Impact of the Japanese Quake on Coal

Japan relies on coal to meet around 25% of its electricity needs. According to Platts, as of March 16, five thermal power stations, the equivalent of 10% of Japan’s installed coal-fired generation capacity, were offline. In the short term, this suggests that coal will play less of a role in meeting electricity shortages than LNG and oil. However, once some of these power stations resume operations, coal could play a larger role in meeting electricity needs. According to Barclays, assuming shut in capacity is 12,000 MW, using the same share of coal that was used to meet lost capacity from Kashiwazaki-Kariwa, Japan will increase its exports of coal by 7,800 tonnes per day. Domestic opposition to the use of coal, as well as policies designed to reduce Japan’s coal consumption, mean it is likely that coal will be used to meet demand in the medium term, but will not be a long-term alternative to nuclear power.

Editor’s Note: This post is excerpted from a much longer analysis available exclusively to RGE Clients: Meeting Energy Demand After the Quake: LNG vs. Oil vs. Coal