Message from Chairman
As the year 2018 entered its second half, the global economy remains brisk and the energy situation at home and overseas is growing uncertain. The U.S. Trump administration’s foreign policies regarding the Iran nuclear deal, the Paris agreement and the menace of a trade war are further increasing the uncertainties.
In the international arena, after an early Trump administration’s declaration of the United States’ exiting the Paris climate agreement in June 2017, the U.S. withdrew from the Iran nuclear deal in May, sending the Middle East into chaos. The Middle East situation combined with the Northeast Asian situation that followed the U.S.-North Korea summit meeting are raising the geopolitical uncertainties. For the first time in 37 months, the benchmark Brent crude oil futures price topped $70 per barrel in January and reached $80/bbl in May. It averaged about $71/bbl in the first half of this year. Although crude oil price hikes typically translate into U.S. shale oil production expansion as well as global economic risks, few people expect crude oil prices to rise continuously.
In Japan, in the wake of examinations by the Nuclear Regulation Authority, nine nuclear plants received approvals for a restart. However, a decision by the Hiroshima High Court in December 2017 forced the No. 3 unit of the Ikata nuclear power station to suspend operation, indicating a lingering judicial risk for nuclear power generation. Furthermore, some local governments have remained negative about nuclear energy. In such situation, the government released the Fifth Strategic Energy Plan, which retained the previous target energy mix for FY2030 and clarified “Efforts for Energy Transition and Decarbonization towards 2050” from the viewpoint of climate change.
While energy is crucial infrastructure for economic activities, Japan’s energy self-sufficiency rate is limited to about 7%, indicating an extremely energy-poor country. Securing stable energy supplies at reasonable prices is therefore a basic premise for Japan’s economic development. At the same time, Japan must also adopt appropriate measures to prevent global warming. The so-called 3Es plus S – energy security, economic efficiency and environmental conservation plus safety, as a lesson learned from the Fukushima nuclear plant accident – represent a common challenge for the world including the growing Asian countries. In the international community, where interdependence between countries has deepened, trends and movements in Japan and other Asian countries have great impacts on other regions in the world.
Our institute has established a strong presence in Japan and in the world by providing objective and factual analyses and by recommending appropriate policies based on future energy and environmental outlooks. We are determined to make steady efforts to find optimum solutions contributing to economic growth by taking advantage of our close networks with the Japanese and other governments, industry, experts, research organizations and others and by viewing energy and climate change issues as two sides of the same coin. We attempt to complete our research analysis and policy recommendations on time to contribute to policymaking and business strategy developments. For example, we publish bi-annual short-term outlooks on Japan’s energy supply and demand in July and December and each fall we release our annual IEEJ Energy Outlook focusing on providing policy messages to Asia and the world. We believe these publications useful for a better understanding of the uncertain energy situation and for the formulation of future policies and strategies.
In its 52nd year, our institute will further enhance its research and policy/strategy recommendations, while envisioning medium to long-term structural changes in the energy situation. We would appreciate your continuous support.
Chairman & CEO
The Institute of Energy Economics, Japan
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