Japanese Heavy Industry and Secure Energy Sources

Heavy industries in Japan are actively seeking & developing secure energy sources that are also less carbon intensive.  How can capex planners in these industries evaluate possible scenarios?

In 2022, commercial and industrial users accounted for about 61% of Japan’s total energy use. (Transportation accounted for about 24%, and households for the remainder.) The steel, pulp and paper, cement, and rail transport industries are actively seeking non-fossil sources of energy.  As they commit to new systems, energy technologies will continue to change.

The latest mid-stream summary of Japan’s current strategic energy plan cites a few broad strategies for changing Japan’s energy mix. Among these:

▶ Restarting the majority of Japan’s light water nuclear reactor fleet;
▶ Continuing to evaluate and plan infrastructure for hydrogen and ammonia to be used as energy sources or energy storage media for the steel and power generation industries;
▶ Ongoing deployment of renewable generation capacity, supported by a feed-in tariff.
▶ Improvements in renewables: perovskite solar cells and new battery chemistry that will make energy storage cheaper and safer.

The big question is, how does a planner at a heavy industrial concern account for accelerated technological change and discovery of new resources? Omissions from the list above include fusion power; the substantial methane hydrate resource on the seafloor around Japan; and the recently demonstrated photomolecular effect, which has deep implications for the nexus of energy and water.

To make good decisions, managers must learn to confront complexity and resist the temptation to oversimplify the situation.

Tilt Global provides a super-accelerator for group decision making that empowers executive management teams facing the complexity of the energy transition to navigate this fast-evolving market.