Getting to Grips Again with Dependency. Japan's Energy Strategy

Japan has had to deal with a high level of dependency on energy imports for many decades. Today the country faces an increasingly competitive global energy market that forces it to reinvent its traditional security of supply policies. Unfortunately for Japan, the rise of China and India is increasing the competition for scarce energy supplies among consumer countries, whereas in the past supplier countries competed for access to the attractive Japanese market. To confront the challenges of the new environment the Japanese government has drafted a New National Energy Strategy. This paper analyses the strength of the strategy's proposals and targets, in particular those aimed at improving security of oil and gas supply. To assess the impact of the strategy we place it firmly against the background of Japan's history of energy security policy, as well as Japan's recent experiences with 'strategic resource projects'. This paper finds that Japan's policies in post-1973 history have been impeded by a complex set of factors. Traditionally this set has included Japan's troubled bilateral relations with Russia and China, and Japan's security dependence on the United States. Other factors are Japan's inability to synchronise national and corporate interests, and a lack of cooperation between domestic energy companies. More recently, rising oil prices, growing resource competition with China and lacklustre domestic demand-growth for energy have increased anxiety about security of supply amongst policymakers in Tokyo. In three case studies the paper illustrates in detail how these factors - in combination or by themselves - have structurally compromised Japanese initiatives to improve security of supply. The case studies discuss the Azadegan oil development project in Iran, plans for a pan-Siberian oil pipeline, and the oil and gas projects on Russia's Sakhalin Island. Our analysis of the New National Energy Strategy confirms that energy security is back on Japan's policy agenda. But the strategy does not offer groundbreaking policy changes and reaches back to policies that have shown an uneven track record. Japan appears unsure of how to win the favour of its Middle Eastern suppliers and fence off Chinese competition for energy supply. Energy relations with Russia and China should be improved, but the strategy looks unconvincing on this point also. In our view, with this New National Energy Strategy Japan has placed itself 'on a rock', waiting for recycled policies to work their magic under increasingly difficult circumstances. Instead of leading to eventual, deserved success, the strategy's ambitions may well be compromised by the same impediments that have plagued Japanese security of supply policy in the past.