’t be able to become a net zero emitter without technological innovation

Smaller regional utilities are more reliant on fossil fuels than the biggest power producer, Jera Co., which said earlier this month that it would be carbon neutral by 2050. Tokyo Gas, the nation’s top city-gas provider that also produces some electricity, has also pledged to achieve net-zero emissions by around 2050.

Hokkaido Electric and Okinawa Electric Power Co. are the regional utilities most dependent on coal.

“We may fall into a tough situation without additional measures” to help cope with the nation’s climate policy, said Shigeru Koshimura, president of Hokuriku Electric’s Tokyo office.

The utilities said to help meet the government’s new emissions goal they will expand renewable energy and ask the atomic regulator and local governors to allow them to restart their nuclear power plants, which were halted after the 2011 Fukushima disaster.

“Revolutionary innovation holds the key” to achieving carbon neutrality, said Yuji Sasaki, senior executive officer at Tohoku Electric.

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